What is a Bitcoin?
In this article, we want to explain bitcoin and its uses.
Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms do, and unlike government-issued currencies, it is operated by a decentralized authority.
Bitcoin is known as a type of cryptocurrency because it uses cryptography to keep it secure. There are no physical bitcoins, only balances kept on a public ledger that everyone has transparent access to (although each record is encrypted).
All Bitcoin transactions are verified by a massive amount of computing power via a process known as “mining.” Bitcoin is not issued or backed by any banks or governments, nor is an individual bitcoins valuable as a commodity. Despite it not being legal tender in most parts of the world, Bitcoin is very popular and has triggered the launch of hundreds of other cryptocurrencies, collectively referred to as altcoins. Bitcoin is commonly abbreviated as BTC when traded.
Bitcoin is digital money that people can exchange peer-to-peer without needing a trusted third party, or “middle man.”
• Bitcoin has a hard cap on its maximum supply at 21 million, making it provably scarce.
• The Bitcoin network runs on computers distributed around the world. The decentralized nature of the network makes it extremely secure and resistant to attacks.
What is the most decentralized currency?
Bitcoin [BTC] is widely regarded as the most decentralized blockchain although there are some arguments against it.
The majority of Bitcoin nodes use bitcoin core as their client to run the blockchain, making it highly centralized when it comes to client usage. Additionally, any updates/changes to the bitcoin network are contributed by a small handful of developers making it a centralized ecosystem.
When it comes to Bitcoin nodes, although they are distributed all across the globe, there is a fairly high concentration of them in the USA and Germany accounting for almost 12% each.
Bitcoin uses a Proof-of-Work (POW) consensus mechanism which is notoriously energy-intensive and requires the use of specialized hardware.
The process of creating a new bitcoin as well as processing transactions is known as mining. Although on paper this is an independent and open-to-all process, meaning anyone can become a miner [as long they have the necessary hardware] and start minting bitcoin, this is not the case in the real world.
Mining is an extremely competitive process and the chances of a small miner getting selected to mine a block are rare forcing these independent miners to hand over their mining power to big mining pools.
This concentrates the mining power to a handful of mining giants who now have tremendous control over the network.
A similar incident happened in 2014 when one mining pool managed to concentrate more than 50% of bitcoin hashing power, making the network susceptible to attacks and manipulation. Thankfully nothing of such sort happened but it did raise alarms in the bitcoin community.
As of last year, no pool has managed to get more than 15% of hashing power.
There is no question about the fact that as more miners join the network the more decentralized it becomes. But the hard entry barrier does bring into question its decentralized nature.
The volume of BTC traded in exchanges stands at $34 Billion, putting it in the 2nd spot in the top cryptocurrencies traded by volume in a 24H period.
While the total BTC addresses currently stand at 918K, with a rather flat curve over the last 3 years indicating not much change.
Use cases of BTC
Bitcoin can be used as
- Digital cash: Its original authors subtitled it a “peer-to-peer electronic cash system.”
- A store of value: Many consider bitcoin to be a better version of gold given that it’s portable, easily storable, and impossible to counterfeit.
- A way to “bank the unbanked”|: Bitcoin lets anyone with access to the internet create a wallet and use the network, including the estimated 1.4 billion globally who lack access to the traditional financial system.
Why is BTC getting attention?
Bitcoin is getting outsized attention due to
- Its size: Bitcoin has the largest market capitalization of any crypto.
- Inflation: With many countries facing rising inflation, many view bitcoin as a hedge, or “safe haven” against the falling value of national currencies.
- Volatility: Bitcoin is synonymous with volatility, reaching an all-time high of around $69K in November of 2021 and trending around $40K since the beginning of 2022, a 35% swing.
Big moments for BTC
- Whitepaper: Satoshi Nakamoto, the pseudonym of still unknown Bitcoin inventor, published the Bitcoin white paper in October 2008.
- Pizza purchase: On May 22nd, 2010, the first retail transaction of two pizzas for 10,000 BTC (over $400 million today) occurred.
- Legal tender: On September 7, 2021, El Salvador became the first country to accept bitcoin as legal tender.
How to Buy Cheap VPN with Bitcoin
You can buy a cheap VPN with Bitcoin in 3 easy steps:
1- First of all, Create a Bitcoin Wallet if you don’t have any.
2- Choose a VPN package from the Buy VPN page. continue to the checkout page, then choose “Bitcoin” and click on the “PAY WITH BITCOIN” button.
3- Wait for a second and you will see the Bitcoin address. So you will send the Bitcoin to the given address to complete the order.
How Safe Is Cryptocurrency Trading?
Cryptocurrencies, such as Bitcoin and Ethereum, boast various features that help them attract serious investors and enthusiasts alike. To begin with, the decentralization of cryptocurrency makes it possible to maintain anonymity during transactions.
Also, it gives consumers more control over how, when, and where they invest their hard-earned money.
The low barriers to entry combined with the high valuation of Bitcoin make cryptocurrency trading a steal deal.
But if you’ve ever trodden the path of Bitcoin trading, you’d know that it isn’t a bed of roses. The anonymous nature of cryptocurrency transactions presents a goldmine of opportunities for scammers and hackers.
Leaked wallet passwords, fake cryptocurrency apps, overhyped cryptocurrencies, and pump and dump schemes – it’s just a glimpse of cryptocurrency scams you’ll likely witness. Hackers can even use cryptojacking to illegally mine Bitcoin on your trading device.