Table of Content
- What is Bitcoin?
- Who is Satoshi Nakamoto?
- What is Silk Road? And how it brought bitcoin into the spotlight.
- Role of WikiLeaks
- How does Bitcoin Work?
- Who controls the bitcoin price & b volume?
- The good thing about bitcoin
- Types of risks associated with Bitcoin Investing
- What makes Bitcoin unique?
- Previous Bitcoin Price spikes & the current market cap?
- Lockdowns have been a boom for bitcoin.
- Is Bitcoin a good investment?
As the internet became more popular in the early 1990s, it sparked excitement and anxiety among software developers. Software guys were excited about how users could interact online and anxious that mass use would ruin privacy.
The cryptocurrency industry has many lip services to the values that drive it, but many people don’t understand those. The cypherpunk’s work laid out assumptions years before Satoshi even wrote Bitcoin White Paper. As bitcoin nears its all-time high price point, we need to understand these actual values to embrace today’s environment.
Bitcoin is a digital currency created on 31st October 2009, just five months after The govt publically announced the 2009 Financial crisis. It follows the ideas set out in a white paper by the mysterious and pseudonymous Satoshi Nakamoto. Anyone can use Bitcoin to buy things electronically without involving any third parties like banks or payment processors. Transactions are made with no middlemen meaning, nominal transaction fees, and it’s completely anonymous, so nobody knows who you’re dealing with! Furthermore, bitcoins aren’t printed, like dollars or euros - they’re produced by people running specialized computers called ASIC(Application Specific Integrated Circuit AKA bitcoin miners worldwide, using software that solves mathematical problems associated with the transactions happening in the bitcoin blockchain.
Bitcoin has been called “the future of money,” but how does bitcoin work? This blog post will explore what bitcoin is and how it works and talk about who Satoshi is!
What is Bitcoin?
Bitcoin is the first successful implementation of a distributed crypto-currency. First described in 1998 on the cypherpunks mailing list, Bitcoin builds upon Wei Dai’s idea that money can be anything–and creates an online payment system designed around cryptography instead of central authorities.
This mysterious currency has created waves in the financial industry, and many people are entirely unaware of how it works. Bitcoin is a digital form of money, meaning that its value can be determined by markets rather than central banks or other entities. In addition, it uses encryption techniques to control transactions and create new units; this functionality makes bitcoin difficult for hackers to disrupt since there’s no single point where information needs to be maintained and compromised. As a result, over 100 billion US dollars worth has been spent worldwide without being hacked so far!
Cryptocurrencies are digital currencies created to be secure and anonymous. Bitcoin is the most well-known, popular cryptocurrency because it has so much computing power behind its transactions. You can’t hold a bitcoin in your hand as you would with fiat money; however, they still require an immense amount of energy for computer work (the mining process).
Despite not being legal tender or backed by any banks or governments yet, many people use cryptocurrencies such as bitcoins worldwide since their value isn’t tied directly to anything else, nor do users have fees when making purchases online using crypto coins. Furthermore, the invention of bitcoin led to a massive movement worldwide among geeks first who understood bitcoin & started working on better versions of bitcoin.
Who is Satoshi Nakamoto?
One possible candidate for the creator is Dr. Wei Dai, a computer scientist known in cryptography and cryptocurrencies. He developed the Crypto++ cryptographic library, created the b-money cryptocurrency system, and co-proposed the VMAC message authentication algorithm, among other things. While both b-money and bitcoin use SHA256 as their proof of work function, they otherwise have nothing in common. Many people believe that Wei dai is satoshi, but this claim is very much debatable.
Satoshi Nakamoto” is presumed to be a pseudonym for the person or people that designed the original Bitcoin protocol in 2008 and launched its network in 2009. The identity of Satoshi has been speculated with suspects including Finney Szabo - accompanying denials included. One possibility could be the European financial sector computer collective based on the same kind of cryptographic currency like B money used by Dai between ‘98-‘99 while developing such protocols.
Nakamoto is an important figure in the bitcoin ecosystem for several reasons. First, he’s widely considered one of, if not THE founder & leading creator of bitcoin, and his status as such has led him to be frequently referenced both by proponents on either side of debates about how Bitcoin should evolve. Second, Bitcoin investors, Nakamoto and his associated wallets, hold 980,000 Bitcoin (about $6.2 billion as of March 2020). Finally, as only 21 million Bitcoins are ever mined, their holdings have the potential to affect their price significantly when they’re traded.
Despite Satoshi being applied to many people, no one has been identified as its true owner. Instead of a real person, it’s believed that this reference is either an alias for someone else or even multiple people working together on Bitcoin development and adoption.
What is Silk Road? And how it brought bitcoin into the spotlight.
