About Bitcoin (BTC)
Bitcoin (BTC) is the first cryptocurrency built on blockchain technology, also known as a decentralized digital currency that is based on cryptography. Unlike government-issued or fiat currencies such as US Dollars or Euro which are controlled by central banks, Bitcoin can operate without the need of a central authority like a central bank or a company. The decentralized nature allows it to operate on a peer-to-peer network whereby users are able to send funds to each other without going through intermediaries.
Who created Bitcoin?
The creator is an unknown individual or group that goes by the name Satoshi Nakamoto with the idea of an electronic peer-to-peer cash system as it is written in a whitepaper. Until today, the true identity of Satoshi Nakamoto has not been verified though there has been speculation and rumor as to who Satoshi might be. What we do know is that officially, the first genesis block of BTC was mined on 9th January 2009, defining the start of cryptocurrencies.
How does Bitcoin work?
While the general public perceives Bitcoin as a physical looking coin, it is actually far from that. Under the hood, it is a distributed accounting ledger that is stored as a chain of blocks - hence the name blockchain.
Let's compare how Bitcoin is different from a commercial bank, which operates as a centralized system. Given a situation where Alice wants to transact with Bob, the bank is the only entity that holds the ledger that describes how much balance Alice and Bob has. As the bank maintains the ledger, they will do the verification as to whether Alice has enough funds to send to Bob. Finally when the transaction successfully takes place, the Bank will deduct Alice’s account and credit Bob’s account with the latest amount.
Bitcoin conversely works in a decentralized manner. Since there is no central figure like a bank to verify the transactions and maintain the ledger, a copy of the ledger is distributed across Bitcoin nodes. A node is a piece of software that anybody can download and run to participate in the network. With that, everybody has a copy of how much balance Alice and Bob has, and there will be no dispute of fund balance.
Now, if Alice were to transact with Bob using bitcoin. Alice will have to broadcast her transaction to the network that she intends to send $1 to Bob in equivalent amount of bitcoin. So how does the system determine if Alice has enough bitcoin to execute the transaction? This is where mining takes place.
Bitcoin Mining
A Bitcoin miner will use his or her computer rigs to validate Alice’s transaction to be added into the ledger. In order to stop a miner from adding any arbitrary transactions, they will need to solve a complex puzzle. Only if the miner is able to solve the puzzle (called the Proof of Work), which happens at random, then he or she is able to add the transactions into the ledger and the record is final.
Since running computer rigs cost money due to capital expenditure, which includes the cost of the rigs and the cost of electricity, miners are rewarded with new supply of bitcoins. This is the monetary system behind Bitcoin, where the fees for validating transactions on the network is paid by the person who wishes to transact (in this case it is Alice).
This makes the Bitcoin ledger resilient against fraud in a trustless manner. While it is resilient, there are still some risks associated with the system such as the 51% attack where by miners control more than 51% of the total computation power and also there can be security risks outside of the control of the Bitcoin protocol.
To learn more about Bitcoin (BTC), you may:
How to keep your Bitcoin safe?
When transacting coins, you would typically be doing it on your personal computer. Since your personal computer is connected to the internet, it has the potential to be infected by malware or spywares which could compromise your funds.
Hardware wallets such as Trezor and Ledger are strongly encouraged in mitigating that risk. These are external devices that look like USB sticks. A hardware wallet secures your private key that holds your Bitcoin into an external device outside of your personal computer. When you intend to transact, you would connect the hardware wallet into your personal computer, and all the key signing in order to transact would be done in the hardware itself outside of your computer.
However, if you physically lose your hardware wallet without a key phrase backup, there is no other way of recovering your funds ever. As such when setting up your hardware wallet, always remember to keep a copy of the key phrase and put it somewhere safe from fire or flood.
Bitcoin Halving
Bitcoin Halving or sometimes also known as the Halvening, refers to the reduction of block reward to miners by half. This is part of its built-in monetary policy, in which after every approximately 4 years, the mining reward will be halved towards the limited capped supply of 21 million Bitcoin. Once 21 million of Bitcoin have been minted, there will no longer be new supply of it rewarded to miners, and miners are expected to earn revenue by way of transaction fees. In order to follow the real time of when the halving will take place, you can bookmark the CoinGecko's bitcoin halving page.
This is seen as a significant event for couple of reasons. Firstly, traders may speculate on the possible scarcity of Bitcoin making way to high volatility. Secondly, as miners' rewards will be reduced, we may see some miners exiting the market as they could not sustain the lower profitability. This in turn may cause the hashing rate to reduce and mining pools may consolidate. Due to this, the bitcoin network may be a little unstable during the halving period.
Bitcoin FAQs
Where can you buy Bitcoin?
BTC tokens can be traded on centralized crypto exchanges. The most popular exchange to buy and trade Bitcoin is Binance, where the most active trading pair WBTC/BTC has a trading volume of $30,775,831 in the last 24 hours. Other popular options include Gate.io and Kraken.
What is the daily trading volume of Bitcoin (BTC)?
The trading volume of Bitcoin (BTC) is $45,483,892,139 in the last 24 hours, representing a 62.20% increase from one day ago and signalling a recent rise in market activity.
What is the all-time high for Bitcoin (BTC)?
The highest price paid for Bitcoin (BTC) is $73,737.94, which was recorded on Mar 14, 2024 (6 months). Comparatively, the current price is 19.38% lower than the all-time high price.
What is the all-time low for Bitcoin (BTC)?
The lowest price paid for Bitcoin (BTC) is $67.81, which was recorded on Jul 06, 2013 (about 11 years). Comparatively, the current price is 87,564.33% higher than the all-time low price.
What is the market cap of Bitcoin (BTC)?
Market capitalization of Bitcoin (BTC) is $1,176,621,686,598 and is ranked #1 on CoinGecko today. Market cap is measured by multiplying token price with the circulating supply of BTC tokens (20 Million tokens are tradable on the market today).
What is the fully diluted valuation of Bitcoin (BTC)?
The fully diluted valuation (FDV) of Bitcoin (BTC) is $1,251,334,014,000. This is a statistical representation of the maximum market cap, assuming the maximum number of 21 Million BTC tokens are in circulation today. Depending on how the emission schedule of BTC tokens are designed, it might take multiple years before FDV is realized.
How does the price performance of Bitcoin compare against its peers?
With a price increase of 0.60% in the last 7 days, Bitcoin (BTC) is outperforming the global cryptocurrency market which is down -2.60%.
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