What Is Bitcoin (BTC)? Price, History & Where To Buy

Bitcoin was created by the infamous ‘Satoshi Nakamoto‘ a pseudonymous genius – whose true identity is still unknown to this day. Bitcoin is a decentralized digital currency that was created in 2009, based on the ideas presented in a white paper created by Satoshi Nakamoto.

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Bitcoin was the first cryptocurrency in the world and it’s currently the most valuable digital currency. It’s estimated that 46 million people in the USA own a share of bitcoin.

How Bitcoin Works

You’ve probably heard many people discussing Bitcoin. Maybe friends, family, or even people at your local cafe. It’s rapidly grown in popularity since its inception in 2009.

Still, you’re probably wondering how it works? In simple terms though, nothing too technical.

Firstly, you can buy bitcoin, sell bitcoin and transfer bitcoin. These bitcoin transactions are processed on the bitcoin blockchain – which is run by a series of computers. Think of it like an app or computer program that processes this specific information, every time Bitcoin (BTC) is bought, sold, or transferred – the blockchain facilitates it.

The blockchain is a public ledger that records bitcoin transactions. Every transaction is authenticated by encrypted digital signatures that allow individuals to send bitcoin from their bitcoin addresses (almost like a bank account number – just with technical jargon).

Your share of bitcoin (don’t worry – it doesn’t have to be 1 BTC, it can be divided into millions of pieces) is stored in your wallet, called a bitcoin wallet.

What Is Bitcoin Used For?

Okay, so now you understand a little bit more about how it works. Not too technical but you’ve got the in a nutshell explanation.

Next, let’s move on to what bitcoin is used for. Bitcoin is a digital currency, just like any other currency – just digital. Some people may not see how this is possible, but most people use online banking already, right? It’s a very similar principle.

There’s no physical cash involved but there is a value attached to it. A monetary value. Because there’s a value attached, it leads directly to the answer – it’s used to make payments.

Sounds pretty basic, right? Well, yes and no. You might be thinking, ‘why don’t people just use cash?‘ Bitcoin was created to offer lower transaction fees than traditional systems. It also operates independently from government-issued currencies – it’s a decentralized currency.

The US treasury can print as many dollars as they wish, whereas there will never be more than 21 million Bitcoins. That’s one reason owning Bitcoin has been deemed so valuable, that and the growing number of people using it.

Many businesses accept bitcoin such as Tesla, Starbucks, PayPal, and Microsoft. You can pay for goods and services using your BTC.

Most recently, multiple countries have recognized BTC as legal tender – including El Salvador and Ukraine.

Another use of bitcoin is as a store of value – as mentioned above the total fixed supply of BTC is 21 million, which makes it scarce. Much like gold, people buy bitcoin in the hopes of it increasing in value over time.

Where & How To Buy Bitcoin?

Now that you understand a bit more about bitcoin payments, you’re probably wondering where you can acquire Bitcoin.

There are several centralized exchanges where you can use your dollars to purchase bitcoin. These exchanges are to bitcoin and other cryptocurrencies, which banks are to traditional currencies. They are simply a home and marketplace for the assets. These crypto exchanges are where you can buy, sell and store bitcoin and other cryptocurrencies.

Five of the most popular crypto exchanges are:

1. Binance (US Customers use Binance.US)
2. Gate.io
3. Coinbase
4. KuCoin
5. Bitfinex

All of the above exchanges allow users to buy, sell, transfer and store bitcoin in a bitcoin wallet, on the exchange. You can simply use your debit or credit card to purchase bitcoin – the bitcoin will then reflect in your bitcoin wallet.

How long has Bitcoin existed?

Bitcoin and the bitcoin network were first created in 2009 by Satoshi Nakamoto.

The first bitcoin block was mined on the 3rd of January, 2009. It was the genesis block, and contained an encrypted message that read ‘Chancellor on Brink of Second Bailout for Banks.‘ The message referenced the financial collapse of 2008, when trillions of dollars were given to commercial banks as a bailout by the central banks and government.

Bitcoin reached $1 for the first time in 2011 and quickly rose to $30 on the Mt. Gox exchange in the same year, before falling to $5 by year’s end.

Since going live, bitcoin has never ceased to exist.

What’s controversial about Bitcoin?

There are a few controversies surrounding bitcoin. These controversies have been a major topic of discussion over the years. Let’s take a look at 5 of the top controversies surrounding bitcoin.

1. The Founder Of Bitcoin Is Unknown: No one knows the real identity of Satoshi Nakamoto – the person or people who created bitcoin. Some people find this to be beneficial, adding to the decentralized nature of Bitcoin while others see this as risky.
2. Bitcoins Aren’t Tangible: If we consider our traditional currencies we are accustomed to using physical cash to make purchases – the cash is tangible. However, bitcoin is a digital currency and therefore there are no physical bitcoins. Should there ever be a problem, bitcoin can’t be recovered – unlike tangible assets.
3. What Makes Bitcoin Valuable? Many people argue that the price of bitcoin is grossly over-valued. Others argue that the metrics used to determine value need to be reconsidered. After reaching an all-time high of $68,990.90 in 2021, bitcoin gained great both popularity and criticism. Two value proponents of bitcoin are scarcity and the number of bitcoin network users.
4. Bitcoin Exchanges Have Suffered Major Hacks: Several popular bitcoin and crypto exchanges have been the victim of hacks. A notable mention is the 2011 Mt. Gox hack where more than 850,000 bitcoins were stolen (more than $35Bn at bitcoin’s price now). Many individuals choose to store their Bitcoin off of exchanges in cold wallets such as Ledgers.
5. What If Governments Ban Bitcoin? Understandably, people are worried that governments might ban bitcoin – bitcoin mining has already been banned in some countries. The fundamental principle to remember is that digital assets and digital currencies are still very confusing to most people, and the legal framework surrounding digital currencies is underdeveloped.The bitcoin software and bitcoin system haven’t ceased to exist since their inception in 2009. Governments can however make it illegal to perform a bitcoin transaction, own, trade, or transfer bitcoin. Arguably, this could be seen as undemocratic.

