What is Bitcoin (BTC)?

Bitcoin (BTC) is the first and most well-known cryptocurrency, created in 2009 by an unknown individual or group of people using the pseudonym Satoshi Nakamoto. Bitcoin is a digital currency that operates on blockchain technology.

Blockchain is a decentralized database that contains records of all transactions made with bitcoins. Thanks to this technology, Bitcoin is not controlled by a central institution such as a bank or government. Instead, bitcoin transactions are verified and confirmed by network participants known as miners, using the computational power of their computers.

Bitcoin can be used for purchasing goods and services, as well as for transferring funds between network participants without the need for intermediaries such as banks or payment systems. It offers several advantages compared to traditional currencies, such as lower transaction fees and the ability to use it anonymously.

The Bitcoin price is determined by market demand and supply. It can fluctuate significantly and is subject to high volatility. Bitcoin can also be used as an investment asset, and some individuals acquire it with the hope of its value increasing in the future.

Who are the founders of Bitcoin?

The founder of Bitcoin is Satoshi Nakamoto, although the true identity or group of people behind this pseudonym remains unknown. In 2008, Satoshi Nakamoto published a document called “Bitcoin: A Peer-to-Peer Electronic Cash System,” which described the concept of Bitcoin and its blockchain technology.

Satoshi Nakamoto actively worked on the development of Bitcoin for several years and then stopped communicating with the community and completely disappeared in 2010. This gave rise to the legend that Satoshi Nakamoto is a pseudonym representing one or several developers.

However, Satoshi Nakamoto’s legacy continues to live on through Bitcoin and the blockchain technology he created. The Bitcoin community of developers and users is actively growing and continues to enhance the protocol and its ecosystem.

What makes Bitcoin truly unique?

The primary unique advantage of Bitcoin is that it became the first cryptocurrency to emerge in the market and revolutionize the world of financial technology.

Bitcoin has managed to create a global community and become a source of inspiration for the development of an entire new industry with millions of enthusiasts actively creating, investing, trading, and using Bitcoin and other cryptocurrencies in their everyday lives. 

The emergence of the first cryptocurrency opened the door to the development of thousands of competing projects, stimulating innovation and experimentation in the field of decentralized finance and blockchain technologies.

The entire cryptocurrency industry, currently valued in trillions of dollars, is built upon the ideas laid out by Bitcoin: the ability to conduct instant and reliable transactions between any participants worldwide without the need for intermediaries such as banks and financial institutions.

Bitcoin has remained at the forefront of the cryptocurrency market for over a decade, and its popularity continues to grow. Even with the emergence of numerous other cryptocurrencies, Bitcoin remains the most significant and widely accepted digital asset. Due to its historical significance and the increasing interest from institutional investors, Bitcoin continues to be an integral part of the financial world and serves as a pioneer in the development of a decentralized financial ecosystem.

How many bitcoins are in circulation?

According to the latest data from Buy Bitcoin Worldwide, as of May 31, 2023, approximately 92.276% of the total number of bitcoins have been mined. Currently, around 900 new bitcoins are added daily. The majority of them are in circulation, but it is worth noting that over time, some bitcoins may be lost permanently.

Currently, over 1 million wallets hold 1 or more bitcoins. This fact is interesting as the growth trend continues despite some negative factors and the overall economic situation, and it may have its limits (not everyone will be able to own bitcoins).

The existence of 1 million wallets with a specific amount of bitcoins is a mathematical fact rather than mere speculation about the future. If you have 1 whole bitcoin, you are already ahead of 99.98% of the population.

The formula used to derive the value of 0.0125%, in this case, is as follows:

(1 million / 8 billion) * 100 = 0.0125%

Therefore, 1 million (number of wallets) is divided by 8 billion (total population), and then the result is multiplied by 100 to obtain the percentage value.

Considering that there are approximately 100 million US dollar millionaires worldwide (1.25% of the population), owning 1 whole bitcoin already becomes quite rare and privileged. These figures indicate the significant economic role of Bitcoin and its position as a high-value digital asset.

The number of bitcoins in circulation constantly fluctuates due to the mining of new coins and the transfer of existing coins between network participants.

The maximum number of bitcoins that can be mined is limited to 21 million. This is due to the fundamental algorithm of Bitcoin, which sets a cap on the issuance of new coins. The mining process, where miners solve complex mathematical problems to add new blocks to the blockchain, gradually increases the total number of bitcoins. Still, the mining reward decreases over time according to a predetermined schedule.

Thus, it can be said that as of now (September 2021), approximately 90% of the total supply of bitcoins has been mined, and the remaining coins will be gradually mined over the coming years until reaching the maximum supply of 21 million.

