Introduction To The Concept Of Cryptocurrency and Bitcoin

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Introduction To The Concept Of Cryptocurrency and Bitcoin

A cryptocurrency is a digital asset that does not exist physically like fiat currency i.e. paper money. Another unique feature of cryptocurrency is that it is decentralized in nature. This means that it is not distributed by a single body like the way naira or dollar is issued by the Central bank. 

One of the advantages of the decentralized nature of cryptocurrencies is that funds are solely at the control of the user. Unlike traditional money in the bank that can be frozen by governments, cryptocurrencies are beyond the reach of regulatory authorities. 

There are different cryptocurrencies including popular ones like Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE) and many more. Now that we have the basic concept of cryptocurrencies, it is time to explore the most popular and valuable cryptocurrency ‘’ Bitcoin’’. 

What is Bitcoin?

Bitcoin was invented in 2008 by an unknown person or group of people who used the name Satoshi Nakamoto. Nakamoto launched the currency in 2009 when its execution was disclosed as open-source software. 

Bitcoin is the oldest and widely accepted cryptocurrency that has been functioning for more than a decade. Like most cryptocurrencies, Bitcoin is decentralized with no central bank or single entity controlling its distribution. Instead it is built on a peer-to-peer network that does not use a mediator or third party for transactions to be approved. 

This process is possible due to cryptography which is a series of mathematical algorithm that ensures that transactions are verified and secured via network nodes. These transactions are then recorded using a public distributed ledger called blockchain. This blockchain ensures that transactions are only sent once and prevents the manipulation of information on the Bitcoin network. 

The security of the Bitcoin network is guaranteed by a set of people called miners. These are persons or organizations who contribute their computer power to solve complex mathematical algorithms on the bitcoin blockchain. The miners are rewarded with newly minted bitcoins when they resolve these algorithms and they also confirm transactions on the Bitcoin network. 

In simple terms bitcoin can be described as a digital money that is controlled by no single individual and can be accessed by anybody

How Was Bitcoin Created

One of the fascinating questions many ask about bitcoin is how it was created and whether it is a scam or ponzi scheme. Bitcoin domain name was first registered on the 18th of August 2008.  This began the journey of the cryptocurrency with Satoshi Nakamoto writing the bitcoin whitepaper subsequently. The Whitepaper titled Bitcoin: A Peer-to-Peer Electronic Cash System was sent to a cryptography mailing list on the 31st of October 2008. 

The whitepaper is perhaps the most famous document in the crypto space and is regarded as the major turning point in the development of cryptocurrency. After the whitepaper was released Nakamoto went to work alongside other developers and developed the bitcoin software. This was then implemented as an open source code and released in January 2009. 

The first person to receive bitcoin was cypherpunk Hal Finney. Finney downloaded the bitcoin software on the day it was released and received 10 bitcoins from Nakamoto on January 12, 2009. 

Nakamoto developed bitcoin on decentralized ledger technology (blockchain) and it subsequently gained popularity in the coming years. Bitcoin is regarded as the king of cryptocurrencies  due to its position as the most known and has the highest share of the crypto market. 

However bitcoin is also infamous for its price fluctuation due to its volatile nature. It is noted for wild price swings and is therefore popular among traders and spectators who benefit from predicting the price swings. There are hopes within the crypto community that the price fluctuation could end once Bitcoin is widely accepted around the world with enough liquidity. 

Bitcoin also has a fixed number of tokens that will be generated on its network. A total of 21 million bitcoins will be mined and it has been estimated that the last bitcoin will likely be mined by the year 2140. Presently about 18 million bitcoins have been mined and are currently in circulation. 

The price of bitcoin is determined by the laws of supply and demand. The higher the demand the higher the price of bitcoin rises. At the time of writing, the price of 1 bitcoin is $36,0000 and the cryptocurrency continues to rise in recent weeks.