Bitcoin and blockchain technologies are becoming fundamental building blocks for the next generation internet. The invention of the Bitcoin Blockchain represents an entirely new platform to build upon, one that will enable an e eosystem as wide and diverse as the Internet itself. Bitcoin is the newest technology to serve the function of money - an invention leveraging the technological possibilities of the digital age to solve a problem that has persisted for all of humanity's existence : how to move economic value across time and space.
Bitcoin is a decentralized digital currency that you can buy, sell and exchange directly, without an intermediary like a bank. Bitcoin’s creator, Satoshi Nakamoto, originally described the need for “an electronic payment system based on cryptographic proof instead of trust.”
Each and every Bitcoin transaction that’s ever been made exists on a public ledger accessible to everyone, making transactions hard to reverse and difficult to fake. That’s by design: Core to their decentralized nature, Bitcoins aren’t backed by the government or any issuing institution, and there’s nothing to guarantee their value besides the proof baked in the heart of the system.
The History & Origin of Bitcoin :
Immediately after the 2008 financial crisis, a paper was published by someone named Satoshi Nakamoto.
This paper is titled “Bitcoin: a Peer-to-Peer Electronic Cash System”, and was widely circulated online. Exdssentially, this paper established the framework for the Bitcoin system, and from it, kick-started the development of the blockchain ecosystem.
The problem that Satoshi Nakamoto’s paper solved is known as the “double –spending” problem that has stood in the way of digital currency development.
What exactly is the double spending problem?
When you send someone a PDF attachment in an email, that PDF does not disappear from your computer when you hit send. Or, when you take a photo and send that via text message to your friend, that photo does not get erased from your phone.
But when it comes to digital money, it is VERY important that if I send you $5 virtually, I do not have that $5 left anywhere afterward. If I can take the same $5 of digital money and send it to a bunch of people at the same time, that presents a very obvious problem—and this is known as the “double spending” problem.
How do Bitcoin transactions work?
First, we need to think about a bitcoin transaction less like a traditional currency transaction, and more like a global ledger. A ledger is a public record of all of the transactions that are done—in this case, done on the bitcoin network. By keeping this public record, this ensures that the person who is spending the bitcoins really owns them, which prevents fraud—because there is public accountability.
Second, bitcoin transactions rely on the consensus, or agreement, of the people who are on the network. Let’s say, for example, you go to your local grocery store. At the checkout, you use your Visa credit card on a credit card machine. This means that the money goes from you, to Visa, then to the grocery store. In a bitcoin transaction, the money goes straight from you to the grocery store. The bitcoin process is where the agreement of people on the network validates payments and transactions, and the removal of any third party central authority (in this case, Visa) is really where the innovation here is.
Features of Bitcoin :
(a) Securing your wallet
Like in real life, your wallet must be secured. Bitcoin makes it possible to transfer value anywhere in a very easy way and it allows you to be in control of your money. Such great features also come with great security concerns. At the same time, Bitcoin can provide very high levels of security if used correctly. Always remember that it is your responsibility to adopt good practices in order to protect your money.
(b) Bitcoin price is volatile
The price of a bitcoin can unpredictably increase or decrease over a short period of time due to its young economy, novel nature, and sometimes illiquid markets. Consequently, keeping your savings with Bitcoin is not recommended at this point. Bitcoin should be seen like a high risk asset, and you should never store money that you cannot afford to lose with Bitcoin. If you receive payments with Bitcoin, many service providers can convert them to your local currency.
(c) Bitcoin payments are irreversible
A Bitcoin transaction cannot be reversed, it can only be refunded by the person receiving the funds. This means you should take care to do business with people and organizations you know and trust, or who have an established reputation. For their part, businesses need to keep track of the payment requests they are displaying to their customers. Bitcoin can detect typos and usually won't let you send money to an invalid address by mistake, but it's best to have controls in place for additional safety and redundancy. Additional services might exist in the future to provide more choice and protection for both businesses and consumers.
(d) Bitcoin is not anonymous
Some effort is required to protect your privacy with Bitcoin. All Bitcoin transactions are stored publicly and permanently on the network, which means anyone can see the balance and transactions of any Bitcoin address. However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances. This is one reason why Bitcoin addresses should only be used once. Always remember that it is your responsibility to adopt good practices in order to protect your privacy.
