“Bitcoin is a technological tour de force.”
Bitcoin (BTC) is the first and most widely used digital currency. Satoshi Nakamoto, an anonymous developer or group of developers, introduced Bitcoin to the public in 2009. In Satoshi’s words, “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party.”
Bitcoin is decentralized in nature, which means Bitcoin operates independently of any central control or oversight by banks or governments. To accomplish this, Bitcoin employs peer-to-peer technology (we know it as blockchain) to facilitate and manage transactions directly among network participants. Bitcoin is an open source permissionless network designed to be open to the public. Bitcoin is not owned or controlled by anyone; everyone can participate in the Bitcoin network.
Bitcoin is stored in digital wallets. Every Bitcoin transaction is recorded on the Bitcoin blockchain. It is similar to a bank’s ledger or log of customer funds entering and exiting the bank. Anyone on the internet can access the transaction history, now immutably stored over the Bitcoin blockchain.
As an added layer of security, the Bitcoin network uses cryptography to encrypt the data stored in blocks on the blockchain. Bitcoin employs the SHA-256 hashing algorithm.
One bitcoin can be divided into 100 million smaller units. Each unit is known as a satoshi. It means that if you own Bitcoin, you can use your crypto wallet to send a small fraction of Bitcoin as payment for goods and services. The total supply of Bitcoin is capped at 21 million. The last Bitcoin is expected to be mined not until 2140.
Over 50,000 merchants worldwide accept Bitcoin as a valid payment method. Major companies like Starbucks, Microsoft, Tesla, etc., accept Bitcoin. In the USA, over $1 million is spent on goods and services daily.
How does Bitcoin Work?
The Bitcoin network is a digital payment system, and Bitcoin as a cryptocurrency is accepted by thousands of e-commerce merchants globally. However, some countries consider them as digital assets. As previously stated, Bitcoin employs blockchain, enabling Bitcoin wallets to calculate their spendable balance so that new transactions can be verified, ensuring the spender’s ownership. A Bitcoin transaction takes around 10 minutes to be completed. Factors such as total network activity, hash rate, and transaction fees influence the transaction completion rate.
The process of validating transactions and creating a new block on the blockchain is known as mining. Mining is carried out by software applications that run on computers or machines specifically designed for mining and are known as Application Specific Integrated Circuits or ASICs.
Installing a Bitcoin wallet on your computer or mobile phone is all you need to get started with Bitcoin. Bitcoin wallets store a private key or seed, a secret piece of data. It is used to sign documents. It provides mathematical proof that the transactions were carried out by the wallet’s owner. Your wallet has a public address as well. It is referred to as your public key. When someone sends you bitcoin, they use your public key.
Losing your Bitcoin address means losing all the bitcoins in your wallet. Around 3.7 million bitcoins have been lost by their owners.
Where to Buy Bitcoin in India?
You can buy Bitcoin in India on WazirX. WazirX is India’s most secure crypto exchange platform, created by blockchain enthusiasts. WazirX uses cutting-edge identity verification systems to complete your KYC within a few hours (in most cases) of signing up while ensuring proper KYC protocol. Sometimes verification could take a bit longer but is usually done within 72hours. The user interface is simple and quick, providing the best trading experience for new and experienced traders. You can access the platform from any location using Web, Android & iOS mobile, Windows, and Mac apps.
Get started with your first Bitcoin purchase by following this step-by-step guide.
Current Developments and Market Sentiments
The crypto market is witnessing one of its worst crypto winters, triggered first by the adverse macroeconomic conditions and Fed’s interest rate hike and then by internal turmoil post the Terra-UST crash. While the market is attempting hard for a possible revival, Bitcoin’s prospects remain tied in a symbiotic relationship, being the currency with the largest market cap and market share.
Bitcoin has been in a bear market phase since its ATH of $69,000 in November last year. However, retail investors have grabbed this bear market opportunity to make Bitcoin a part of their portfolio. To put things in context, investors remain bullish about Bitcoin’s long-term prospects, which is evident in the number of developments that have confirmed the same. According to ARK Investment Management, Bitcoin (BTC) has a ‘neutral to positive’ outlook despite remaining below $20,000 in value.
Another thing to note here is that post-Covid, Bitcoin shows a certain correlation to stocks and traditional assets. Coinbase compared Bitcoin’s risk profile to that of the oil and tech sector. Cesare Francassi, Chief Economist at Coinbase, noted that two-thirds of the recent decline in crypto prices was the result of inflation and macroeconomic factors.
Despite the plunge, institutional investors purchased a record $51.4 million investment products offering exposure to shorting the price of Bitcoin (BTC). In another development, MicroStrategy acquired 480 bitcoins for approximately $10.0 million. The announcement came after the chairman of the United States Securities and Exchange Commission (SEC), Gary Gensler, clarified that bitcoin is a commodity.
Other positive news from around the globe trickle in, putting a stamp on the fact that Bitcoin is here to stay. After El Salvador and Central African Republic, Indira Kempis, a Mexican Congress senator, proposed legislation that would make bitcoin legal tender in the country. Visa, one of the world’s largest payment companies, also announced the launch of a series of Bitcoin and crypto-enabled cards in collaboration with several Latin American fintech startups.
Bitcoin was developed to allow people to send money over the internet. Bitcoin exhibits some characteristics of a fiat currency, but its main source of value stems from its limited supply and increasing demand. No one can forge a Bitcoin as it operates on a blockchain ledger. As a result, unlike fiat currencies, there can be no fake bitcoins. The 51% attack (in which a group of miners theoretically controls more than half of all network power) will be required to falsify Bitcoin records.
The Bitcoin network improves overall security by allowing as many people as possible to participate. The greater the number of nodes connected to Bitcoin’s distributed network, the greater its value.
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