How is the security of the Bitcoin network ensured?

Bitcoin is secured using the SHA-256 algorithm, which is part of the SHA-2 family of hash algorithms. This algorithm is also utilized in its fork, Bitcoin Cash (BCH), and other cryptocurrencies.

Why does Bitcoin have value?

Bitcoin is the first decentralized digital currency that operates on a peer-to-peer network principle. One of its main purposes is to serve as a decentralized store of value. In other words, it provides the ability to own an asset or acts as a unit of account. However, the use of Bitcoin as a store of value remains a topic of discussion. Many cryptocurrency enthusiasts and economists believe that the mass adoption of Bitcoin will lead to the emergence of a new modern financial world, where transaction amounts will be measured in smaller units.

The smallest unit of Bitcoin, 0.00000001 BTC, is called a Satoshi (or sat for short), named after the pseudonymous creator. At the current price level of Bitcoin, 1 Satoshi is approximately equal to $0.00048.

Bitcoin is considered by many as a store of value, akin to gold, rather than a currency. This concept of the first cryptocurrency as a store of value means that many people buy bitcoins and hold onto them for a long time (or “hold”) rather than spending them on goods, as is typically done with dollars, viewing Bitcoin as a digital form of gold.

How does Bitcoin technology get updated?

A hard fork is a radical change to the protocol that makes previously invalid blocks/transactions valid and thus requires an update by all users. For example, if users A and B disagree on whether an incoming transaction is valid, a hard fork can make the transaction valid for users A and B but not for user C.

A hard fork is a protocol update that is incompatible with previous versions. This means that every node (a computer connected to the Bitcoin network using a client that performs transaction verification and propagation tasks) needs to be updated to adopt the new blockchain with the hard fork and reject any blocks or transactions from the old blockchain. The old blockchain will continue to exist and accept transactions, although it may be incompatible with newer Bitcoin clients.

A soft fork is a change to the Bitcoin protocol where only previously valid blocks/transactions become invalid. Since old nodes will recognize new blocks as valid, a soft fork is compatible with previous versions. Only a majority of miners updating to apply the new rules is required for such a fork.

Some examples of well-known cryptocurrencies that have undergone hard forks include the Bitcoin hard fork, which resulted in the creation of Bitcoin Cash, and the Ethereum hard fork, which led to the emergence of Ethereum Classic.

Bitcoin Cash itself was further hard forked with the introduction of Bitcoin SV. More details about the differences between Bitcoin, Bitcoin Cash, and Bitcoin SV can be found here.

What is Taproot?

Taproot is a soft fork that combines BIP 340, 341, and 342 and aims to improve scalability, efficiency, and privacy in the blockchain by introducing several new features.

The two main changes include the introduction of Merkelized Abstract Syntax Trees (MAST) and Schnorr signatures. MAST represents a condition that allows the sender and recipient of a transaction to sign it simultaneously for completion. Schnorr signatures enable users to combine multiple signatures into one for a single transaction. This allows multi-signature transactions to appear the same as regular or more complex transactions. The introduction of this new type of address also enables users to save on transaction fees, as even complex transactions appear as simple ones with a single signature.

While long-term investors are unlikely to notice a significant impact, Taproot could be a crucial step in equipping the network with smart contract functionality. Specifically, Schnorr signatures will lay the foundation for creating more complex applications on top of the existing blockchain as users predominantly transition to Taproot addresses. If users embrace Taproot, it could potentially lead to the development of a native DeFi ecosystem on the network in the long run, competing with alternative blockchains such as Ethereum.

What is the Lightning Network?

The Lightning Network is a protocol for conducting payments that operates off the main blockchain and enables fast and scalable transactions between participants. It creates an additional layer for conducting instant and low-cost payments, bypassing the need to record every transaction on the Bitcoin main blockchain. The Lightning Network is built on the concept of creating payment channels between participants, where they can conduct multiple transactions without the need to record each one on the blockchain. This significantly increases the throughput and efficiency of the Bitcoin network, reducing transaction delays and fees.

Who are the largest corporate holders of Bitcoin?

Just a few years ago, the idea of publicly traded companies holding Bitcoin on their balance sheets seemed quite laughable. The flagship cryptocurrency was considered too volatile for serious use in the business world. Many well-known investors, including Warren Buffett, referred to this asset as a “bubble” that would soon burst.

However, this negative viewpoint gradually began to change, and starting in 2020, several corporate giants began actively acquiring Bitcoin. In particular, the business analytics company MicroStrategy set the tone when it purchased Bitcoin worth $425 million in August and September 2020. Since then, many other companies have followed suit, including the electric vehicle manufacturer Tesla.

