Bitcoin (BTC)

What’s a Bitcoin? Basic information

Bitcoin (abbr. BTC) is the oldest cryptocurrency in the world. It was created in 2008 by a person or a group of people, hiding under the codename Satoshi Nakamoto. The coin differs from other currencies you know so far, such as Polish Zloty or American Dollar - it does not exist in a physical form.

Bitcoin, as all the other cryptocurrencies, is placed on a so called blockchain. In other words, it is located in a decentralized, scattered net. It means that it cannot be managed by a single unit or institution. The control over this virtual coin is spread owned all the users of the net. 

Bitcoin (BTC) basic information
Project page
Bitcoin Project Specification
BitcoinTalk Forum (English forum)
Bitcoin community on Reddit
Bitcoin StackExchange (Q&A) - developer forum
Creator	Satoshi Nakamoto (unknown)
Year of creation	2008
Quantity of the coins (BTC total supply)	21 million
Quantity of the coins in circulation (mined BTC)	18 106 162 (as of 19.12.2019)
Country	international

Now you know what a Bitcoin is, or at least have a general idea of it.  But I bet you wonder - why was it created? Why would anyone need a virtual currency, that does not exist in a physical form and, in addition, is placed on an unfamiliar formation called the blockchain.

Well, according to the creator of Bitcoin himself – Satoshi Nakamoto, cryptocurrency was supposed to be an alternative to fiat money. As you probably know, traditional currency is influenced by inflation (is loses value over time) for example due to incompetent government of a given country.

In case of Bitcoin it’s totally different. First of all, its supply has been decided in advance, which means there cannot be more that the 21 million coins. Second of all, because it is placed on a blockchain none of the national institutions or bank can take control over it. Destruction or elimination of Bitcoin is virtually impossible, because it is spread over thousands of servers around the world.

Although Satoshi Nakamoto himself wanted Bitcoin to be used for immediate transactions, with no constraints regarding time or country, today this cryptocurrency can be used in three different ways. For some people it is just a virtual money, that can be easily and quickly transferred from one end of the world to the other, at any time of day or night. Others see Bitcoin as a speculative asset, which can bring a big return on investment. There are also those who treat the cryptocurrency as a safe way to store their savings. 

Who created BTC? Who’s Satoshi Nakamoto?

Those intriguing questions baffle the cryptocurrency society since the time the Bitcoin was created. Who is the person hiding behind Satoshi Nakamoto codename and why was he/she so concerned about anonymity? Was it indeed just one person? Or perhaps a group of people? I suppose we will never find that out.

Let’s then wonder, why Nakamoto wanted to remain anonymous. Well, cryptocurrency is a kind of a treat to existing financial system. Governments are hostile towards Bitcoin, simply because they cannot control it. They do not enjoy this lack of power at all, so if the creator of BTC was not hiding behind a codename, he would probably be in danger himself. 

11 years ago, this mysterious man published the white book of Bitcoin. Lot of people also call it the Satoshi Nakamoto Manifesto. The document thoroughly explains BTC functions and full technical potential of its net. 

What’s particularly interesting is that throughout the last decade, there were many claiming it’s them, who created the most popular cryptocurrency in the world. However, none of them was able to present evidence sufficient enough, to prove their words. 

Bitcoin mining – what is this about?

As you probably suppose, BTC does not just appear out of the blue. It is extracted with a use of a special equipment, called the cryptocurrency excavator. The process is called Bitcoin mining and the people engaged in it are Bitcoin miners. People outside of the cryptocurrency world most likely have a totally incorrect idea, of what a cryptocurrency mine is. Why is that? Because, in fact, any space, where the excavation equipment is solving complicated mathematical equations can be called a mine. It’s just about getting the reward – the BTC block. The idea image of a Bitcoin miner as a person with a pick in his hands can be put aside then. 

