Bitcoin - the future of money?
"I think anybody who is interested in keeping their money safe from the criminal banking system would want gold, silver, and Bitcoin." - Max Keiser
Bitcoin is dubbed as the decade's best-performing asset, but what is it? Bitcoin is a digital currency, meaning it exists entirely on the internet. It is money that can be sent electronically, much like email. There can be no double-spending (duplicated money) since every computer running the program agrees not to allow it.
Let's break it down further, Bitcoin challenges not only the present banking system but also our whole method of transferring wealth from one location to another. For example, If you wanted to transport a significant sum of money a few hundred years ago, you could use paper money, gold, or silver. However, the medium was psychical, regardless of your decision. Bitcoin allows you to move money digitally, effectively making psychical money movement obsolete.
There are only 21 million bitcoins that can ever exist. There will never be more (allegedly), but the money will continue to be valuable since it can be divided into minor units. One can own.000001 bitcoins.
History of Bitcoin
In 2007, SATOSHI NAKAMOTO, the persona created to mask the identity of the original Bitcoin creator(s), began working on the concept.
In 2008, An encryption patent was filed by Neal Kin, Vladimir Oksman, and Charles Bry. Bitcoin.org is registered, and Bitcoin White Paper, authored by 'Satoshi Nakamoto' was published.
In 2009, Block 0, THE GENESIS BLOCK, was established, and Version 0.1 of Bitcoin was released. The first bitcoin transaction occurs between Satoshi and Hal Finney.
In 2010, The first currency exchange was born, known as The Bitcoin Market, and the original encryption patent was published.
How Does Bitcoin Work
Bitcoin works on the same principle as blockchain. Each Bitcoin is essentially a computer file that is saved on a smartphone or computer in a "digital wallet" program. Bitcoins can be sent to your digital wallet, and you can send Bitcoins to others. Every transaction is recorded in the blockchain, which is a public ledger.
This allows for tracking of Bitcoin transactions to prevent anyone from spending coins they don't own, manufacturing duplicates, or undoing transactions.
Bitcoins are created by solving tough cryptographic equations. This is known as mining. Your computer runs (alone or in a network with other computers) for a time, and if specific requirements are satisfied, a new bitcoin is produced and allocated to you. As the problem becomes increasingly difficult to solve, the computing power required to manufacture each bitcoin increases.
Is Bitcoin Secure
A set of mathematical principles governs a Bitcoin. These principles are public and well known; anybody can check to see if they are still being followed at any moment.
When you make a bitcoin transaction, you add it to the end of a long list (the blockchain) by solving a math problem in accordance with the principles.
The security stems from the fact that solving these problems correctly takes a lot of time while checking them against the rules is simple: If you try to cheat (counterfeit) coins, the other nodes will double-check your work and notice that you were cheating therefore your counterfeited coins will be ignored.
The biggest weakness in bitcoin's security is the end user's control over their bitcoins, not the network itself. When you store bitcoins with an online service, you're trusting that service not to steal your bitcoins and keep them safe (just like any bank) and that your login credentials aren't intercepted or social engineered. In addition, if you keep your bitcoins on your smartphone, you're vulnerable to a variety of attack vectors in both the hardware and the program. To protect your device from these threats, you'll need some knowledge and expertise.
Problems with Bitcoin
The issue with bitcoin and its likes is that many people want them to be currencies and therefore stable, while others want them to be volatile since they are investments. Currency stability is essential. Nobody wants to use a currency that fluctuates between hyperinflation and deflation. On the other hand, investments must be volatile to increase in value.
They can't be both, so they'll collapse either as currencies or as investments.
Bitcoins Aren't Very Popular and are still only accepted by a limited number of online businesses. This makes relying only on Bitcoins as a currency impossible. It's also possible that governments may force retailers to stop accepting Bitcoins to track consumers' transactions.
Deflation will occur as the total quantity of bitcoins is limited to 21 million, and as the total number of Bitcoins reaches its limit, each bitcoin will become increasingly valuable. Early adopters will be rewarded under this scheme. The dilemma of when to spend bitcoins becomes more significant as the value of each bitcoin rises with each passing day. This might result in spending spikes, causing the Bitcoin economy to change quickly and unexpectedly.
Future of Bitcoin
Bitcoin is the world's only true decentralized financial network. It doesn't require authorization, and nobody can prohibit a bitcoin holder from sending money to anyone. People are fed up with the devaluation of currencies that is taking place in the old banking sector, hence Bitcoin is gaining value. Because Bitcoin is decentralized, it cannot be stopped. There is no Bitcoin CEO or actual firm. Nobody can stop it.
Bitcoin's adoption as a payment method will not happen without technological advancements in its ecosystem. Bitcoin's blockchain must be able to process millions of transactions in a short period of time to be regarded as a viable investment asset or method of payment.
Bitcoin may become the chosen currency for international trade after PayPal and Tesla announced bitcoin bets in early 2021. Bitcoin's future remains unknown, but it is on the verge of becoming mainstream. The cryptocurrency is generating widespread awareness due to institutional investment interest.