Bitcoin, this cryptocurrency born in 2009
The first cryptocurrency project appeared in 1989, but the first successful attempt - and what a success! - is bitcoin, created in 2009 by Satoshi Nakamoto. Behind this pseudonym hide one or more developers whose identity and even the alleged Japanese nationality remain uncertain.
The concept of cryptocurrency
Bitcoin is therefore a cryptocurrency, the first of the family. So what is a cryptocurrency?
Like any currency, it is an instrument that serves to represent and exchange value. But, unlike traditional currencies, it is not issued by a central bank but by a peer-to-peer computer system. Also, cryptocurrencies only exist in digital form.
All transactions are recorded anonymously (or rather pseudonymously) and can be consulted in a secure, incorruptible register: the blockchain. It is also because this large register is fully encrypted that we speak of cryptocurrency.
In summary, bitcoin and all other cryptocurrencies are alternatives to both currencies and traditional means of payment.
The characteristics of bitcoin
Bitcoin is not only the oldest of the cryptocurrencies: it is also the most popular. Indeed, this cryptocurrency has made a place for itself in the global financial system by demonstrating its reliability both as a payment method and as an investment medium. It is no coincidence that bitcoin is the most important cryptocurrency today, with a total capitalization of around 850 billion euros.
Bitcoin cryptocurrency of course has its own system, named Bitcoin (with a capital letter), with its own software, its own protocol for creating money, its own blockchain, etc. This whole system is public and transparent, anyone can study it… on the condition that they are good at computers, however. In any case, this results in collective and automatic management of the system.
Also, we already know in advance the rate at which bitcoins will be created. There will be fewer and fewer new bitcoin issuance each year, and this creative process will stop when 21 million units have been issued. Some believe that we will get there around the year 2140 ...
Finally, did you know that when you split bitcoin, you don't get pennies like most currencies? Bitcoin, BTC for short or XBT on the markets, is divided into 100 million satoshis: 1 satoshi = 0.00000001 bitcoin.
What is bitcoin used for?
For a little over a year after its inception, bitcoin was used very little and its value was almost zero. In the spring of 2010, bitcoin begins to trade at the price of $ 0.03. 3 months later, its dollar rate is multiplied by 30.
For 4 years, bitcoin attracts attention because it is mainly used for transactions related to criminal activity. But after the FBI's closure of the Silk Road site, a veritable darknet black market, illegal activities only represent a small part of bitcoin trading.
Bitcoin is therefore used more and more as a means of payment, mainly in online commerce. The transaction fees are the responsibility of whoever sends the amount in bitcoin and fluctuate depending on the degree of saturation of the network. These are generally low around a few tens of cents.
The other use of bitcoin is a financial investment. It is often a question of speculating, of playing with the high volatility of its price. But some are also starting to see it as a safe haven just like gold, especially in times of crisis like the one we are currently experiencing.
Be aware of the risks associated with bitcoin
You have already understood that bitcoin has many advantages: transactions between anyone in the world, without an intermediary, without limit of the amount, and with low fees, anonymity, etc. But you must also know the disadvantages to better protect yourself from the risks.
In addition to the fact that bitcoin experiences periods of very high volatility, with significant price variations in a few hours sometimes, the absence of an intermediary means that you can only sell your bitcoins if someone wants to acquire them. True, bitcoin has become very popular, but the likelihood of a collapse will never be zero. What would happen if one day no one wanted to buy it?
The operation of Bitcoin is certainly transparent, but it takes fairly advanced computer knowledge to explore it and know all the ins and outs. Also, it is better to be aware of everything related to computer security. Indeed, if you get hacked or if you lose the private key that identifies your bitcoin account, you lose everything! It is therefore advisable to make copies on several secure media, but not too much either so as not to increase the risk that someone malicious will get their hands on it.
And then, like other cryptocurrencies, bitcoin does not yet benefit from a well-defined legal framework. Any legal action is therefore delicate and the outcome very unpredictable.
There you go, you now know the basics of bitcoin. In future articles on Raza Educate, you will be able to read the practical and detailed information, for example, to know how to buy bitcoins, to secure them, or to mine bitcoins and other cryptocurrencies. So see you soon!
0 Comments