Table of Contents
Introduction To Bitcoin
Bitcoin is the first cryptocurrency created by Satoshi Nakamoto in 2008. The original reference implementation of bitcoin(BTC) is written in the bitcoin white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System.
Satoshi designed the first blockchain database for bitcoin. The first mined block was the genesis block and embedded in the coinbase of this block was the test “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”.
Its payment system aims to charge lower transaction fees than traditional payment systems and bypass intermediaries, such as a bank, enabling bitcoin to be sent on a peer-to-peer network.
What Are Blockchain And Mining?
The Bitcoin blockchain is a public ledger that records transactions. Every computer running the blockchain can view the same list of blocks and transactions, so no one can rewrite or change the block without having other people noticing. Unless in the case of a bad actor operating 51% of the computer power of the network, can the bad actor control the majority of the hash rate and cause network disruption. This is called a 51% attack, however, a 51% attack on Bitcoin is rather unlikely as miners could easily fork a new blockchain to avoid the attack.
The Bitcoin network works through a process called “proof-of-work.” It is a decentralized consensus mechanism, in which members of the network work together to solve an arbitrary mathematical puzzle to prevent bad actors from disrupting the system. PoW measures miners’ contributed computing power on processing and verifying transactions, as well as block generation.
So what is Bitcoin mining? In short, miners are presented with a complex cryptographic puzzle and the first one to work out the answer to the puzzle will get the right to pack the verified transaction into a block and add it to the blockchain. Every ten minutes, a new block will be validated and added to the blockchain. To control the production, the reward miners receive will be cut in half roughly every four years in the halving event. The hash rate of the blockchain will also be adjusted every two weeks so that the average time between each block remains ten minutes.
What Is The Use Case Of Bitcoin?
Opinions on Bitcoin’s utility are divided. While some consider it as digital payment, some believe it is a store of value. We are far from fully understanding it but there has been a significant increase in adoption in the past decade.
At the moment, there are already many use cases.
Bitcoin As A Digital Payment
Conceived as a peer-to-peer form of electronic cash, it can be used to make payments. One of the most famous cases of Bitcoin as payment is one person spending 10,000 BTC on two pizzas. However, with Bitcoin continuing to increase in value, more people choose to hold it.
Recently, Time Magazine now accepts BTC and other digital currencies for digital subscription payments, and they will not be converted into fiat. In March 2021, Paypal allows U.S. consumers to pay millions of its online merchants with cryptocurrencies.
Hold For The Long-term
Before 2017, Bitcoin was trading merely at less than $2,000. Four years have passed and one Bitcoin is worth more than $50,000. That means if you enter the market and own Bitcoin a few years ago, now you may become a millionaire. People who hold Bitcoin for a long period often refer to this action as “HODL”, a misspelled term of “hold” that implies “hold on for dear life.”
This strategy works best on Bitcoin believers and is very simple and less troublesome. Simply store your Bitcoin in a cold wallet and forget about owning it for a while, but never forget your private keys!
Trade Bitcoin For Profits
Another way to grow your wealth is through futures trading, with which you could make money by speculating the price of BTC. Traders usually use leverage to increase their exposure. However, while this could be faster than holding your BTC, it comes with higher risks. During violent price swings, traders may subject to liquidations.
Features Of Bitcoin
Differences between Fiat and Bitcoin
As we introduced at the beginning of the article, the Bitcoin network is a peer-to-peer system, anyone can operate a bitcoin node with a Bitcoin client-side or mining software downloaded and installed on the well-equipped computer. The whole network is actually a ledger, recording the balance of BTC of each address. And this ledger is saved and maintained by all nodes within the Bitcoin network, which is also known as a distributed ledger system.
Central banks can issue as many fiat currencies as they need according to the current economic situation. The total amount of Bitcoin is limited to 21 million and will not supply more in the future. The time and the number of new coins generated are strictly controlled by the consensus algorithm.
Once you send BTC to another address, the transaction is irreversible. Unlike fiat currencies transfer, there is no central bank to “adjudicate” that you can rely on for money returns. Any transaction in the network is tamper-resistant.
To transfer fiat currency online means to transfer money from one bank account to another, which is real-name registered. But the process of Bitcoin transfer is to transfer BTC from one wallet address to another. A string of numeric code is the identity of your wallet address, and no need to identify yourselves with your personal information.
What Is Bitcoin Wallet?
