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Knowledgebase What is Bitcoin ?

What is Bitcoin ?

  • Beginner
05 Mar 2022
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What is bitcoin


Bitcoin (BTC) is the first and the most well-known cryptocurrency in the world. It came into play in 2009 but no one knows for sure who invented it. Bitcoin is said to be the brainchild of Satoshi Nakamoto — but this person seems to be a fictional character rather than a real individual. In the past decade, a few entrepreneurs claimed they were the real Mr.Nakamoto but gave no proof. In 2020, the results of an investigation showed that back in 2009, Bitcoin relied on a Russian proxy, so its creator seemed to be from Russia.

Those who are just making their first steps in the crypto world, feel nervous about this mystery. Yet experienced Bitcoin users perceive this secrecy as an essential attribute of decentralization — this phenomenon will be discussed in detail further in this article.

What is a Bitcoin miner?

What is a bitcoin miner

Mining is the process of generating new Bitcoins using the processing power of a computer. A miner is a person who does so. In the early days of Bitcoin, miners could earn this currency on their personal computers. Their machine carried out calculations that helped the network find the next Bitcoin block. The BTC network relies on the proof-of-work (PoW) consensus: it means you receive the reward only if you can confirm that your machine actually completed the task.

Now, the mining process has become much more energy-consuming. Miners join forces, purchase pricey rigs and launch large mining farms in abandoned factories or other large premises. Today, it makes sense to locate Bitcoin mining farms only in the regions with the lowest electricity prices.

Every 4 years, the miners’ reward for producing this currency decreases by 50%. This is called “halving”. Over time, trading the Bitcoin on an exchange becomes more profitable than mining it. 

According to the initial algorithm, the emission is limited to 21,000,000 BTC. This means miners will generate the last Bitcoin around the year 2140. After that, the mining will stop forever. However, things might change over such a long period of time. In theory, the initial algorithm can be modified. In practice, those who are not happy with the original Bitcoin can fork it (this will be discussed in detail below).

What is Bitcoin and how does it work?

What is Bitcoin and how does it work

In its early days, Bitcoin was considered as a geeks’ amusement. Now, it is world-famous and available for the general public.

Bitcoin is based on a blockchain, this is why all the financial transactions are highly transparent. When you add information to the blockchain, you can not modify or erase it. If you want to amend the information, you can add its updated version to the network. Yet the initial version will remain there forever and anyone can compare all its versions and updates at any moment. Blockchain is an outstandingly efficient tool to combat frauds — and it can be applied to projects of all spheres of life, not only to Bitcoin.

The speed of BTC transactions depends on how busy the network is at the moment. Bitcoin is decentralized — this means it is not controlled by a central bank or other similar authority. Bitcoin is an ideal means for sending money abroad because all you need to do is:

  • To install a BTC wallet on your device.
  • To ask the recipient to install a wallet too. 
  • To send them funds in just a couple of clicks. You can do it right from your home computer or a portable gadget, regardless of its brand or operating system.

To start using Bitcoin, you do not need to verify your personality. The first generation of miners preferred to remain fully anonymous. Today, centralized trading platforms require their users to pass the verification according to KYC standards. Upon registration, you will be required to submit the scan of your ID or other personal documents to the administration and wait till they check them. But at a decentralized platform, you can avoid this procedure.

Earlier, this coin is considered as a prerogative of rich people. Now, it is getting increasingly popular in Africa where people lack conventional infrastructure for financial transactions. BTC brings freedom and democracy to the world.

What are Bitcoin Cash and Bitcoin Gold?

What are Bitcoin Cash and Bitcoin Gold

These are the forks of the original Bitcoin. Their teams took the best of the Bitcoin concept and modified it as they found necessary. They launched their separate blockchains that differ from that of Bitcoin in the size of block, witness protocol and other technical parameters. Not all forks contain the word “Bitcoin” in their name: Litecoin, for instance, is a BTC fork too.

These alternative currencies are available for trading on diverse exchanges but none of them can compete with Bitcoin in terms of price and popularity. In the future, an unlimited number of forks might take place, if anyone finds it reasonable.

Apart from Bitcoin forks, there are hundreds of other cryptocurrencies on the market. Some of them rely on their own blockchain, others do not have a blockchain at all. Most currencies disappear in a few years after their inception. 

Trading experts can make money on nearly any new currency: they buy and sell it at a profit almost immediately after it hits the exchange. But for less experienced users, it would be a waste of funds. For the general public, the original Bitcoin remains the most reliable crypto investment.

What is the price of Bitcoin?

What is the price of Bitcoin

Bitcoin is deflationary. Each year, fewer units of this currency are generated. The more scarce the tokens of the Bitcoin blockchain become, the more they cost. Those who acquired these coins a decade ago and kept them till today are millionaires now. 

However, the above-said does not mean that the Bitcoin price can only increase over time. This currency operates on a free and open market. Its price depends on fluctuations in demand and supply. When many people want to buy Bitcoin but few want to sell it, the price goes up. When few want to buy it but many want to sell it, the price goes down.

