What is Bitcoin

Investing in bitcoin (BTCNZD) seems complicated to most people, but once we break it down into a few steps, it’s pretty simple.

Bitcoin is a digital currency available for electronic use and distribution. Bitcoin is not tied to any central bank or administrator, and is sent over the P2P network independently of intermediaries.

bitcoin
Bitcoin symbol

In this article, we will explain everything about Bitcoin cryptocurrency, including:

  • What it is Bitcoin and many more interesting facts about this popular cryptocurrency.

So let’s dig in!

What is Bitcoin?

Bitcoin is the first decentralized digital currency created in 2009, January.

The creator of the Bitcoin code and the first blockchain database is the mysterious Satoshi Nakamoto, who described this currency in his book “The White Paper” published in 2008.

The Satoshi identity has never been discovered or confirmed, and it is suspected that a much larger organization is behind the creation of Bitcoin.

The biggest advantage of Bitcoin is that it offers low transaction fees than the usual payment methods and that, unlike national currencies, Bitcoin is a totally decentralized body.

bitcoin fees vs other banking method fees
Bitcoin has the lowest cost per transaction

It is not a real currency like NZD, USD or EUR, but a so-called cryptocurrency or virtual currency because it is not available in physical form and uses cryptography as security.

Bitcoin is stored on a public ledger (blockchain) which everyone has easy access to through unique encryptions (keys). Bitcoin is not supported by any bank organization or government, but despite that, it is a very popular payment method in the world.

What’s more, the creation of Bitcoin has started a chain reaction in the launch of hundreds of new cryptocurrencies, which have acquired a common name as altcoins.

Every Bitcoin transaction must be verified by a process known as “mining”, which requires a large amount of computing power.

What is Peer-to-Peer technology (P2P)

Bitcoin is the first cryptocurrency that uses peer-to-peer (P2P) technology to enable instant transactions.

The companies and individuals who possess the governing computing power and partake in the Bitcoin web (miners) are in control of processing the trades on the blockchain.

In return “miners” receive rewards.

Rewards are releases of new Bitcoin and trade fees paid in Bitcoin.

Bitcoin miners are considered as the decentralized authority that enforces the Bitcoin network credibility. New bitcoins are released to “miners” at a fixed but occasionally declining momentum.

Only 21 million bitcoins can be mined in total. In November 2021, there was existed around 18.875 million Bitcoins, which mean there are less than 2.125 million Bitcoins left to be mined.

Bitcoin and other cryptocurrencies operate very differently compared to fiat currency.

In centralized banking procedures, the currency is created at a rate that matches the development of the economy.

A decentralized Bitcoin system has set a release rate according to an algorithm.

Timeline of Bitcoin

bitcoin timeline infographic
You can se the growth of Bitcoin from 2008 to present
  • 18th August, 2008: The domain with the name Bitcoin.org was registered. It is still unknown to public who stands behind it, due to WhoisGuard protection.
  • 31st October, 2008: The first announcement by Satoshi Nakamoto to the Cryptography Mailing List with the introduction sentence: “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party.”
  • 3rd January, 2009: Block 0 is mined; The first Bitcoin block also known as “Genesis Block” with the text message “The Times 03 / Jan / 2009 Chancellor on brink of second bailout for banks,” This message has not yet been deciphered whether it was created due to evidence when the block was made or due to political goals.
  • By 2013: Bitcoin had its ups and downs where we recorded its first peak to $ 29.60 in June 2021, as well as the biggest drop to 2.05 the same year. 2013 witnessed by then the highest value in value when Bitcoin reached $ 230. At the end of 2013, it reached a value of $1237 to fall to $ 687 three days later.
  • Through 2014: and the early Januar 2015, Botcoin value droped to $315,21.
  • From 2016: and further the Bitcoin value start to climb slowly and in 2017 the value climbed to $2000 in May, and then jumped to an unbelievable $19.354.29 on 15th December 2017.
  • In 2020: due to a pandemic, the value of bitcoin starts the year at $ 6,965, but all shutdowns and restrictions have accelerated the growth of bitcoin. On November 23, 2020, the price of bitcoin was $ 19,157, while in December 2020 it reached just under $ 29,000.

Who is Satoshi Nakamoto?

Despite the popularity of Bitcoin, as well as the fact that El Salvador is the first country to accept Bitcoin as a legal tender; there is so little to know about the true creator of Bitcoin cryptocurrency.

Nobody knows who owns a Bitcoin, the only thing that is known is the name and pseudonym “Satoshi Nakamoto”, behind. Rhe real creators of this currency are hiding.

Bitcoin creator infographic
Dorian Nakamoto was one of three people who were supposedly Bitcoin creators.

The original Bitcoin White Paper was released in 2018 by an individual or group of people. The White Paper was a notice of the arrival of the first cryptocurrency and what its purpose was.

Before Bitcoin, similar currencies that did not have the power of bitcoin were also released. The owners of these currencies are well known, they include: Adam Back (Hashcash) Wei Dai (b-money) Nick Szabo (bit-gold) Hal Finney (Reusable Proof of Work)

In the White Paper, you can find many references to B-money and HashCash as many other research fields related to digital currencies before. That is why it is not strange when many speculate that some of these individuals have something with creating Bitcoin.

No wonder why the creator or creators of bitcoin are secret, two main reasons include:

  • Privacy: Considering that Bitcoin is so popular, if Satoshi Nakamoto revealed his identity he would become a public figure with a lot of media on his back as well as various world governments.
  • Competition with existing fiat currencies: If Bitcoin received mass adoption, there would be a great chance that this cryptocurrency would surpass the existing sovereign fiat currencies. This would not have pleased the state government, and legal action had been taken against the person who created Bitcoin.

Frequently asked questions

Is Bitcoin a scam?

Bitcoin is not a scam. This virtual and untouchable currency has been in circulation for more than ten years, and its system has proven to be stable.

The great advantage of bitcoin is that its open source code can be downloaded and analyzed by anyone for potential errors or evidence of malicious intent.

Of course, the risk that arises when trading bitcoins has nothing to do with the open source of bitcoin system, but it is the influence of third parties, most often hackers and fraudsters who want to fraud you and steal your bitcoins.

Why Is Bitcoin valuable?

In the last decade the value of bitcoins has exponentially risen from NZD1,5 to around NZD 100,000 during 2021, and to more than NZD 58,000 in beginning of the 2022.

Bitcoin value deriving from sources such are:

  • market demand
  • marginal production cost
  • and relative scarcity

So even if we talk about virtual currency that is intangible its total market cap for November 2021 was around $1.11 trillion of US dollars. Additionally with thus sryptocurrency customers can buy online, trade, and even deposit at bitcoin casino sites.