If you have purchased or “dig out” some BTC, how can you store it? Similar to traditional currency, you can store it in your wallet.
A BTC wallet is a program for you to store the BTC you hold. For every BTC wallet, there is a private key and a public key (wallet address). There are 4 popular types of wallets: Desktop, Mobile, Paper, and Hardware wallet.
Desktop wallets allow users to create an address for sending and receiving BTC. Holders can store their own private keys by downloading software to individual computers. The frequently-used desktop bitcoin wallets are Bitcoin Core and Exodus.
Mobile wallet (Android or iOS) allows users to trade on the go. Mobile wallet is designed to utilize only a small fraction of the blockchain and rely on other nodes within that network to access the remaining necessary information. A mobile wallet, storing the private key on the phone, is not secure enough, because your mobile phone tends to get stolen, lost or broken. Your private key as well as the BTC stored in the wallet might be lost as well.
The Bitcoin paper wallet offers two QR codes, one link to the public key and another link to the private key and printed on the paper. The key generation is usually done in your browser, you should clear the history and cache of your browser after printing.
The hardware wallet is another form of cold storage that stored BTC offline. USB flash drive is a common hardware wallet. Both private and public keys are stored in it. You can set a password to secure the USB drive wallet. However, since you need to insert the USB drive into any computer, it might be easily read and hacked by malicious software.
Is Bitcoin A Good Investment In 2021?
Bitcoin has set new all-time highs at the end of 2020 with more and more people invest in bitcoin. Although we are still exploring what cryptocurrencies can do and how they will change our lives, we believe Bitcoin is one of the crypto assets with the greatest potential. Here are several reasons why you should take it seriously.
Bitcoin is going mainstream
The adoption of Bitcoin is accelerating and every day we get exciting news. Tesla, Paypal, Visa, Time Magazine are some of the big companies that support Bitcoin payment and service.
The number of addresses with balance over 0.01 BTC is steadily climbing and fast approaching ten million.
Wild Guesses Are That It May Top $400,000 By The End Of 2021
The market is having wild guesses for the new high. In a Bloomberg report “Crypto Outlook”, analysts present a bitcoin forecast of $400,000 by the end of Q4 2021 for bitcoin. According to the report, Bitcoin is “on similar ground as the roughly 55x gain in 2013 and 15x in 2017. To reach price extremes akin to those years in 2021, the crypto would approach $400,000, based on the regression since the 2011 high.”
Compared with Bloomberg’s analysis, the target presented in the Stock to Flow model seems more realistic and reachable. The Stock to Flow model measures the scarcity of resources and their prices. And the model targets Bitcoin at $100,000 by the end of 2021.
Wall Street Warming Up
Wall Street has turned its tune on crypto. Before 2020, many traditional financial institutions were skeptical of cryptocurrency. But now more companies are considering adding Bitcoin to their portfolios. We could be expecting a BTC ETF later this year too!
MicroStrategy is perhaps the biggest fan. After amassing approximately 70,784 BTC by the end of January, the non-crypto company announces that it plans to purchase $1 billion more BTC with the net proceeds from its convertible senior notes. New York-based leading asset management and advisory firm, Guggenheim Partners also seeks a 10% investment exposure in Grayscale BTC Trust.
The direct listing of Coinbase is just the icing on the cake. The listing of Coinbase, the first cryptocurrency exchange doing so, is considered a milestone for cryptocurrency on the road to going mainstream. Coinbase is the largest cryptocurrency exchange in the U.S and it now has over 56 million users.
Bitcoin is considered the “gateway” of cryptocurrency. Getting to know and understand it is the first step to enter the cryptocurrency world. No matter if it’s a bubble or future, Bitcoin has ushered in its first 10th anniversary. Whether it will be the future that drastically different from the fiat-based financial world today, let’s wait and see!
How To Trade On Bexplus
Trading crypto futures on Bexplus is easy. Once registered, you will have a 10 BTC demo account to get familiar with the platform, a trading account to earn your real profit, and a wallet account to get up to 21% annual interest.
No KYC. Just simply click sign up to enter an email address, the verification code you received, and set up a password. Then you can start your journey on Bexplus. After making a deposit, you can apply for a 100% deposit bonus.
After becoming a Bexplus user, you can trade BTC/USDT, EHT/USDT, LTC/USDT, DOGE/USDT, and XRP/USDT with 100x leverage. Bexplus also offers market analysis, notification of the market changes to keep you updated.