Hamed Tavakoli
If you want to know what Bitcoin is, it must be said that Bitcoin is a cryptocurrency. A cryptocurrency (or crypto currency) is a type of digital currency that is widely accepted as a medium of exchange among the public. Cryptocurrencies, including Bitcoin (BTC), are produced and maintained by a community known as miners. Miners can be devices or members of the general public who process transactions. Miners work together to solve cryptographic transactions called hash functions. When miners confirm the solution to a problem, a new block is added to the Bitcoin blockchain and a digital coin is received. The rate of BTC production is decreasing over time because the supply of cryptocurrencies is limited. As a result, solving hash functions becomes increasingly difficult, and therefore the reward decreases.
What is Bitcoin?
Today, there are various cryptocurrencies, but Bitcoin is the most valuable and widely accepted digital currency. According to the virtual currency usage guide from the European Central Bank and the United States Department of the Treasury, the definition of Bitcoin includes:
- BTC is a type of digital currency that is typically issued and controlled by its developers.
- Bitcoin acts as a medium of exchange that operates like a currency in some environments but does not have all the characteristics of real currency.
- This currency is increasingly being used and accepted among community members.
- This currency can only exist without having a physical form. This means that BTC is not issued as bills or invoices.
- Various types of digital currencies can be stored and transferred electronically.
What are the Unique Features of Bitcoin?
If you want to know the characteristics of Bitcoin, they include the following:
- Open or Convertible Currency: Real-world currency can be used to buy virtual BTC and vice versa. This means it is usable by the general public. Closed virtual currencies only circulate within a closed system like an online game and have no connection to the real-world economy.
- Decentralized Currency: Decentralized currencies like Bitcoin do not have a single main issuer or central treasury. This system is based on several distributed operators who can buy and sell. Additionally, the price is created according to the market and then distributed by the network of users. Centralized virtual currency is issued and managed by a single organization responsible for all necessary actions. The centralized virtual currency model can be traded with real money and then used to purchase goods in a game or platform.
Bitcoin Exchange
- Lack of Central Bank Support: As a virtual currency, Bitcoin does not have an official monetary system. Therefore, it is not connected to any central bank and is not regulated or supported by them. For this reason, collecting and trading with these digital currencies can sometimes be unsafe and occasionally risky.
- Non-Physical Payment System: Bitcoin has a payment system that is not tangible but is used in virtual purchases and even in the real world. This type of currency requires a high level of trust among its users because currently, virtual currencies are not considered legal tender.
History of Bitcoin from Day One to Future Analysis
The Beginning of Bitcoin
The first day of Bitcoin can be considered as October 31, 2008. At this time, Satoshi Nakamoto, the creator of BTC, uploaded a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” on the internet. However, Bitcoin was not the first digital currency, as many other currencies had been created years before. Nonetheless, none of them achieved the same success as Bitcoin. After the publication of the paper, the main idea behind this virtual currency was revealed on the internet. The purpose of creating this cryptocurrency was to enable transactions by bypassing financial institutions, meaning there would be no intermediary representative in monetary transactions. At the beginning of 2009, software was released to use Bitcoin in exchanges. On January 12, 2009, the first BTC transaction took place between Satoshi Nakamoto and Hal Finney. The subject of this transaction was a genesis block (the initial block of the Bitcoin blockchain) valued at 50 BTC.
The process of buying Bitcoin is accessible to anyone, similar to fiat money that can be exchanged hand-to-hand. The first Bitcoin exchange was established on February 6 by a member of the bitcointalk community, and by May 2010, the exchange rate reached 0.004 USD/BTC. The exchange rate has been highly volatile and depends on user demand along with its supply. This currency is based on a cryptographic system that assures both parties that the transaction is real and secure. On January 26, 2016, the amount of Bitcoin in circulation was 15,128,400 units, and the price of each BTC was 393.70 USD. An online price update of Bitcoin to the dollar on the coincodex website shows the current price of Bitcoin on May 19, 2024, as 67,260 USD. According to the website’s forecast, the highest price of Bitcoin in 2025 will reach 168,152 USD.
What is the Exact Prediction About Bitcoin?
The evolution of money and the payment system are interrelated. Along with the digitization process, digital currency has also gained more importance. Bitcoin, as a highly innovative digital currency, entered the scene in 2009. In recent years, Bitcoin has become the most popular and widely accepted virtual currency in the market. The great advantage of Bitcoin is the ability to conduct anonymous transactions with any user worldwide without using a third party. However, it also has disadvantages, such as the risk of being hacked or collapsing due to competition. Additionally, the volatility of this virtual currency and its deflationary nature make it challenging for BTC to become a financial unit.
The Future of Bitcoin
If you want to know the future prediction of Bitcoin, it must be said that forecasting this digital currency is difficult. The main problem is that Bitcoin is becoming more popular day by day and, therefore, is subject to government regulations. The acceptance of Bitcoin as a legal currency and also as national money can be difficult considering national standards. Central banks and governments have no power in the event of an economic shock. Bitcoin can hardly be flexible in response to various economic shocks. In conclusion, the likelihood of Bitcoin soon becoming a common currency that challenges the Euro and the US dollar is very low. However, blockchain technology has high growth potential. It can be said that the innovation of Bitcoin using blockchain technology will lead to a great future.
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