Making headlines almost every day, Bitcoin's popularity doesn't come as a surprise as interest for cryptocurrency widens all over the world.
After being the subject of skepticism for years, Bitcoin is now considered by many as the future of finance while it heralds the era of cryptocurrencies, a new group of assets that are now available to invest on via the eToro online investment platform (read our full review here).
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History of Bitcoin
Bitcoin is a cryptocurrency that was created in 2009 by a programmer or a small group of individuals who oddly chose to remain anonymous and instead used the alias Satoshi Nakamoto.
By authoring the bitcoin white paper and deploying Bitcoin's reference implementation, Satoshi Nakamoto created the first blockchain database.
Released as an open-source software, the appeal of Bitcoin rest on it being a decentralized digital currency that relies on no central bank. Bitcoin can be transacted through peer-to-peer without needing any intermediaries. All transactions are verified via network nodes using cryptography and are stored in a "blockchain" or otherwise known as the public distributed ledger.
Nakamoto—according to Blockchain analysts—has mined more than one million bitcoins before going off the grid in 2010. He then handed control of the Bitcoin network to Gavin Andresen who later became Bitcoin Foundation's Lead Developer.
The first proof-of-concept transactions using Bitcoin happened in early 2011 among few black markets merchants like Silk Road, an online black market. It is widely believed that Silk Road saw the transactions of Bitcoin amounting to over $200 million or an equal of 9.9 million Bitcoins from 2011-2012.
How Bitcoin Works?
As a digital currency, a cryptocurrency such as Bitcoin is not a physical coin. It is also not governed or regulated by any bank of government.
Bitcoin coins are created through mining using powerful computers to verify user transactions using the blockchain technology. "Miners" as a reward, receives a bitcoin coin for their effort.
Bitcoin coins can be bought and sold through trading platforms and exchanges using the US dollar and other world currency.
Bitcoins can also be used as a payment as a growing number of merchants around the world are now starting to accept Bitcoins as mode of payment.
If you would imagine what a Bitcoin look like, it is basically composed of lines of computer codes storing a digital signature of an owner.
All Bitcoin transactions can be viewed on the network as all are stored publicly. This is called the Bitcoin address. However, no one can know the identity of the users behind the Bitcoin address.
Moving this cryptocurrency can be done anonymously and stored in digital wallets, like with other cryptocurrencies, and hardware wallets using special software applications.
Bitcoin in a Nutshell
To sum it up, Bitcoin is:
- Digital - Like other cryptocurrencies, Bitcoin exist online tracked and stored via the blockchain technology which is consistently being updated and therefore listing the history of every Bitcoin coin (think of using the serial number of a 50-dollar bill to search for everyone who held it before).
- Decentralized - Bitcoin is not covered by any central bank or government.
- Sort of Anonymous - Bitcoin ownerships are labeled with your Wallet ID instead of your own name and personal data. This however doesn't make it completely anonymous as hackers can have a small chance of linking Bitcoin addresses (transactions) to the identity of a Bitcoin owner.
What is Bitcoin Mining?
Because of its lack of a central regulator that controls the circulation of physical currencies, Bitcoin can be regulated by anyone. By "anyone" it refers to as "miners".
Bitcoin miners uses a software powered by a powerful computer that solves complex math problems. The more powerful the computer is, the more number of answers it can formulate per second, therefore increasing the miner's odds of answering correctly.
The Bitcoin miner that solves the mathematical equation gets the chance to update Bitcoin's blockchain by affirming all recent Bitcoin transactions. Each transaction confirmation is represented by a block and enters through a chronological order in the Bitcoin blockchain. This process protects the network of Bitcoin and allow other users to agree on the transactions.
Simply say: Bitcoin miners serves like what Auditors do when they certify veracity of bank's ledgers.
The eToro Crypto Wallet for Bitcoin
Supporting more than 120 cryptocurrencies, the eToro Crypto Wallet is a good choice to store your Bitcoins. Its features include:
- Easy crypto-to-crypto exchange
- Unlosable Private Key
- On-Chain Address
- Simple, secure and online
Bitcoin (BTC) Price History
Bitcoin's price history is one full of jumps and drops but more on the jump side. From $0 in 2009 when it was first introduced, it crossed the $1 mark in 2011. From then it continued skyrocketing reaching the $1000 level in November 2013. It then surged to $20,000 in 2017 before dipping to $3,300 in the following months. It again soared in December 2020 when it passed the $20,000 mark before hitting its high-water mark of $64,895 in April 2021.
Take Note of the Elon Musk Effect - Did You Know?
Bitcoin price seems to have a history of reacting to Elon Musk, the Tesla founder. It should be remembered that Bitcoin's value rose when Musk's Tesla invested $1.5 billion worth of Bitcoin. A few months later on May 2021, Bitcoin's price turned volatile after Musk revealed Tesla will not accept Bitcoin as payment for Tesla cars.
How to Buy Bitcoin?
Like with other physical currencies, you can buy Bitcoin using real cash through payment platforms like PayPal, credit card, debit card or wire transfers. First thing though, you need to have a bitcoin wallet where you will get a "Wallet ID" for you to store your bitcoins.
An easier option is to buy and trade Bitcoins using a trading platform like eToro.
How to Trade Bitcoin (BTC) on eToro?
- On your eToro dashboard, click "Discover".
- Select "Crypto".
- Scroll down to look for "BTC".
- Click "Buy" and set the amount you want to invest.
- "Click "Open Trade".
Interested now to trade Bitcoin? Get started here.
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Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.
Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.
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