In 2011, a Texas-born libertarian named Ross Ulbricht, AKA the “Dread Pirate Roberts,” launched Silk Road – an online marketplace of illegal drugs that operated on the dark web accessed by the Onion Router The Tor browser and used Bitcoin as a form of payment. However, in 2020, only 0.34% of all global bitcoin transactions were related to illicit activities, even though it was called criminal currency at the time due to its shady nature.
The Silk Road was an online marketplace where law enforcement agencies said Ross sold illegal drugs. It took its name from the historic trade routes spanning Europe, Asia, and parts of Africa. The US govt took the seized bitcoins under civil forfeiture, which allows some US law enforcement agencies to seize assets if they are suspected of criminal activity without necessarily bringing charges against them first.
This final auction for more than 34 thousand confiscated Bitcoins attracted 11 bidders compared with only six in December 2014’s bitcoin sale, conducted by Marshals Service on behalf of Ulbricht, who had been convicted last month after a jury trial that lasted four weeks at federal court in Manhattan.
Role of WikiLeaks
Satoshi Nakamoto, the mysterious creator of Bitcoin alluded to WikiLeaks in his last public writing before disappearing. WikiLeaks, at the time, was causing controversy by posting confidential military information on their website. This included a video showing civilian casualties and detail of logs like those found in The Pentagon Papers. They were kicked off major payment platforms for these actions, which led to Paypal freezing an account associated with WikiLeaks that funded them because “[PayPal] cannot be used for any activities that encourage, promote or instruct others to engage in illegal activity.”
There is a lot to criticize about WikiLeaks and Julian Assange. From being cruel towards those who have worked with the American state on reform in their states, such as activists from Afghanistan or Tibet –to having bias when deciding what documents to publish.
How does Bitcoin Work?
Blockchain is the technology that makes Bitcoin work. It’s essentially a distributed digital ledger, and it keeps track of every single transaction in each block on its chain. So if you buy something using bitcoins from me, for example, the bitcoin blockchain will send this information to my bitcoin wallet where I’ll keep all records about what bitcoin transactions have been made with me as well as any other info related to said purchases such as date/time, etc.
Unfortunately, with so much value stored digitally, there are more opportunities than ever before for hackers who can potentially gain access through network malware or unsecured connections, which could lead them directly into your bitcoin wallet and possibly someones entire identity when done enough times by an individual attempting unauthorized entry via multiple sources (hackers).
Who controls the bitcoin price & b volume?
The beauty of bitcoin is that the bitcoin price & b volume is not determined by a few executives or a handful or a group of government-appointed people. The easiest way to understand what affects the bitcoin price is to understand the demand & supply of gold. Gold has been an ultimate store of value for more than 5000 years as no government or corporation can print or issue gold out of the blue.
The price of bitcoin is purely dependant on demand & supply, similar to real estate & gold but with numerous additional features like Fungibility, Liquidity, Instant transfer, global acceptance, Privacy & Control.
Store of value
Scarce by design, there is a max supply of 21 million bitcoin, out of which 83%, i.e., 18.78 million bitcoin have been mined and are in circulation. Bitcoin currently has a market share of 41% & with a market cap of 950 Billion $. The bitcoin price is expected to rise in the years ahead since anything rare, such as gold, tends to appreciate.
Private, Secure — with fewer potential fees
Bitcoin transactions are quick and easy to complete. Once you own bitcoins, you can transfer them anytime without worrying about your personal information being compromised or stolen in the process. In addition, transactions don’t contain sensitive info like a name or credit card number, so there is virtually no identity theft risk.
Bitcoin is a digital currency that eliminates time delays associated with traditional banking procedures and minimizes potential financial risks from fraudulent purchases.
Bitcoin is among the first digital currency to offer peer-to-peer payment functionality. The independent individuals and private companies owning the power governing the bitcoin network will process the transaction on the blockchain. With just a few bitcoins remaining, there are about 18 million bitcoins available now. In central banking systems, the value is released to coincide with growth rates within a particular product designed to stabilize prices. However, a decentralized system such as Bitcoin sets the release rate ahead of time and is based on an algorithm. In this sense, bitcoin and other cryptocurrencies operate differently.
The potential for significant growth with a healthy market cap of 1 Trillion $.
With the current rise in popularity, some investors are betting that Bitcoin will be worth more once it becomes fully trusted and implemented by mainstream society. These people believe this shift to happen due to its maturation process, increasing value for Bitcoins. The current market cap of bitcoin is $ 0.9 Trillion. A few months ago, the market cap of bitcoin alone made an ATH of $ 1.3 Trillion.
