What is Bitcoin

How and when was Bitcoin introduced

Bitcoin are an internet-only currency that works following the rules of a group of individuals that operate under the protocol of Satoshi Nakamoto who, in 2008, came up with the concept of cryptocurrency for the first time. The acceptance of cryptocurrency was fast and bound to financial reasons. Such reasons included the will to create a virtual meta-economy in which banks became obsolete, as cryptocurrencies would allow financial transactions without the need of a middleman.

A definition

For some, it is a virtual currency. For others, it is a math-based currency. Some also say that Bitcoin is not a currency, but a commodity. This is because the total amount of possible Bitcoin will be depleted by 2040. The total capital of Bitcoin today is worth about 13 billion dollars. A peculiarity of Bitcoin is that it is used to carry out specific functions, such as the digital security validation through the blockchain technology.

How does it work?

Let’s start by mentioning the concept of “miner” and “wallet”. A miner is one or more computers connected in a peer-to-peer network to verify mathematical operations. A wallet, instead, is a software that allows to access the Bitcoin network and contains addresses and keys to carry out financial transactions. This literally makes the wallet a personal bank account for cryptocurrency. To use your Bitcoin, you must have a personal key that points to the address used to validate the transaction. These addresses are sequences of numbers and letters and each transaction is archived in a specific register called “blockchain”. Blockchains are used to verify the integrity of the transaction and to make sure that the transaction actually happened.

Factors that determine the price of Bitcoin

The price of Bitcoin depends on offer, demand and also mining. If the latter goes over the price of Bitcoin, or goes lower the price for extraction, miners lose interest in Bitcoin and therefore its hashing power reduces. For this reason, investing in Bitcoin brings a slightly higher risk. Fluctuations are very subtle and are not bound to any national economy or other well-known variables, making it a quite unpredictable currency. For this reason, professional traders are studying and theorizing new strategies on how to profit with Bitcoin. Its fluctuations are subtle, as they can happen in matters of hours, even minutes sometimes. This opens new ways for traders that want to experience the thrill of a new currency, who can benefit from huge profit if they prepare accordingly.