How many Bitcoins are there?

There are currently more than 18,000,000 bitcoins in circulation. There is a max supply of 21,000,000 bitcoins.

Bitcoins are mined every day and block rewards are distributed by the bitcoin protocol. The total supply of bitcoins will never surpass 21,000,000.

How does Bitcoin mining work?

You’ve likely heard of people that are ‘bitcoin miners’.

In simple terms, to ‘mine’ a bitcoin people use computing power, advanced software, and hardware. The most common algorithm used to mine is an SHA-256 cryptographic hash algorithm.

The difficulty of mining bitcoin is always increasing, and the block rewards decrease by 50% every 4 years (this is called a halving). Bitcoin mining maintains the integrity of the ledger and rewards miners for doing this.

The price of mining is measured in how much electricity is used and the bitcoin price is normally relative to the price it costs to mine.

What is the market cap of Bitcoin?

The market cap of bitcoin is:

Market cap = total amount of coins that have been mined (coins in circulation) x market value of one BTC (eg $42,000)

Eg. ₿18,000,000 x $42,000 = $756,000,000,000Bn

The market cap fluctuates according to circulating supply and market price.

Does Bitcoin Have Competitors?

Essentially, bitcoin is the pioneer of digital currencies. It is the first and most valuable of all cryptocurrencies.

There are more than 10,000 cryptocurrencies available on the market, which could be seen as ‘competitors’ of bitcoin.

Multiple cryptocurrencies offer low transaction fees and have similarities to bitcoin. However, because bitcoin was the first cryptocurrency it has remained a trusted and popular choice by most people.

Technically speaking, any other cryptocurrency would be a plausible competitor to bitcoin because an individual opted to invest in x project as opposed to investing in bitcoin.

What are the future plans for Bitcoin?

When considering the plans for bitcoin there are a couple of things to look at. Firstly, to determine what the future of bitcoin might look like – you need to consider the present and the past.

From its inception till now, bitcoin has grown from $0.08 to an all-time high of nearly $69,000 – in 14 years.

There are currently more than 200 million bitcoin wallets, more than three times the amount when compared to 2018.

The statistics seem to suggest that bitcoin adoption and usage, along with countries recognizing it as legal tender, paint a promising picture for bitcoin’s future.

A failing traditional finance system, crippled by inflation and heightened interest rates lends itself toward reformation in the form of a new monetary system – specifically a decentralized currency with decentralized authority.

It is currently the best-performing asset of the 21st century and although there is no way of determining its success in the future – it has only grown in the number of users, popularity, and source of value.

Pros and Cons of Bitcoin: Bitcoin Transactions, Bitcoin Wallet, Bitcoin Network

Now that you understand various aspects of bitcoin and cryptocurrencies, it’s necessary to provide a list of the pros and cons of bitcoin.

Pros:

• Bitcoin has a fixed supply – The number of total bitcoins will never surpass 21,000,000. This is a key point of interest among investors because it proves that bitcoin has value through scarcity.
• Governments Don’t Control Bitcoin – Bitcoin was created by Satoshi Nakamoto, a pseudonymous person or group of people. That means that while governments can continue to print money, which they regulate – the exact opposite is the case with bitcoin. It’s not controlled by any government or person, it’s a decentralized currency with decentralized authority. Although governments can implement laws that regulate the use of bitcoin and tax it accordingly.
• It’s Anonymous – Any person in the world can purchase bitcoin and store it in their digital wallet. You can send and receive bitcoin anonymously. Some exchanges require a KYC (Know Your Customer) which is proof of identification but many exchanges don’t require this.
• Potentially High Financial Return – Bitcoin is the best performing asset of the decade and has created many millionaires. The sheer volatility of bitcoin can make it a very profitable investment.

Cons:

• Bitcoin Transactions Aren’t Always Cheap – Because the asset has grown enormously in value, the price of transactions has increased tremendously. There are protocols in place that aim to solve the issue of high transaction fees and scalability – the lightning network is currently the most promising solution.
• Transactions Are Irreversible – When you send bitcoin, the transaction can’t be reversed. The nature of decentralization means that no centralized intermediary can resolve a transaction sent to the wrong address or an address that doesn’t exist. Once you transfer bitcoin it can’t be reversed – it’s your bitcoin, in your wallet, solely in your control.
• It Has Limited Use – At the moment you can only use bitcoin to pay for certain things. Not every establishment accepts bitcoin as a form of payment, which limits its use. Although, as of late many companies have started accepting bitcoin.

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