The easiest way to check the current Bitcoin price is to Google it. If you type the “Bitcoin price” request, the search engine will show you the following information:

  • The Bitcoin price in the national currency of the country where you are located at the moment
  • A small graph that reflects the fluctuations of the price
  • A handy converter that enables you to check the price of Bitcoin in any national currency

Apart from Google, the current Bitcoin exchange rate can be checked at Coinmarketcap and other similar platforms.

When you check the Bitcoin price on several exchanges simultaneously, it will differ inevitably — and it is a norm. Experts in arbitrage trading buy Bitcoin cheaply at one exchange and sell at another for a higher price, making a profit on it. Newbies should resist the temptation of repeating this procedure. First, to earn and not to lose on Bitcoin arbitrage, you need to act really quickly. Second, exchanges take commissions on carrying out transactions and you should possess a certain expertise to be able to calculate them correctly. 

What is the current Bitcoin price in 2021?

What is the current Bitcoin price in 2021

In early 2021, the Bitcoin price on crypto exchanges exceeded $40,000. This was a historical record and then it went down. Over time, the price of this currency fluctuates drastically. It reflects major economic and political shifts on a global scale, such as a change of power in the U.S. or an oil price slump. 

To make money on this token, one needs to acquire it at a minimal price and get rid of it once its price sky-rockets. It resembles gambling to a certain extent because one can never know what the maximum price will be before the next fall. Yet experienced traders do not rely on pure luck: they keep up with the industry’s news, use the technical analysis tools and never invest 100% of their savings only in Bitcoin.

When professional traders and investors as well as authorities discourage newbies from purchasing BTC, they try to warn them against investing all their savings in this token. When its price breaks another historical record, many people sell their cars and other valuables to acquire it. You should never repeat this mistake. Invest in cryptocurrency only those funds that you are not afraid to lose and buy tokens only when they are cheap.

Value of Bitcoin in US dollars USD

Value of Bitcoin in US dollars USD

The ultimate goal of this blockchain-based coin is to replace the dollar and other fiat currencies. Many people do not believe in such perspectives and keep asking “When will Bitcoin crash?”, “When will Bitcoin fall?”, “When will the Bitcoin bubble burst?”. 

At the moment of writing this review, there were over 63 Bitcoin wallets in the world. To burst the bubble, all the owners of these wallets should agree to stop using crypto. Of course, this will hardly ever happen.

The second possible scenario of the “burst” is connected with the so-called “Bitcoin whales”. This term is used to denote people who owe large amounts of Bitcoins, worth millions of dollars. If many whales decide to get rid of their savings simultaneously, the Bitcoin price on most trading platforms will plummet. But serious investors realize the potential of cryptocurrency very well. They are not as prone to panic as inexperienced Bitcoin owners. The whales have witnessed so many ups and downs of the coin that they will hardly try to get rid of it soon. They regard Bitcoin as a perfect tool for long-term investment — so you should not expect the bubble to burst in the next few years.

Bitcoin trading

Bitcoin trading

Miners are not the only people who make a profit on Bitcoin. You can acquire this token on nearly any crypto exchange and earn money on reselling it.

Some projects allow newbies to train for free first: instead of the real Bitcoin, they use a virtual token and thus cannot cashout what they earned. Once they gain confidence, they can switch to real Bitcoin at any moment.

Successful traders do not need to remain chained to their computer 24/7 and rely purely on their intuition. Sites allow them to use the instruments of technical analysis to predict the upcoming fluctuations of the Bitcoin price. Of course, this will not be a 100% accurate forecast — but still, it will be easier for you to estimate the approximate value of the coin. You can trade Bitcoin either from your stationary computer or portable gadget.

Also, you can resort to such tools as Stop Loss and Take Profit. They allow you to place an order and leave your device. Once the Bitcoin price reaches a limit that you set, the order gets executed and you either receive your profit or prevent further losses.

You can store Bitcoin either on your exchange account or on a separate wallet. Each wallet has its unique identification number. You do not need to connect your Bitcoin storage to your passport data, real name or other confidential data.

Physical wallets for storing this currency are also known as “cold” ones”. They resemble a USB device. Unlike the exchange, they can not be attacked by hackers when they are offline. But if you often need this currency for trading, you’d rather store it on the exchange.

A vital tip for using Bitcoin cold wallets is: never lose your password! They allow their owners to introduce the password only a limited number of times. If you fail, you will lose your Bitcoin savings forever. Also, you need to protect the device from physical damage.

Reasons to purchase Bitcoin at P2B exchange

Reasons to purchase Bitcoin at P2PB2B exchange

P2B is a centralized trading platform that allows you to purchase Bitcoin using fiat currency from your regular bank card. To do so, you should stick to the following algorithm:

  • Create an account in the system and log in
  • Opt for topping up your balance and choose Bitcoin
  • Transfer fiat currency and get your Bitcoins

The procedure is genuinely simple and takes just a couple of minutes. P2B is officially licensed in the EU, so you can safely entrust your savings and confidential information to this site. 96% of tokens, including Bitcoin, are stored on cold wallets so that no third parties can get hold of them. Web Application Firewall is used to identify and prevent hacking attacks.

