What Is Bitcoin and How It Operates?

The price of Bitcoin has broken all previous records by March 2021.

11:44 23 April 2021

In comparison, the price was initially around $11 after the first halving in 2021, but after the latest halving event, it soared to over $60,000 in 2020. So, it's safe to say that the talk of the currency has gone global, with an increasing number of supporters. In case you're totally new to the crypto world, and you want to learn what exactly Bitcoin is and how it works, here we cover everything you need to know about this digital phenomenon.

 

Background Information

 

The decentralized digital currency was created by Satoshi Nakamoto – a mysterious figure that used the alias to conceal his identity. Crypto supporters and developers, some of them are famous today, like Hal Finney and Lesley Haines, worked with Nakamoto in order to create a secure version of the blockchain network, which is the underlying technology for Bitcoin.

 

However, he is responsible for the entire idea that was explained in more detail in the now very famous white paper 'Bitcoin: A Peer-to-Peer Electronic Cash System.' The entire purpose of creating Bitcoin and the blockchain network was to create a payment system that is completely independent of any authorities like the government, commercial banks, and it's able to function without their supervision and approval.

 

Blockchain and Bitcoin

 

Today Bitcoin is used to securely, anonymously transfer money over the Internet, while the blockchain network, even though it was developed for BTC, it's used across many other sectors.

 

The blockchain network is developed as a payment system that is peer-to-peer-based, and the miners of the network work on computer systems that are all following the same set of rules. The miners are the users responsible for the verification of the BTC transactions are basically in charge of securing the network and making sure it operates smoothly. 

 

BTC Investment

 

The main advantage of buying BTC is that its value is appreciating over time, and there are tons of online trading platforms where you can get BTC. For example, Bitcoin System is a well-established automated trading site where users that are complete beginners can engage in Bitcoin trading, as the AI-powered system executes trades automatically. If you want to learn more, click here. Moreover, the platform is powered by blockchain technology, which makes it a secure choice for trading. Otherwise, you can earn up to 60% ROI on a daily basis here. 

 

Supply and Demand

 

As we mentioned earlier, because this is a totally decentralized system, the supply and demand of BCT are the main forces that form the price. The supply of 21 million Bitcoin tokens was created by Satoshi Nakamoto, and it is one of the reasons why in the long run, Bitcoin experienced a huge increase in its price consistently over the years. Furthermore, Bitcoin halving is a crucial event to the available supply of BTC because it halves the block reward of the miners and minimizes the flow of BTC in circulation.

 

The digital scarcity of Bitcoin coupled with the fact that no one can randomly create new Bitcoin on the market or tamper with the rate at which new Bitcoins are being created makes the cryptocurrency a deflationary cryptocurrency.

 

When we talk about the demand of the BTC, we look at the investments in BTC, the number of users who are selling or buying NTC, as well as companies that are supporting the cryptocurrency by accepting BTC payments. In other words, the adoption of cryptocurrencies, as well as Bitcoin, drives the demand for BTC.

 

It is worth mentioning that over the years, the number of companies that accept BTC kept growing, and at one point, there were about 15,000 companies all over the world that accept Bitcoin. In addition, brands like OkCupid, Tesla, Home Depot, and other companies publicly announced that they support Bitcoin.

 

In conclusion, Bitcoin is a revolutionary virtual currency that was created to provide a secure alternative to traditional currencies, and it has successfully fulfilled this purpose, but it also became a well-known, safe-haven asset due to its incredible bull market phase.