How does the actual BTC mining process runs and how do the cryptocurrency excavators look like? The miners are being awarded with the Proof of Work (PoW). This proof is the Bitcoin. However, to perform this work, miners need equipment with a great computing power. Each piece of equipment has equal chances of digging up BTC. But does it mean that mining for Bitcoin is easy? No at all. In time the difficulty was increasing, at first a simple computer might have been used as an excavator, now a sophisticated equipment is needed. The bigger the computing power of the machine the bigger changes of getting to BTC.

At first, simple CPU processors were used to mine for Bitcoin. The miner would share the computing power of his machine in exchange for BTC. But at that time, no one knew that one day, the cryptocurrency will be so valuable. And so, for a few years since Bitcoin creation it was possible to mine for it, with a use of a laptop or a desktop. But things changed were quickly, in time CPUs were not able to meet the requirements of PoW. They were just not able to perform so many calculations at the same time. That is why graphics cards (GPUs) took their place They could operate on multiple algorithms, but because of less efficiency and higher electricity consumption they soon became unprofitable. And then ASIC (integrated circuit) was introduced. Unlikely the GPUs, which were pretty much used just for computer games and video rendering, ASICs were designed to perform specific actions, in this case mining for Bitcoin.

Mathematical equations, that the cryptocurrency excavators must solve, are automatically generated by the Bitcoin net. The more miners join the net and start to compete with each other, the harder the puzzle gets. It takes a long time and a lot of energy to solve it. Also, the quantity of Bitcoin received in return changes – it’s called Bitcoin halving. It takes place every four years, more precisely each 210 000 mined chains. Adapting the difficulty of BTC mining allows for stabilize its emission on a given level. 

Bitcoin halving – what does it mean?

Lately, there's been a lot of talk about Bitcoin halving. What does it actually mean and what is its impact on the cryptocurrency community? It is important to realize, that the halving is not a new thing, it occurs every 4 years since Bitcoin creation. In this article’s chapter about Bitcoin mining there’s a mention on increasing difficulty of BTC excavation. Each time another 210 000 BTC blocks are mined, the miners will receive half less PoW for their future work.

Bitcoin halving will take place till the time all of it is excavated. The last BTC block will probably be mined after year 2140. Why Satoshi Nakamoto invented the BTC halving? The mechanism was intended to balance supply and demand. Imagine all 21 million of BTC were present on the market at once. The demand for it would be much lower and the miners would feel no incentive to keep logging transactions in BTC blockchain. Reducing the prize for excavating BTC eliminates that problem. And with a reduced supply the value of Bitcoin increases. 

How does halving impacts the exchange rate of BTC? No one really knows that. On one hand, many constantly speculates the Bitcoin value will rise, on the other hand others claim it will drop, as it will no longer be profitable to mine for it. However, what happened after past halvings is worth taking a closer look, just to have a better understanding of the consequences.  

First reduction in the value of a prize awarded in return for excavating BTC took place on 28th November 2012. The Bitcoin exchange rate at the time was around 13,42 USD and the halving did not have a major impact on it. However, not long after that, the exchange rate increased to 230 USD. Many claimed, that was because of the rescue action for Cyprus. In 2013 the BTC price rapidly increased, after investors all around Europe started to question the security of banks’ financial systems. The situation in Cyprus was difficult at the time, many citizens of this small island were fighting for their right to access their own cash stored in the country’s banks. Some of them took massive loss on their deposits.  

Next halving took place in 2016. Not much changed then as well. During the occurrence the BTC exchange rate oscillated around 650 USD, week after that around 675 USD. A boom in BTC values was not recorder until December 2017.

What will happen this time? Millions of theories already exist. Most popular one says, that because of the shortage of BTC on the market, its value will increase significantly till the end of 2020.

How much does Bitcoin cost? How to check its price in a chart?

The current value of Bitcoin is around 7 200 USD (as of 20.12.2019, 3:54 PM). In Polish Zloty that’s over 28 000 PLN. How to read the price in a chart? That’s very intuitive! It does not matter which website you are using, they all look similar. The horizontal axis represents time period, you can extend or shorten it from daily to weekly, monthly, yearly etc. up to your own needs and likes. The vertical axis shows the Bitcoin price. The bars located at the bottom of the chart reflect volume of transactions (they are present in professional charts). 

