What is a Bitcoin?
The domain name bitcoin.org was registered on August 18, 2008. Back then and now, the identity of the individual who certified this domain has been hidden.
October 31, 2008. Somebody, using the pseudonym Satoshi Nakamoto, publicized at metzdowd.com on the Cryptography distribution list: “I’m working on a novel electronic currency system, which is built on the peer-to-peer network principle, without trusted third parties.
January 3, 2009: the primary BTC block (block 0) was registered. This block is also recognized as the “genesis block” and contains the words: “The times 03/Jan/2009 Chancellor on brink of the second Bailout for banks”.
January 8, 2009. The primary form of the BTC software was released.
January 9, 2009: block #1 was extracted, and Bitcoin-mining started gaining momentum.
What is a Bitcoin?
Bitcoin is a virtual currency invented in 2009. It follows the concepts in the article set forth by the secretive creator of Bitcoin Satoshi Nakamoto. To this day, it is not known whether Satoshi exists, or perhaps his name - the alias name behind which another person or a group of individuals hides. Bitcoin, unlike conventional online-payment mechanisms, provides a way to lessen transaction fees significantly and is managed by a decentralized system. Bitcoin is built on what we will talk about later; the Blockchains we call “Blockchains.” Today’s market capitalization of Bitcoin (or, more rarely, XBT) exceeds $7 billion.
Bitcoin is a digital currency or, as is commonly known as cryptocurrencies, it does not exist in the form of banknotes or coins, only accounts, and transaction lists held in the public domain for all participants in a decentralized peer network (P2P) that provides verification of all transactions and an operational immense computational power. Bitcoin is currently not issued or maintained by banks or any government, but, while BTC is not a legitimate means of payment, it can be easily purchased and exchanged for dollars, euros, rubles, using exchanges and exchange services. In view of the increased popularity of cryptocurrencies, the launch of other digital currencies, which were in their sum total called Altcoins or “forks”, was started. A crowded cryptocurrency market contains both viable alternatives to Bitcoin and “bubbles” that are ending in the lack of the necessary capitalization.
All accounts and transactions are stored by means of private and public “keys”, which in turn are lengthy combinations of letters and figures created by the numerical encryption algorithm. The public key (similar to the number of the bank account) performs functions as the public address for making payments and is called the “wallet number”. The private key (analogous to the PIN code of the bankcard) is designed for encryption of transactions and can be used when transferring tokens from one wallet to another.
How Bitcoin works
BTC is one of the first virtual currencies to utilize peer-to-peer technology to speed up instant payments. Rewards motivate autonomous users and companies which own computing power and take part in the BTC network, also well-known as “miners”, are driven to reward, so interest in “mining” (producing new Bitcoin coins) is steadily rising worldwide. The miners can be considered a decentralized body that provides credibility to the BTC network since it is their participation that provides all the transactions to be made and the storage of information on the state of accounts. Miners produce the novel token with a fixed, but intermittently declining speed; hence, the total amount of Bitcoins is slowly but surely approaching its mathematically defined maximum of 21 million. One BTC coin contains one hundred million Satoshi, i.e. one Satoshi is one hundred million Bitcoin.
Bitcoin extraction is the process by which tokens are issued. Mining involves solving a complex computational problem to detect a new block, which is supplemented to the blockchain and receives a reward in the form of several bitcoins. In 2009, the award for the found block was 50 BTC. Every 4 years, the return for the block decreases and this is another factor that affects the growth of the cost of one token. The more Bitcoin tokens are created, the more the complexity of the production process (the quantity of computing power involved) increases. The complexity of extraction began at 1.0 in 2009; in the last part of the year, the complexity increased to only 1.18. By April 2017, the complexity of mining reached more than 4.24 billion. In 2009, a conventional desktop was enough to extract bitcoin. Now, the extraction is carried out by the so-called “farms” that are united into a single network of tens, hundreds, and even hundreds of thousands of processors, such as specialized integrated circuits (ASICs) or graphics processors (GPU).
By August 2017, one Bitcoin is worth roughly $4,500 – a significant leap since the end of 2016, when it was worth approximately $770.
The price of Bitcoins also depends heavily on the size of the peer network, because the bigger the network, the more complex; hence, the more expensive it is to create new tokens. As a result, Bitcoin’s price must rise as production costs rise. Over the last twelve months, the total capacity of the BTC network has increased by more than three times.
Bitcoin price prediction
No analyst can provide an unambiguous forecast of the price of Bitcoin at the moment. The factors influencing its cost are a great many, from the number of miners involved in the attitude of the government of a country. Predictions for 2020 range from fantastic, millions of dollars, to more realistic - 25,000 - 100,000 dollars per coin. However, all experts are unanimous in the fact that Bitcoin is gradually gaining more trust and will remain with us for a long time, if not forever. We are entering a new era of digital currency, which requires no intermediaries to be accessible to everyone, open and reliable, as are past generations of payment systems.