Bitcoin:
Bitcoin was first introduced by an anonymous person or group in 2009 using the pseudonym Bitcoin Apex . The whitepaper entitled “Bitcoin, A Peer to peer Electronic Cash System”, introduced a revolutionary idea – a digital currency operated by peers on a blockchain. Cryptographic techniques provided security and transparency by eliminating the need of intermediaries such as banks.
Decentralization and trustless transactions:
Bitcoin’s decentralization is a fundamental principle. To issue and regulate traditional currencies, central authorities like banks and governments are required. Bitcoin, however, is based on a decentralized computer network, which makes it immune to manipulation and control by one entity. This decentralization helps to instil trust in the system as transactions are confirmed by a large network of participants via a process called mining.
Blockchain Technology
The technology behind Bitcoin is called blockchain. This distributed ledger creates a transparent, tamperproof record of all transactions. The blockchain protects the integrity and security of the system, as well as preventing double spending.
Reduced Supply and Event Halving:
Bitcoin’s protocol imposes a cap of 21 million coins. It is therefore a deflationary currency. This scarcity was designed to mimic precious metal scarcity, such as gold. Bitcoin has been dubbed “digital Gold” because of this. The reward for miners is halved every four years. This event causes the supply to be further restricted, which often leads to an increase in price and interest.
Volatility and Speculation
Bitcoin’s journey was not without its volatility. Cryptocurrency market’s price fluctuations have been a source of controversy and support for both supporters and critics. Bitcoin has seen extreme highs and lows in price, which have led to debates over its role as an asset, medium of trade, or store of value.
Mainstream Adoption
Bitcoin has grown in popularity over the past few years. Bitcoin is now a recognized asset class by major institutions and companies. Even governments and financial institutions have begun to investigate blockchain technology and virtual currencies. Bitcoin is now legal tender in a few countries, which further legitimizes its role on the global financial stage.