On top of the financial crisis and the Great Recession, some investors are eager to embrace an alternative currency decentralized outside regular banks. However, to purchase Bitcoin on exchanges using U.S dollars, you will likely need a linked bank account, which has not been easy for people worldwide due to economic restrictions from various governing authorities or third parties such as Wells Fargo & Company (WFC).
Types of risks associated with Bitcoin Investing
In 2017, Bitcoin’s price skyrocketed to almost $20k. However, in 2020, it dropped by about half of its value, and people who bought at the peak are still recovering their losses as they wait for another spike so that they can recover some money from what was lost during the previous year.
The hacking of bitcoin wallets & exchanges is a problem for consumers, as it could result in stolen money. To take the funds from exchanges that have been hacked would be possible, but those who take out the cash may also use them to transact other transactions. In 2014 Mt-Gox closed after hackers stole millions worth of bitcoin. There was no safety net or recourse available when things went wrong because they were essentially just transferring between two people without any third-party involvement. Credit card companies provide security against fraud, etc. Furthermore, all bitcoin transactions are permanent and irreversible. Someone can only annul transactions if someone refunds the bitcoins.
Limited (but growing) use
Despite the rising popularity of bitcoin, many companies remain on the fence about accepting crypto. However, in May 2019 alone, telecommunications giant AT&T joined companies such as Overstock.com and Dish Network in welcoming this new form of payment into their stores - an exception to a rule that continues to keep most businesses away from embracing cryptocurrencies.
Not protected by SIPC.
Uninsured investors are left to fend for themselves. They have no protection if the brokerage fails or funds are stolen, and those protections usually cover only up to $500,000 in cash per investor.
What makes Bitcoin unique?
The most uniquely good advantage of Bitcoin is that this was all the first cryptocurrency released. The emergence of the first cryptocurrency created a conceptual and technological base that inspired thousands of competing projects. The ICO industry that already represents around $400 billion is being built on Bitcoin: money that can be used for anything anywhere in the world without relying on trusted intermediaries. Even though Bitcoin has lost its undisputed dominance, Bitcoin is the largest cryptocurrency of all time, with a market capitalization fluctuating between $800-950 billion in 2021.
Previous Bitcoin Price spikes & the current market cap?
By April 2013, international speculation for Bitcoin price to reach reached an all-time high. The coin was valued at $260 per BTC, and the bitcoin price plummeted to around a value of $50 within that same month.
In 2009 when bitcoin first released, its worth wasn’t much, with one US dollar being able to buy more than 1,300 bitcoins in which by the end of 2012 it had been reported as having increased over six times. Even though there were several fluctuations throughout this time frame, many people saw potential from cryptocurrency. However, they continued investing in bitcoin despite how unstable it seemed during these past few years. Even after such low values toward 2017 ended up rising again due to speculations regarding blockchain technology.
The bitcoin price continued to rise gradually throughout 2015 and 2016, trading between $200-$400. However, in July 2018, it exploded upwards, rising from about $2,800 on the 1st up to a peak of around $19k in mid-December 2017. This was accompanied by an influx of mainstream media coverage and many new investors jumping into cryptocurrency market for the first time.
Lockdowns have been a boom for bitcoin.
Finally, amid the COVID-19 pandemic in 2020, demand for Bitcoin skyrocketed among institutional investors once more & the bitcoin price with it. As a result, the bi price climbed quickly throughout 2018 and 2019 when it reached a new all-time high of nearly $64800 in April 2021.
However, since then, its value has declined significantly due to factors such as environmental unease over mining methods along with impending Chinese regulation, among others, which resulted in a sharp drop down from that peak by roughly 50% at around 32000 before recovering slightly above $49500 currently.
In part, Bitcoin’s constant price fluctuations are due to its capped amount of 21 million individual bitcoins and perceived value on the market.
Is Bitcoin a good investment?
The price of Bitcoin started lower than zero and eventually became the actual market price. Bitcoin is a volatile asset class that requires a high-risk appetite. The probability is this Bitcoin could get zero. If one of these projects fails, a major software bug is found, or new, more innovative digital currency options occur. Bitcoin was valued at $20,000 at the end of December 2016. Bitcoin hit the lowest level since December 17th, 2018 - $1307. It is more stable than the gold price of about ten years since gaining its first public use.
Bitcoin has been an exciting investment for many, but it’s essential to understand the values that drive this industry. The cypherpunk movement laid out assumptions years before Satoshi Nakamoto wrote the Bitcoin White Paper. As bitcoin nears its all-time high price point, we need to embrace these real values in today’s environment. Sign up now at cxihub if you want to access our community of innovators who see how every human being can use cryptocurrency to help us achieve a better world. Then, join me on my quest to learn more about blockchain technologies!