Bitcoin, the enigma
In 2008 the anonymous programmer Satoshi Nakamoto published a blue-print for a new digital currency
Bitcoin is a digital asset and a payment system invented by the anonymous programmer Satoshi Nakamoto in 2009. Transactions are verified and recorded on a decentralized public ledger called a blockchain.
Bitcoin is unique in that there are a finite number of them: 21 million. Satoshi Nakamoto, bitcoin's enigmatic founder, arrived at that number by assuming people would discover, or "mine," a set number of blocks of transactions daily.
Since then, the price of Bitcoin has fluctuated wildly, from a low of under $3,000 in December of 2018 to a high of over $64,000 in November of 2021. Nevertheless, Bitcoin remains the most well-known and popular crypto asset, with a market cap of over $500 billion as of 2022.
Bitcoin is often hailed as a revolutionary breakthrough in the world of finance and economics. And while it’s true that Bitcoin has the potential to change the way we think about money, it’s important to remember that the technology is still in its early stages. In other words, don’t expect to be able to use Bitcoin to buy your coffee just yet.
But if you’re patient, and willing to take on some risk, investing in Bitcoin could pay off handsomely. Here’s everything you need to know about how to buy Bitcoin.
Proof of work
Bitcoins are created as a reward for a process known as mining. To mine bitcoins, people use special-purpose computers to solve math problems. This process requires a lot of computing power and electricity, so it’s not free. This is why it's also called 'proof-of-work'. When a problem is solved, the miner gets a reward in bitcoins. The reward is halved every four years, so it’s getting harder and harder to mine bitcoins.
Bitcoins can be used to buy things electronically. They can be exchanged for other currencies, products, and services. As of 2022, over 100,000 merchants and vendors accept bitcoin as payment. In that sense, it’s like conventional dollars, euros, or yen, which are also traded digitally. However, Bitcoin isn’t regulated by any government or financial institution. That makes it different from traditional currencies.
Bitcoin is decentralized, so no single entity controls it. That means it’s very unlikely to be manipulated or hacked. But it also means that there’s no central authority to manage the system or help you if something goes wrong. This is why it's so important to take precautions and know what you're doing when investing in digital assets.
Bitcoin is pseudonymous, so your personal information isn’t attached to your bitcoin address. However, transactions are recorded on the public ledger, so people could potentially see your bitcoin address. But they don't know it's you unless you publicly link your address to your identity.
Have you ever wondered how Bitcoin works in practice? The basics are actually pretty simple. Let’s say you want to buy a cup of coffee with Bitcoin. First, you need to find a merchant that accepts Bitcoin as payment. Then, you create a “transaction” on the Bitcoin network and send your Bitcoin to the merchant’s Bitcoin address.
The transaction is then verified by the network and recorded on the blockchain. Once it’s been verified, the merchant can then release the coffee to you. The whole process happens in a matter of minutes, and it’s all done without a middleman or any third party. That’s one of the benefits of Bitcoin: it’s a peer-to-peer system that doesn’t require any intermediaries.
Investing in Bitcoin and other crypto assets has become increasingly popular among private and institutional, and it could pay off if you’re patient and willing to take on some risk. Just remember to do your research and invest responsibly, or consult with a professional to help you.