Do you want to quickly check the Bitcoin price? Use our calculator! You just need to put the number of BTC you’re interested iat the blank field and our cryptocurrency converter will do the math for you. 

Which stock exchange is Bitcoin listed on?

Given the BTC is the most popular cryptocurrency, it is listed on the virtual money stock exchange. These platforms can be divided into two main categories: crypto-crypto stock exchange and crypto-fiat stock exchange. To buy Bitcoin in the first one, the user must be already in possession of another cryptocurrency and use it for payment. These markets do not operate on fiat money such as PLN or USD and they are used by experienced market players, who are already familiar with a cryptocurrency concept. They’re not popular among beginners, who want to purchase Bitcoin using traditional currency. This kind of transactions can be done in crypto-fiat stock exchange.  

Interesting thing: you can also distinguish cryptocurrency stock exchange that are centralized (controlled by a company or an institution) from those decentralized (based on blockchain). You cannot use a transaction bot on the decentralized markets, therefore their transaction volume and liquidity are lower and they are not very popular.

You need to remember, that each cryptocurrency platform differs from the others. Some have simple interfaces, other ones more complicated, some have a very broad offer, others just base on the leading currencies. Before you choose a platform for yourself you need to consider all the aspects. If you want to trade Bitcoin, choose a market with low transaction fees, if you consider a long term invested, pick a one with high liquidity. Take the safety factor into consideration as well. Do not consider the cryptocurrency stock exchange to be a kind of a savings account. Due to the large number of assets stocked on the platform, these markets fall victims to cyberattacks. That also happens to the most renowned ones.

Examples of cryptocurrency stock exchange with Bitcoin listing 

Crypto-fiat stock exchange:

• TOKENEO

• Coinbase

• Bitfinex

Crypto-crypto stock exchange:

• Huobi

• Binance

Bitcoin wallet. How to choose?

You probably wonder, how you can acquire BTC, since it does not exist in a physical form. Well, the BTC you purchase will be assigned to the public address of your wallet. Each Bitcoin wallet consist of two keys: private and public.  

Let’s use a metaphor to better describe the principles of Bitcoin wallet. Image a post box. Only you know the access code (private key), which must be used to open it. Others may drop letters into your box (BTC), because there’s a small hole in it, but they cannot take anything out of it. But if you misplace your access code and it falls into to the hands of a person, who also knows the address of your post box, he can open it and take what’s in. Hence, it’s very important for you to guard your access code (private key) and do not share it with others.

If you lose or forget your code (private key) you will not be able to access your own post box (Bitcoin wallet). There will be no one who could help you, in case it happens. That’s what happened to a number of people, who lost their cryptocurrency.

BTC wallets can be divided into two main categories: cold and hot. Choosing a wallet right for you is very important, the safety of your Bitcoin depends on it. 

How to acquire BTC?

Do you want to purchase Bitcoin? There are many options to do that: cryptocurrency exchange stock, online cryptocurrency exchange service or personal sale. The last one calls for caution. It is much safer to use the broker services, even if you’ll need to pay the transaction fee. This way you can be sure the other party to the contract will keep their end of the deal.

You wonder what’s the quickest way to obtain BTC? Use our cryptocurrency exchange service Tokeneo.cash. We do not require an arduous process of data verification. You just need to put the number of Bitcoin you want to purchase to the blank field and provide your email address and public address of your wallet. Can’t get easier that that! Just visit us!

How to invest in BTC?

Before you make a decision about investing in Bitcoin make sure your assets will be safe. Store them in a secured place and never share your private keys. Cryptocurrency markets are unstable, BTC exchange rate fluctuates heavily, so never invest funds you are not ready to lose! Try not to give in to emotions, the market if full of FUED (information meant to cause a given emotional response). Stick to your chosen investment method, do not blindly follow the current trends. Avoid FOMO, fear of missing out – on purchasing BTC when the value is raising, on selling it when the price drops heavily. Emotions were never and will never be a good advisor to a cryptocurrency market player. 

By: Karolina Kropopek