What is Bitcoin?
If you have heard of cryptocurrency, then Bitcoin must have crossed your mind as well. Since the creation in 2008, Bitcoin has come relatively far in a short period of time whereby billion-dollar businesses such as Dell, Microsoft, Lamborghini and more have already accepted them as a form of payment.
Bitcoin (BTC) is a cryptocurrency, which is a form of digital currency that operates without the dependence on third party gate keepers such as banks.
The word “Bitcoin” is capitalized when referring to the entity or concept. On the other hand, “bitcoin” is lower cased in relation to the quantity of the cryptocurrency (for example, “John Doe traded 100 bitcoin”) and the plural form can be either “bitcoin” or “bitcoins.”
Bitcoin uses a decentralized blockchain network that allows transactions to be made to and from 16-character encrypted addresses and keeps a track record of every activity. This is beneficial for fraud detection because if a single file in the chain is fraudulent, the blockchain prevents it from affecting the rest of the ledger.
In addition to the decentralized nature, instead of having third party authorities to print more currency, the creator(s) of Bitcoin designed the system so there would only be a limited supply to be mined. Currently, there are almost 18 million bitcoins in existence and the cap quantity to be mined is 21 million bitcoins. Since Bitcoin is divisible, there isn’t an issue with scaling whereby users can even transfer as little as 0.0000000001 bitcoins.
WHERE DID BITCOIN COME FROM?
In 2008, bitcoin.org domain was registered and by the end of the year, a link to a whitepaper written by Satoshi Nakamoto was posted to reveal the first details of Bitcoin and how it worked as a peer-to-peer electronic cash system. Satoshi Nakamoto is an anonymous individual or group of people who believed in improving the current financial system that is running on multiple ledgers that are governed by multiple national authorities resulting in more parties to coordinate with, longer transfer times and higher fees.
Although Bitcoin was invented by Satoshi, the idea of cryptography has been around as early as the 1980s; however, none of the coins were as successful. Bitcoin was developed on some of these prior researches and attempts which were credited in the references section of his/their whitepaper in page 9.
A few months later in January 2009, the code was released, and the first bitcoins were mined into existence by Nakamoto. The first few people who supported and received bitcoins in the early days were Hal Finney, Wei Dai and Nick Szabo.
By the following year on 22 May 2010, the first real-world transaction for bitcoins were made when a man name Laszlo Hanyecz purchased two pizzas in Florida for 10,000 BTC. Since then, Bitcoin adoption has been growing across the general public and billion-dollar companies from various industries such as IT, e-sport, beauty, automotive, F&B, hospitality and more.
- Decentralization: Bitcoin uses blockchain technology to jointly manage the transaction data which is not controlled by one central constitution. Without an authoritative gate keeper, users do not have to ask or pay additional fee to anybody else to use their cryptocurrency.
- Accessibility: Due to decentralization, there are less restrictions against the user to have the rights and access to cryptocurrency. In some nations, banks do not permit people of certain race, gender or age to open an account. In addition, in areas where women do work, they find their earnings are controlled by their male spouses or families. As long as users have access to internet through a device, they are able to retain control over their finances.
- Identity Protection: Users do not have to share their personal information to conduct activities with their assets. Instead, they only need to share the address of their wallet. This reduces the risk of people having access to and misuse personal details without the knowledge of the user.
- Universal Recognition: Bitcoin is not bounded by any nation which makes them not affected by the interest rates and transaction charges of any country. Thus, users would experience less friction in transferring bitcoins at a global scale. Also, this reduces the amount of time for individuals or companies to transfer money across nations compared to going through banks.