By Tofiq Aliyev
On Nov 03, 2020
Bitcoin is the first cryptocurrency created. All Bitcoin discussions began with the paper in 2008. The idea of this cryptocurrency came from Satoshi Nakamoto – the supposed creator of this digital currency. There are some debates around Satoshi because no one knows the true story of this man. The article was “Bitcoin: A Peer-to-Peer Electronic Cash System.” The unit of the Bitcoin is called bitcoin. To honor his name, the smallest unit of bitcoins (0.00000001) is named a satoshi.
As its creator, bitcoin also can be mysterious at first glance. The abstract process of the Bitcoin system can be seen as dangerous for some people because they cannot grasp the understanding of the cryptocurrency. That’s why not all people are interested in it, and misunderstanding holds one of the innovative tools in the world back from wildly available in public. We will examine the Bitcoin in detail in the next paragraphs. Also, if you want to get information about check our blockchain blog.
Bitcoin is a peer-to-peer transaction of money. There is not a trusted third party to do the deal, and parties have to trust each other to do the transaction. Each individual owns the account, and the security of this account is so highly protected. The security of the system is the primary focus of the Bitcoin system. In the traditional banking system, banks take a record of every transaction you do, and those transactions are not publicly open to the crowd. So, this third party had to be trusted by both of the involvers. Similarly, Bitcoin writes down the record of every transaction in its digital books. Those transactions are publicly available, and you can readily figure out which transactions occur in which amount. However, you cannot find out who owns those accounts. This is called a pseudo-anonymous, everything is transparent in look, but still, you cannot determine the owners of those accounts. Transactions are also irreversible, unlike PayPal or other digital payment systems. If you send bitcoin more than it should be by mistake, then that person should refund to your address. That’s why you should trust the person you work with to save yourself from additional headaches.
Since the bank managed all of these transactions, then the bank is a centralized body to offer you banking services. However, Bitcoin has a network of computers that store your transaction history on all connected computers. It indicates if you have a computer, then you can save the ledgers. It is better for a safety standpoint too. If hackers want to hack the bank, they know where to begin, and they do it once. Bitcoin, on the other hand, consists of many nodes, and if you want to hack your accounts, they have to hack all those computers, and this is impossible. Nodes are the computers connected to the network to share information and obey rules. These nodes are essential to run the cryptocurrency network.
Bitcoin does not have any entities that can support the currency in bad times. The Federal Reserve regulates the USD. They decide what amount of money to inject and eject out of the economy. So, this process circumvents the sudden fluctuations in the currency. It is a fact that the limit for the Bitcoin is 21 million, and it is impossible to mine more bitcoins. Since it is not possible to mine more than 21 million, then it is not possible to inject and eject whenever you want.
The initial paper introduced by Satoshi did not attract attention at first. The major attraction to the Bitcoin was in 2013 because transaction volume and market capitalization became eyeballing. Bitcoin hit its first high market value in late 2013. In December 2013, the market price was around 1,130$, and it was the highest since it has been around. In that period, market capitalization was 8.92 billion USD. However, it was not his peak. In the last quarter of 2017, the price of bitcoin increased to appx. 19,100$, and market capitalization surged to 238 billion USD. It was highly unprecedented that bitcoin could get so much popularity. Although to these accomplishments of bitcoin, nevertheless, it could not stay stable at its peak. The highest price for Bitcoin since 2017 is around 12800$. According to those statistics, we can conclude that bitcoin is highly profitable and highly risky.
I wanted to end this article with his own words of Satoshi Nakamoto:
“In a few decades when the reward gets too small, the transaction fee will become the main compensation for nodes. I’m sure that in 20 years there will either be very large transaction volume or no volume.”
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