MicroStrategy is currently the company holding the largest amount of Bitcoin among publicly traded organizations. The business analytics platform has decided to adopt Bitcoin as its primary reserve asset and has actively been acquiring the cryptocurrency throughout 2021 and 2022. As of August 30, 2022, the company held 129,699 bitcoins on its balance sheets, equivalent to just over $2.5 billion.

Among other major corporate Bitcoin holders, notable mentions include Marathon Digital Holdings with 10,054 BTC, Coinbase (9,000), Square Inc. (8,027), and Hut 8 Mining Corp. (7,078).

Bitcoin and Its Political Influence

The influence of Bitcoin on politics is becoming increasingly noticeable, particularly after El Salvador adopted it as a legal tender. President Nayib Bukele made this decision despite criticism from citizens, the Bank of England, the International Monetary Fund, and others. Since the Bitcoin Law was passed in September 2021, Bukele has also announced plans to create a Bitcoin City that will operate entirely on Bitcoin mining using geothermal energy from volcanoes.

There are rumors that other countries, including Mexico and Russia, are considering the possibility of adopting Bitcoin as a legal tender, but for now, El Salvador remains one of the most progressive countries in this regard.

On the other hand, China has made the decision to heavily regulate Bitcoin mining and trading. In May 2021, the Chinese government declared all cryptocurrency operations illegal, leading to a crackdown on mining operations and forcing many cryptocurrency-related companies to seek refuge in other countries.

Surprisingly, China’s anti-crypto stance has not been able to completely halt the industry. According to data from the University of Cambridge, China is the second-largest contributor to the global Bitcoin hash rate, second only to the United States. This indicates that even in the face of restrictions, Bitcoin continues to attract interest and support from miners and investors in different parts of the world.

What is the Bitcoin price?

The price of Bitcoin is constantly changing based on a variety of factors. These factors include market demand and supply, regulatory changes, news and events in the cryptocurrency industry, as well as global economic and political events.

To obtain up-to-date information on the price of Bitcoin, it is best to refer to reliable data sources such as leading cryptocurrency exchanges or financial platforms. On these platforms, you can see the current price of Bitcoin as well as charts and historical data that will help you analyze its changes over time.

It should also be noted that the price of Bitcoin can vary in different countries and on different exchanges due to varying liquidity and demand in those regions. Therefore, when determining the current price of Bitcoin, it is useful to consider your location and choose appropriate platforms or data sources.

Where can you buy Bitcoin (BTC)?

Bitcoin (BTC) can be purchased on various cryptocurrency exchanges. Below are some well-known platforms where Bitcoin trading is available:

• Binance – one of the largest and most popular cryptocurrency exchanges, offering a wide range of trading pairs with Bitcoin.
• Kraken – a cryptocurrency trading platform with high liquidity, including Bitcoin and other digital assets.
• Binance US – the US version of Binance, specifically designed for users from the United States.
• Binance Futures – a section of Binance that offers futures trading on Bitcoin and other cryptocurrencies.
• Bybit – a platform for trading cryptocurrency derivatives, including inverse contracts and spot market trading.
• OKX – a cryptocurrency exchange offering a wide range of trading instruments, including Bitcoin.
• KuCoin – a platform for trading cryptocurrencies with various trading pairs, including Bitcoin.
• Bitfinex – a popular exchange offering cryptocurrency trading, including Bitcoin, with various tools and features.
• EXMO – a European cryptocurrency exchange offering the ability to trade Bitcoin and other digital assets.
• Gate.io – a popular cryptocurrency platform offering a wide selection of trading pairs, including Bitcoin.
• Huobi – a major cryptocurrency exchange with a wide range of trading pairs, including Bitcoin.

In addition, educational courses are available for beginners in the world of cryptocurrency, such as the cryptocurrency course by CryptoRobotics. These courses will help acquire the knowledge and skills necessary for successful trading and management of cryptocurrency assets.

 Bitcoin’s energy consumption

In recent decades, consumers have become increasingly interested in their energy consumption and personal impact on climate change. When news about the potential negative consequences of Bitcoin’s energy consumption started to emerge, many became concerned and criticized its energy usage. One report claims that each Bitcoin transaction requires 1,173 kilowatt-hours of electricity, which “is equivalent to the electricity consumption of a typical American household over six weeks.” Another report states that Bitcoin’s annual energy consumption exceeds that of Finland, a country with a population of 5.5 million people.