The reputation of this project has been impeccable ever since its inception in 2018 and people’s reviews about it have been overwhelmingly positive. Its site has been translated into 5 languages so far.  If you have any questions regarding Bitcoin or any other aspects, the highly-qualified multilingual support will be ready to help you 24/7. 

Apart from trading, P2B allows its users to receive passive income on spreading the word about the platform and attracting new customers to it. In your user profile, generate a unique invitation link and share it among your peers. Explain to them how reliable P2B is and how convenient it is to purchase cryptocurrency here. After your peers register in the system using your link, you will start receiving a fee for each transaction they make. This offer is not limited to Bitcoin only — any token would do. Later on, each of the individuals whom you invited to the platform can resort to the same procedure: generate a link, invite their friends and colleagues and receive passive income. Thanks to such an approach, P2B shapes a sustainable and thriving community.

Bitcoin investment

Bitcoin investment

Now that mining Bitcoin at home is not profitable anymore, you can try to earn or purchase it using alternative methods.

  • A Bitcoin faucet is a site where users can fulfill simple tasks and get rewards in crypto. These tasks normally do not require any profound expertise or technical skills, so nearly anyone can handle them. Of course, the reward is not too large. Yet if you have no other chance to acquire Bitcoin, faucets indeed come in handy.
  • Depending on your location, you can google the nearest Bitcoin ATMs. If compared to bank cards purchase, these provide a higher level of confidentiality because they might accept cash.
  • In the IT sphere, people use Bitcoin for paying salaries and fees — but beyond this sector, this approach is not too widespread yet. 

Some companies sell goods or services for this currency. You can use Bitcoin to gamble online, pay for your mobile phone or purchase drinks in a vending machine. Yet the smartest usage of Bitcoin now is trading it on an exchange or simply storing it in your wallet (because in the future, its price should dramatically increase).

Secure is Bitcoin?

Secure is Bitcoin

Ever since the inception of this currency and its blockchain, critics try to convince the public that Bitcoin is fake. Yet among all the blockchain-based currencies that you can buy and sell on crypto exchanges, this one is the most valuable, long-lasting and reliable.

Bitcoin transactions are anonymous. A few years ago the national authorities claimed that crypto was often used for nefarious purposes. Now, this apprehension against Bitcoin is not relevant anymore. The statistics prove that approximately 99% of crypto investments are legit and pose no hazards to the society.

The most common Bitcoin scams used to involve the following:

  • Someone hacks your computer and demands a ransom — otherwise, you would fail to launch your operating system
  • Fraudsters create a fake online shop, ask you to pay in Bitcoin for their goods or service and then disappear forever
  • Online Bitcoin wallets might be hacked
  • An exchange might turn out to be a scam (this is why should not store all your crypto savings at a trading platform)
  • Someone cheats on you when your try to buy Bitcoin or exchange it for another currency

As you see, these problems are not inherent to Bitcoin or blockchain. The same could happen if you were using fiat currency. To avoid scams, you should protect all your accounts with complicated passwords, avoid using public Wi-Fi connections without a VPN and double check the credibility of each service before using it. If someone tries to involve you in a scam with Bitcoins, you can report it to the police just as if it were a regular currency.

If you deal with reliable individuals and organizations, Bitcoin provides an outstandingly secure infrastructure for financial operations. Smart contracts can add a new security dimension to deals that you sign online. Imagine that you sign an agreement or another document with a contractor or employer. Once both sides of the smart contract fulfill their commitments, blockchain closes the deal. The contractor will not be able to receive the payment unless the task that they submit meets all the criteria mentioned in the agreement. This creates a win-win situation and minimizes risks for all participants of the deal. So far, smart contracts are not omnipresent. But soon, they should become ubiquitous. They can feature payments not only in Bitcoin but in any other currency.

Conclusion about Bitcoin

Conclusion about Bitcoin

Bitcoin is one of the largest financial projects of the past decade. Earlier, people used to make money by mining BTC. Today, people buy Bitcoin either for trading or as a long-term investment. You can buy it at nearly any trading platform and store it at either online or physical wallets.

The investors’ risks consist in the fact that the exchange rate of the coin is unpredictable. However, it is hard to imagine that Bitcoin with its forward-thinking blockchain and millions of supporters could entirely collapse one day. Its price might fluctuate but it is here to stay, definitely. So it would be fair to say: it is as secure a crypto can be.

The biggest merits of Bitcoin consist in its anonymity, reliability and high speed of transactions. It is much more reasonable to transfer funds abroad using Bitcoin and not fiat currency because the former does not rely on any intermediaries — that is, you will not need to pay a fee to a bank. The Bitcoin network charges its commission for carrying out transactions — but it is relatively small.

Probably, you have further questions about this currency, its blockchain and exchanges. Feel free to google what is Bitcoin and its blockchain — and you will find plenty of information. If you want to purchase Bitcoin quickly and safely, using fiat currency from your bank card, you can do so at P2B exchange. This platform allows its users to receive passive income by spreading the word about it — so make sure you use this opportunity.

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