BITCOIN (BTC) – A BRIEF INTRO FOR INVESTORS
The original cryptocurrency that started the crypto revolution, Bitcoin is the ‘blue chip’ asset that all other cryptos rise and fall with.
- Blockchain can handle up to 7 transaction per second with 1MB block size
- Utilizes public and private keys to transact in a trustless state
- Proof of work consensus algorithm which rewards miners for successfully verifying transactions
- Built-in SHA-526 cryptography for security developed by the United States government
- Has incurred several hard forks to its blockchain, the most notable being Bitcoin Cash
- Newly implemented Lightning Network is expected to reduce transaction time and fees
Bitcoin has a fixed coin supply, expected to not exceed 21 million Bitcoin.
The supply schedule is set to half the amount of bitcoin released for successfully mined blocks based on a fixed interval and time it takes to mine.
Bitcoin is built on its own public blockchain ledger in which a global network of computers verifies transactions that are encrypted with the SHA-256 algorithm (originally developed by the NSA) to ensure protection.
The blockchain strings a set of transactions together across time in order to keep a running ledger of Bitcoin transactions, while at the same time, making it difficult for any one entity to hack into the system or change information.
The information on Bitcoin’s blockchain is public in that all transactions can be viewed, but still private — meaning user data and information is not stored and only seen behind a public key, a long string of numbers and digits.
In order for Bitcoin to be sent, a user must submit their private key, another string of numbers and digits that are only known to that user, in order to send Bitcoin from their public address.
While Bitcoin does see itself as a decentralized network not owned by any one party, it has a full-time core development team who are the main contributors to its open source code.
Team members include: Wladimir J. van der Laan, Jonas Schnelli, and Marco Falke.
Bitcoin’s goal is to become a global, trustless currency (does not require a third party to verify transactions because transactions are verified on the blockchain) that can allow anyone to transact across borders with no fear of government intervention or regulation.
The technology on which Bitcoin sits is open sourced, so that it can be built upon and improved, and public, so that there’s transparency throughout the system, leading to a decreased likelihood of malicious attack.
In 2007 the pseudonymous figure Satoshi Nakamoto proposed a vision for a new form of digital currency that was decentralized and secure across its network.
Satoshi saw the need for a new currency that could not be censored by local governments and had the ability to hold its value for those who did not have confidence in fiat currency.
Fast forward to 2018 and Bitcoin is showing itself to be a revolutionary technology that is changing the way money is viewed.
Governments around the world don’t know how to handle this new form of currency, and are at odds on if/how to regulate it as such.
Countries such as China are cracking down on the use of Bitcoin altogether, while others such as South Korea are taking steps to ensure that all Bitcoin trades are taxed appropriately.
The United States has gone as far as to subpoena Coinbase, the country’s most notable Bitcoin exchange, to receive user data and ensure all taxes are being paid, but has yet to put any real regulatory action together against cryptocurrency to this point.
Even if Bitcoin slips past government regulators it still must stand up to its issue of scalability if it wants to grow into a globally used currency.
Currently, Bitcoin can only process 7 transactions per second, which pales in comparison to the 24,000 transactions that Visa can compute.
Some solutions to this problem are in the works, such as the Lighting Network, an off-chain scaling solution, but only time will tell if these solutions will provide the stability the Bitcoin network needs to continue its exponential growth.
If Bitcoin continues its growth and solves its scaling problems, it could begin to challenge gold as a universal, safe store of value, giving it a lot of room to grow in the future.
HOW TO GET BITCOIN
Bitcoin is the most popular and well-known cryptocurrency, the standard of all cryptos, so it can be purchased at any cryptocurrency exchange (read through our list of Exchange Reviews).
Bitcoin can be bought with almost any major global fiat currency. It can also be purchased via other cryptocurrency tokens.
For a step-by-step guide to buying Bitcoin using various forms of payment (credit card, bank account, PayPal, etc.) check out our Bitcoin Buyers Guide.
EXCHANGES WHERE YOU CAN BUY BITCOIN (BTC)
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