This news sparked comments from technology entrepreneurs, environmental activists, and political leaders. In May 2021, the CEO of Tesla, Elon Musk, even stated that Tesla would no longer accept Bitcoin as payment due to concerns about its environmental footprint. Many criticized this issue, while others offered solutions: How can Bitcoin be made more energy-efficient? Others simply defend their viewpoint, stating that the issue of Bitcoin’s energy consumption may be exaggerated.

Currently, miners rely heavily on renewable energy sources, and estimates suggest that the share of renewable energy used by Bitcoin may range from 40% to 75%. However, critics argue that increasing the use of renewable energy for Bitcoin could divert energy away from solar sources that could power other sectors such as hospitals, factories, or homes. The mining community itself also claims that the expansion of mining could contribute to the construction of new solar and wind farms in the future.

Additionally, some Bitcoin advocates point out that the gold and banking industries consume twice as much energy as Bitcoin, making the criticism of its energy consumption inconsistent. Furthermore, the energy consumption of Bitcoin can be easily tracked, whereas the same cannot be said for other industries. Bitcoin supporters also highlight that the complex verification process provides a more secure transaction system, justifying energy consumption.

Another argument from Bitcoin proponents is that the energy consumption required for Bitcoin takes into account all processes – creation, securing, use, and transferring of Bitcoin. Whereas in other financial sectors, this is not taken into consideration. For example, when assessing the carbon footprint of a payment system like Visa, the energy required for printing money, operating ATMs, using smartphones, running bank branches, security vehicles, and other components of the payment and banking infrastructure are not considered.

What are governments and non-profit organizations doing to reduce Bitcoin’s energy consumption? In the United States, earlier this year, a congressional hearing was held on this topic, where policymakers and technology representatives discussed the future of cryptocurrency mining in the country. They are particularly concerned about the consumption of fossil fuels. Issues related to the use of coal in the cryptocurrency space, including repurposing coal power plants into mining farms, are also being discussed.

In addition to congressional hearings, there are cryptocurrency initiatives in the private sector dedicated to addressing environmental issues, such as the Crypto Climate Accord and the Bitcoin Mining Council. For example, the Crypto Climate Accord proposes a plan to eliminate all greenhouse gas emissions by 2040. Given the innovative potential of Bitcoin, it can be assumed that such ambitious plans can be realized.

Thus, the issue of Bitcoin’s energy consumption remains complex and continues to generate debates within the cryptocurrency community and beyond. While steps are already being taken to address this issue, it is necessary to continue seeking effective solutions that can reduce Bitcoin’s environmental footprint and ensure the sustainability of its further development.

Cryptocurrency Wallets

Currently, there are various types of cryptocurrency wallets, including hot wallets and cold wallets. Hot wallets are connected to the internet, allowing for quick cryptocurrency transactions, while cold wallets are used to store large amounts of cryptocurrency offline.

Among popular cold wallets, Trezor, Ledger, and CoolBitX stand out. These wallets provide a high level of security and reliability for storing cryptocurrencies offline.

Hot wallets, such as Exodus, Electrum, and Mycelium, offer more convenient features and mobile applications for quick access to your cryptocurrency but require an internet connection and, therefore, have some security limitations.

FAQ

What will Bitcoin be worth in 2030?

Predicting the exact future value of Bitcoin is speculative and uncertain. Bitcoin’s value is influenced by various factors, including market demand, adoption, regulations, and technological advancements. While there are predictions and opinions from experts, it is important to approach them with caution as the cryptocurrency market can be highly volatile.

How much is $100 worth of Bitcoin right now?

The value of $100 worth of Bitcoin can change frequently due to market fluctuations. To determine the current value, you can check reputable cryptocurrency exchanges or financial platforms that provide real-time Bitcoin prices. Keep in mind that transaction fees and exchange rates may apply when purchasing or selling Bitcoin.

Can you buy 1 Bitcoin?

Yes, it is possible to buy 1 Bitcoin. Bitcoin is divisible, and you can buy a fraction of a Bitcoin if you don’t want to purchase a whole coin. The smallest unit of Bitcoin is called a Satoshi, which is equivalent to 0.00000001 Bitcoin. Depending on the current market price, you can calculate the amount of Bitcoin you can buy with a specific amount of money.

How much Bitcoin should I buy?

The amount of Bitcoin to buy depends on your personal financial situation, investment goals, and risk tolerance. It is generally recommended to invest an amount that you are comfortable with and can afford to lose. As Bitcoin can be volatile, diversifying your investment portfolio is also advisable. It is recommended to do thorough research, consult with financial advisors, and make informed decisions based on your own circumstances.