(e) Unconfirmed transactions aren't secure
Transactions don't start out as irreversible. Instead, they get a confirmation score that indicates how hard it is to reverse them. Each confirmation takes between a few seconds and 90 minutes, with 10 minutes being the average. If the transaction pays too low a fee or is otherwise atypical, getting the first confirmation can take much longer.
(f) Bitcoin is still experimental
Bitcoin is an experimental new currency that is in active development. Each improvement makes Bitcoin more appealing but also reveals new challenges as Bitcoin adoption grows. During these growing pains you might encounter increased fees, slower confirmations, or even more severe issues. Be prepared for problems and consult a technical expert before making any major investments, but keep in mind that nobody can predict Bitcoin's future.
(g) Government taxes and regulations
Bitcoin is not an official currency. That said, most jurisdictions still require you to pay income, sales, payroll, and capital gains taxes on anything that has value, including bitcoins. It is your responsibility to ensure that you adhere to tax and other legal or regulatory mandates issued by your government and/or local municipalities.
How To Obtain Bitcoin
If you have a user-controlled wallet, you could buy some Bitcoin through services like Coinbase, Circle, itBit, Gemini and other exchanges, which enable you to link your bank account. You could also buy some at a Bitcoin ATM or on a local exchange such as Local Bitcoins or Mycelium Local Trader where you can arrange to meet up with someone who has Bitcoin and then trade your dollars (or other currency) for their Bitcoin.
Hosted wallets make it easy for you by connecting to the traditional banking system, enabling you to buy Bitcoin through ACH, wire transfer or even check.
Investment Strategies
Buy and 'Hodl' Bitcoin -
Hodl (an intentional misspelling of hold) is the term used in the bitcoin investment community for holding bitcoin—it has also turned into a backronym (where an acronym is made from an existing word)—it means "hold on for dear life." An investor that is holding their Bitcoin is “hodling,” or is a “hodler.”
Many people invest in Bitcoin simply by purchasing and holding the cryptocurrency. These are the people who believe in Bitcoin's long-term prosperity, and they see any volatility in the short term as little more than a blip on a long journey toward high value.
Long Positions on Bitcoin -
Some investors want a more immediate return by purchasing Bitcoin and selling it at the end of a price rally. There are several ways to do this, including relying on the cryptocurrency's volatility for a high rate of return, should the market move in your favor. Several bitcoin trading sites also now exist that provide leveraged trading, in which the trading site effectively lends you money to hopefully increase your return.
Short Positions on Bitcoin -
Some investors might bet on Bitcoin's value decreasing, especially during a Bitcoin bubble (a rapid rise in prices followed by a rapid decrease in prices). Investors sell their bitcoins at a certain price, then try to buy them back again at a lower price.
For example, if you bought a bitcoin worth $100, you would sell it for $100, and then wait for that bitcoin to decrease in value. Assuming the buyer of that bitcoin wanted to sell, you could buy it back at the lower price. You make a profit on the difference between your selling price and your lower purchase price.
Future of Bitcoin
Bitcoin has been performing quite well and has started its bull run, Macro investors like Paul Tudor Jones are buying it as a hedge against inflation. It is now not dependent on institutional adoption to continue its bull run as more and more individuals are thinking of it as a hedge against inflation to retain value.
Additionally, countries like the U.S, Japan, and South Korea are incredibly open to integrating bitcoin and other cryptocurrencies in their financial system by regulating it. Towards the end of 2021, bitcoin is estimated to reach $19,169.44*.
With the rapid mainstream adoption that bitcoin is experiencing, we can expect that by 2022 the adoption rate of bitcoin will get tripled. Bitcoin doesn’t seem too far off before it replaces fiat in many cases. By 2022, Bitcoin might reach $32,000, given the advancements are stable.
The fourth bitcoin halving is expected to take place in 2024, meaning we can expect to see a spike in price for 2025. It is expected to reach an all-time high of $100,000, to as much as $400,000 based on the predictions of experts.
Based on Fibonacci extensions alone, additional short-, medium-, and long-term price targets can be found. Using math alone, Fib ratios point to prices of $75,000, $64,000, $47,000, $31,000,and $25,000 for possible new price records.
Are you ready to join the future of the online economy?
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