Bitcoin happens to be the oldest and most popular cryptocurrency in the world. Beginning with the basics, there are three major aspects of Bitcoin; its origin, the technology behind it (or how it works) and the utility of Bitcoin as money. It was launched on 3rd January 2009 by the mysterious developer or group of developers called “Satoshi Nakamoto”.
The Bitcoin network is not governed by a central authority. You don’t need a middleman to carry out financial transactions; moreover, bitcoins are stored electronically, which is why Bitcoin was launched as a “Peer-to-Peer Electronic Cash System”. Bitcoin possesses multiple qualities that distinguish it from traditional fiat currencies.
It does not exist physically; it is mined independently by people that have the resources to do so; it is stored and maintained using strong cryptographic keys (or passwords), which is why it is called a ‘cryptocurrency’. It runs on a distributed ledger technology called blockchain that records every transaction on the network.
Since its inception, Bitcoin has come a long way, steadily rising from its initial price of $0.30 in 2011 to its all-time high of $64,863 on April 14, 2021. However, the Bitcoin price depends on a number of factors, most of which cannot be clearly defined by anyone. Below are Bitcoin’s significant price movements since its creation:
Bitcoins received acceptance in 2011 from an international non-profit digital rights group called the Electronic Frontier Foundation. In 2012, the Bitcoin Foundation was launched, with more than 1000 merchants accepting it as a payment service.
In February 2013, the price of one Bitcoin rose to $22. A cryptocurrency exchange in the US got an endorsement in late 2014 from the US Commodity Futures Trading Commission (CFTC) regarding the listing of an OTC (Over the Counter) product that would be based on the price of Bitcoin, marking the first instance of a Bitcoin financial product being approved.
These two years were a disaster for bitcoins as multiple cryptocurrency exchanges were hacked. However, this period had several positives, of them being the deployment of around 700 Bitcoin ATMs across the world to help people access their Bitcoins conveniently.
The number of merchants and businesses accepting BTC as payment continued to rise exponentially. In December 2017, as the Bitcoin price increased astronomically to its all-time high of $20,000, Bitcoin started gaining further mainstream attention. The rate of transactions increased threefold. However, in 2018, BTC started a bearish run that saw it drop to $3,000 by the start of 2019.
By mid-2019, the price of Bitcoin had surged to $13,000 again, before retracing back to the mid-6,000s and 7-000s. 2019 saw the launch of Bakkt, the Bitcoin futures exchange. Late 2019 and early 2020 also saw the launch of Bakkt Options and CME Options respectively. Bitcoin is being widely adopted as currency as time goes on. The Bitcoin price has dropped to $4,800 since the turn of the last decade, but the future of BTC looks as promising as ever.
Bitcoin as a payment system has some significant advantages over traditional fiat currency. They are as follows:
? Traders get freedom from peer-to-peer trading and there are no interruptions from third parties such as the government, banks and other financial institutions.
? No sales tax is payable on Bitcoin transactions.
? Transaction fees are comparatively lower than standard wire transfers.
? International Bitcoin transactions are massively quick as compared to standard bank transfers.
Bitcoin is all about its underlying technology called ‘blockchain’ – a secure, time-efficient and decentralized record-keeping ledger system. It makes Bitcoin an incredibly powerful payment tool, specifically in the unbanked and underbanked regions.
However, the market sets its price. As it is listed on almost every cryptocurrency exchange platform, the price varies according to its selling price on each of them.
Secondly, market liquidity also impacts the price of bitcoins to a great extent. Political events and technological developments have varying degrees of influence over the Bitcoin price. One needs to be extremely careful while investing in bitcoins as its price can be very volatile and many people do regard it as a high-risk asset.
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