What are the characteristics of Bitcoin?
Bitcoin is the first fully decentralized payment network which uses a currency called Bitcoin (abbreviation = BTC). The main unique feature lies precisely in the decentralization, which means that the cryptocurrency is not managed by any central authority. For this reason, Bitcoin cannot be influenced by anyone the way it happens in FIAT currencies (classic money), where targeted inflation may occur, causing the devaluation of money. Bitcoin has a firmly set maximum number of coins (21,000,000) and the timetable for the gradual release of the currency until the final count is reached is known in advance and carried out by the so-called mining.
Bitcoin cannot be counterfeited or confiscated because it is not a tangible currency but instead a section of a code which runs on an internet network. This is why it’s been nicknamed the “gold of the modern era“.
Its unique characteristics made it the first universal payment tool in the world which doesn’t recognize borders and which can be used 24 hours a day. Currently, Bitcoin serves as activum which can be used as payment for various goods or services, and its influence constantly grows.
History of Bitcoin
Bitcoin’s history is shrouded in a small mystery. That’s because its creator is unknown. On January 3rd, 2009 an unknown creator (or team of creators) under the pseudonym of Satoshi Nakamoto release the so-called white paper, which described Bitcoin’s principles of operating and the first block was mined (an interesting fact – 50 BTC were mined in the first block; currently, the miners‘ reward for one mined block is 12.5 ).
At its beginnings, Bitcoin was the domain of just a few technology enthusiasts. But within a few years there a lot more talk about Bitcoins and a sharp development followed. This was dominated both by large fluctuations in price, both up and down, as well as issues with certain cryptocurrency exchanges which crashed (just like it happens to banks). However, these issues didn’t stop the mass adoption of Bitcoin which found its way to an ever-growing community of users. Its popularity was also influenced by its initial ability to be mined on ordinary computers, though due to the increasing computing demands, this is not possible anymore today and bitcoin mining has thus become the domain of miners who specialize in it. However, you can simply purchase Bitcoin in one of the crytpocurrency exchanges.
Operating principle and Bitcoin mining
The system of Bitcoin consists of users and miners.
Complete classic transactions by using wallets (from a user’s point of view, this works on the same principle as electronic banking – that is, in the case of Bitcoin, you receive and send specific amounts to generated addresses). If you are intending to send Bitcoins or a specific fraction (for example, 0.05 Bitcoin), you simply send it from your online wallet, which you have created, or from a hardware wallet, to an address given to you by the recepient. And vice versa: if you wish to receive Bitcoin from someone, you simply tell them the address of you wallet. The wallet’s address therefore serves as an „account number“. Carrying out transactions is truly simple.
Represent a very important part of the Bitcoin ecosystem because their computing power ensures the functioning of the network itself. Miners use their equipment to carry out energetically demanding computations which confirm mined blocks and transactions and are supposed to prevent misuse. In this regard, Bitcoin is founded on the so-called proof-of-work principle. Miners receive the fees from transactions and the newly mined Bitcoins, generated from mined blocks, are distributed among them (the miner’s reward therefore serves as a motivation for mining). With every 21,000 mined blocks, this mining reward is reduced by half. Currently, it is 12.5 bitcoins; one block is mined approximately every 10 minutes in the BTC network.
Can i mine bitcoin on my PC?
An important thing to add regarding Bitcoin mining – these days, it is not profitable at all to mine Bitcoins on a home computer anymore because the computing demand of the BTC network is so high that blocks are always mined by specialized miners who have a high mining power at their disposal and who use specialized hardware (the image below shows an example of such equipment).
Is Bitcoin truly anonymous?
Often, we hear that Bitcoins represent a truly anonymous „financial“ system. As was said above, transactions are carried out by sending the currency from one address (which consists of letters and numbers, for example a Bitcoin address can look like this: 1GNWpjDwic484Ew3Ren5kPbvjD1RYhXy61) to another address. As soon as the recepient knows that you have sent them a certain amount of BTC, he will logically also see from which address you sent the transaction and thus know that this address belongs to you (it’s exactly the same as with a bank account).
However, you can easily use a uniquely generated address for every transaction. This way, no one can find out based on your payment that a specific address belongs to you and track your financial history, since all the transactions are recorded in a public blockchain. If you use a unique address each time, they will only see one of your many addresses from which you carried out one transaction – the one sent specifically to them.
The number of Bitcoin coins
The maximum number of Bitcoin coins which can be mined over time was set from the beginning. This number is 21,000,000; currently around 18 million Bitcoins have been mined. The overwhelming majority of Bitcoin will be mined by 2030 and it is expected that the last coin should be mined in the year 2140. Afterwards, miners will profit only from transaction fees. The unit’s abbreviation is BTC.
Each 1 Bitcoin can be divided into a maximum of 8 decimal places, which is why you can purchase even just a 0.005 BTC for a proportionate price instead of buying 1 entire Bitcoin. The smallest unit, that is 0.00000001 BTC, is called satoshi, from the name used in the creator or creators‘ pseudonym.
All time high – 20 089 USD (17th of December 2017).
Bitcoin counts among the most widely spread cryptocurrencies, which means it’s not a problem if you want to buy some. Each cryptocurrency exchange sells Bitcoin. If you’d like to purchase Bitcoin or its part, we recommend Coinmate, where you can purchase BTC directly for FIAT currencies via card payment or bank wire. Bitcoin can also be purchased at the Binance cryptocurrency exchange with a credit card or by exchanging it for a different cryptocurrency.
Since Bitcoin is the most widespread cryptocurrency in the world, it is fully supported by all available hardware wallets.