What Is Bitcoin 2018-07-13T15:42:57+00:00

What is bitcoin proof of work

What is Bitcoin?

So what is Bitcoin.. Bitcoin was first created in 2009 under the synonym Satoshi Nakamoto. The real identity of it’s creator(s) is not known, however the value of the digital currency speaks for itself. Bitcoin is the first ever decentralised currency, a fact which plays a big part in it’s ever increasing popularity. For generations, the global monetary system has been run and controlled by centralised banks, riddled with corruption, inflation, and most importantly, based entirely on debt. Bitcoin is not controlled by any organisation, bank, third parties. It’s controlled entirely by it’s users, transaction by transaction. What is Bitcoin used for? Bitcoin allows users to quickly and directly transfer the digital cash to any address around the globe, without the permission of any third party.

How does Bitcoin work?

Bitcoin uses blockchain technology to bypass third party control. Before Bitcoin, a third party organisation such as a bank would be required to authorise and log any transfer of money in a ledger in order to prevent double spending. This ensures any monies transferred to, for example account B, had actually left account A. Bitcoin provides the ideal solution to the double spending problem, enabling complete freedom of cash transfers.
Every transaction (the block) is time stamped and added to the chain. Every other transaction is then added to the chain creating the blockchain. The chain and blocks are highly encrypted and each new transaction forms a part of a sophisticated equation spanning the entire chain. If one block were to be changed in an effort to double spend or change the values, the entire chain would be effected and the attempt would immediately be picked up on and rejected.

Where to buy Bitcoin?

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Bitcoin Price Volatility

Bitcoin is perhaps one of the most volatile assets every exist. The price fluctuates wildly on a daily basis, and for the most part is impossible to predict. Although it is impossible to predict, we can look back over the trading history since it was first available to trade on an exchange in 2010 and track the trends and patterns it seems to follow. The day on average with the highest Bitcoin price, or the best day to own Bitcoin is December 13th.

Take a look at this article for an in depth analysis of the Bitcoin price on every day since 2009!

Bitcoin price in 2018

The current all time high (ATH) Bitcoin price is $19,343 which it hit on 16th December 2017. Since then the price has been in a slow decline for the rest of 2017, and into the first half of 2018. Currently (12th June 2018) the price is the lowest since November 2017 ($6,750).

That’s a 65% decline in price in just under 6 months. What is Bitcoin up to? Without context, that would seem to some like the end of Bitcoin and a tremendous disaster. However the market has seen larger drops and in shorter periods of time before recovering and increasing multiple times.

When you consider the fact that Bitcoin increased by over 1300% in 2017, the 65% drop does not seem so daunting. Can Bitcoin continue to appreciate in value in 2018?

How to Buy Bitcoin!

Why is Bitcoin so volatile?

Bitcoin markets react to news spreading online. Financial markets in their infancy have always been volatile, but in the age of the internet where news spreads like wild fire, in a market where literally anyone can invest, the volatility has been dramatically intensified. People have the ability to buy and sell with the touch of a button, something which traditionally would have taken hours, if not days to do.

What is Bitcoin Mining

Bitcoin mining is the process of adding and verifying transactions made on the public distributed ledger, which is in short a list of all past transactions. This ledger of past transactions is called the blockchain as it is a chain of blocks. The blockchain serves to confirm transactions to the rest of the network as having taken place.

Bitcoin mining uses high powered computers to validate and confirm transactions made on the Bitcoin network. Using a process known as proof of work, computers solve incredibly complex mathematical problems in order to prove they have the ability to verify the transactions. A miner is also known as a node, and each computer around the world make up the distributed ledger responsible for allowing the Bitcoin network to work. All the miners compete to solve the ‘work’ and the fastest are rewarded with newly mined Bitcoin.

The process uses lots of electrical energy, mostly to keep the computer cool, and this electricity costs a lot of money. Bitcoin has gained some negative press in relation to the amount of energy the network consumes. Some companies though are putting the excess heat generated to good use such as this company using the Bitcoin Mining heat to grow tomatoes.

Mining has two main functions, the primary purpose of mining is to allow the mining nodes (miner’s computers) to reach a secure, tamper-resistant consensus. The second function mining facilitates is to add new Bitcoins into circulation. As a reward for solving the blockchain (confirming the transactions) miners are rewarded with Bitcoin.

What is a Bitcoin Fork

There are two kinds of Bitcoin forks; a soft fork and a hard fork.
A hard fork is a mandatory update to part or all of the blockchain protocol. A permanent divergence in the blockchain is created and all nodes running the previous version will not be accepted. This is different to a soft fork as it requires the all nodes must upgrade their software in order to continue transacting on the blockchain. Unlike a soft fork, a hard fork is not backwards compatible.
When the hard fork takes place all the users validating the newest version will continue along a new path and all users validating the old version will continue along the original path.
A good example of this is when Bitcoin Cash was created… a certain percentage of nodes started to support the updates to the protocol which caused the chain to split. All Bitcoin nodes continued on the original Bitcoin blockchain, and a new blockchain was created which became Bitcoin Cash.

Bitcoin Adoption

Bitcoin is becoming increasingly more popular. Although recently the price has fell, inline with Google search volumes, adoption around the world is still growing. The hype has subsided since the frenzy seen at the end of 2017, but positive changes are slowly happening around the world which will allow Bitcoin to scale.

Many financial institutions around the world for example have announced plans to launch Bitcoin and cryptocurrency exchanges in 2018! Nasdaq for example are developing their own cryptocurrency exchange. Coinbase, the largest exchange in the USA became the first every exchange to get a UK bank account, and received an e-money license from the UK government.

Bitcoin ATM’s are popping up all around the world, with thefts of them even becoming a problem for some owners! 500,000 Swiss citizens recently voted for a Bitcoin based financial system! It also became permissible under Sharia law, a sticking point for many potential Muslim investors!

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