Bitcoin is a virtual or digital currency. It is simply known as the online version of cash. Today, one Bitcoin is worth $38484 or ₹2811612.
It was on 3rd January, 2009 that the Bitcoin network came into existence. It has been gaining popularity ever since. Especially in the years 2020 and 2021, when competitors like Dogecoin and Ethereum started coming up as well. In this article, we are going to talk about the cryptocurrency giant, Bitcoin.
If it is so expensive, who owns Bitcoin?
The price difference between standard currency and Bitcoin is too big but that doesn’t mean Bitcoin is not for the common man. One can own even half the price of a Bitcoin. People have started buying Bitcoins (part of it) with $1 as well. This facility enables massive participation and is not only restricted to millionaires.
How is Bitcoin made?
The production or making of Bitcoin is called Bitcoin mining. Bitcoin mining is a task performed by highly powerful supercomputers that are built to solve complex high level problems. These problems include higher level mathematics. Once these problems are solved, for each problem, one Bitcoin is produced. The cost of one Bitcoin is directly proportional to the cost spent on solving these problems. After solving a problem, it takes years for Bitcoin to actually physically exist. Hence, currently, there are 21 million Bitcoins out of which only 18 million are used by us.
How Does Bitcoin Work?
Let’s take an example of a friend group of three namely A, B and C. All of them meet up and spend money all the time. Sometimes B pays for C and sometimes C pays for A. At the end of the day, they sit and discuss who has to pay whom, how much. So, A comes up with a plan which enables every member of the group to write down in a sheet about who owes him, how much.
The problem or drawback this plan has is, anyone from the group can put anyone’s name and say that he owes me money. So, they upgrade the plan to make it secure. The upgrade is that the person who owes money to somebody has to approve (sign) of the statement written on the paper. In this way, nobody can write off fake statements and rob each other off of their money.
But there is another drawback to this plan. What if someone copies the signature? This process of going from unorganized payments to implementing signatures is everything about how Bitcoin works. To solve the problem of mimicking signatures, the owner of Bitcoin is provided with a security and a private key. Both of which are kept a secret from everybody other than the owner of the Bitcoin. It is only through these keys that a transaction can take place.
What is Wrapped Bitcoin?
Wrapped Bitcoin (WBTC) is aiming to tokenize Bitcoin (BTC). This ‘token’, named ERC-20, will eventually ease Bitcoin transactions and increase the security of owning it. The concept of Wrapped Bitcoin was taken into action from January 31st, 2019.
To put it in simple terms, Wrapped Bitcoin is a product of the merging of the two leading cryptocurrencies in the market, Bitcoin and Ethereum. This simply means that Bitcoin can enter the world of the Ethereum network and both can benefit from it.
So, think of it as if you own gold. Now, you can’t carry gold around in your bag and make your daily transactions. Gold is simply heavy and very complex to make accurate payments.
In the above example, the gold refers to Bitcoin and the cash you have in your wallet instead of the gold is your Wrapped Bitcoin. Wrapped Bitcoin simply eases your Bitcoin transactions. It is better to own a token than actually carry around Bitcoins in your wallet.
How has Bitcoin grown Since its Inception?
Bitcoin, back in 2009, was an entirely new concept in the world of finance. Anything new is exciting and interesting. The introduction of a decentralized system of transactions and the transparency that the blockchain provides are concepts that have ever-changing effects on the money world.
Here are some reasons for all the potential investors and traders out there to keep their eyes not only glued to the live charts of Bitcoin but also pay attention to the finance world, in general.
- Influence of billion-dollar companies on Bitcoin pricing:
The CEO of Tesla, Elon Musk, was all in and for Bitcoin. Tesla even invested $1.5 billion into Bitcoin and because of this, the price of one Bitcoin rose to about $50k. BitPay, a Bitcoin payment service provider, had performed $1 billion worth of transactions in the year 2019. LAToken, a Bitcoin exchange platform, promises assets worth $1.2 trillion by 2025. Amazon provides you, buying items using Bitcoin, a discount of around 10% to 15%, if you log in via Facebook or Google Plus account.
- Influence of financial gurus and celebrity investors on Bitcoin:
Billionaire investor, Paul Tudor Jones, has 2% of his assets in Bitcoin. CEO of J.P. Morgan, Jamie Dimon, advises people to stay away from Bitcoin and calls it all a ‘fraud’. Max Keiser, investor and host of the Keiser Report, predicts that one Bitcoin may be worth $100k in one to two years and probably reach $400k in 2025-26. Robert Kiyosaki, the best-selling author of the book ‘Rich Dad and Poor Dad’, predicts Bitcoin to be worth $75k in the next two years.
- Demand and supply:
There are 21 million Bitcoins produced yet, and around 25 million users around the globe. The numbers are increasing every second and so is the fluctuation in the price of one Bitcoin. Bitcoin is not sold by an organization and neither is there any government interference in this crypto world. Currently, out of the 21 million coins, around 18 million have already entered the market. There are thousands of investors and traders who talk about their journey in the cryptocurrency world and inspired by them, there is an increase in the demand for Bitcoin. When the demand increases, the price of one Bitcoin increases. This mechanism helps the supply to balance out the demand.
- The mining of Bitcoins:
The mining of Bitcoins is a process wherein highly powerful supercomputers solve complex mathematical problems and puzzles. In reward, they obtain Bitcoins. The making of Bitcoin requires expensive and essential raw materials. The price change in the raw materials affects the rates of Bitcoin too.
Future actions and company decisions will always influence the rates of Bitcoin. Here are some articles talking about it. These are not according to the current times but they will help show you how much companies hate and love Bitcoin.
- Trump may ban Bitcoin
- Bitcoin 2024
- Elon Musk tweet June 14, 2021
- Bitcoin price jump, June 14 2021
- India bans cryptocurrency
- India Bitcoin ban, June 14, 2021
With this article, we hope you now have a better understanding of how Bitcoin has evolved over the years. You can get started in Bitcoins easily with Bitcoin Method App. You must keep an eye out for the live charts that provide you with real-time prices of Bitcoin before you perform any kind of transaction. Do your research and find yourself an excellent platform to exchange and trade your Bitcoins. All the best!