Bitcoin (BTC) was the first decentralized digital currency, that is, not issued by a central bank and not controlled by any government. This means that anyone can use BTC in global transactions without the need for intermediaries.
Besides decentralization, the difference between bitcoin and traditional money is that there are no physical banknotes or coins, and each BTC is formed from a unique code.
Another aspect is that bitcoin is a limited currency – unlike fiat money, such as the dollar or even the Brazilian real, no new BTC will be issued if countries feel the need.
BTC is based on a peer-to-peer (P2P) network devised by Satoshi Nakamoto, with a public open-source protocol. This code stipulates a limit of 21 million bitcoins to be issued.
How did bitcoin come about?
Bitcoin was created in 2009 by the legendary figure Satoshi Nakamoto – whose identity is unknown – who, months earlier (in 2008), released a document (A Peer-to-Peer Electronic Cash System) in an internet discussion group, describing how it would work.
A few months later, Satoshi Nakamoto presented the first version of the software and invited other developers to join in.
The first commercial transaction with bitcoin took place on May 22, 2010. On that occasion, a user bought two pizzas for 10,000 bitcoin! But the first transaction happened earlier, on January 12, 2009. At the time, Satoshi Nakamoto made a transfer to Hal Finney, a game developer who supported the creation of the decentralized digital currency.
How does bitcoin work?
Bitcoin exists in a virtual environment, and its security is guaranteed by the blockchain, whose structure resembles a data chain.
In this case, the data are encrypted blocks that need the network to solve a mathematical problem so that they can connect and form the chain (or blockchain).
Each block has its code and the code of the previous one, which enables the connection and ensures that no violation has occurred.
The work of validating these codes is known as mining. On average, a new block is mined every 10 minutes, and the difficulty increases automatically every 2,016 blocks. That is, approximately every two weeks, in sync with the network hash rate.
However, the difficulty of mining is increasing as the amount of computing power in the network increases, a rate known as the hash rate. The activity becomes more complex as equipment with greater computing power connects to the network.
What is bitcoin halving?
In addition to the increased difficulty of mining, bitcoin goes through a halving every four years, an event in which the reward for mining is cut in half.
This event is part of the programming devised by Satoshi Nakamoto, who created the system intending to ensure the scheduled scarcity of the crypto asset and, thus, its appreciation in value.
The idea was to ensure the reserve value of bitcoin, often compared to gold (precisely because of the scarcity resulting from the limited stock).
How to mine bitcoin?
The term mining comes from the extraction, that is, the process of remunerating the operators responsible for validating the transactions performed on the bitcoin network. Miners are the equipment owners that work to verify, transmit, and record transactions in the blockchain.
The transactions are grouped into blocks, and the validation of the record depends on the resolution of calculations applied by the protocol, like a puzzle. After their resolution, a new block of transactions is added to the blockchain. The bitcoin mining process aims to maintain the integrity and security of the transactions and remunerates the miners with the new coins generated with each block.
It is not possible to profit from mining on the bitcoin network using the processing of a personal computer and a few video cards because mining was designed to be a competitive process currently controlled by thousands of specialized data centers scattered around the planet. In addition, the high costs related to power consumption make it impossible to operate without gains in scale.
In other words, mining is practically an industrial process executed by highly specialized companies, usually installed in locations where the cost of electric power is more interesting. As a result, mining bitcoin at home is currently impossible – it may even be possible, depending on the equipment, but the cost of the operation is so high that it is not worth it.
How to buy bitcoin?
You can buy (and sell) bitcoin at specialized exchanges, such as TransferoCrypto, or directly with other users.
It is worth mentioning that it is not necessary to acquire 1 BTC in one purchase – there are fractions of bitcoin, known as “satoshis.” In other words, to enter this market, starting with a minimum amount is not necessary. The smallest fraction of 1 bitcoin is 1 satoshi, equivalent to 0.000000001 BTC.
But in addition, another possibility to invest in bitcoin is through investment funds and ETFs. There are several options available via investment platforms.
It is worth clarifying that bitcoin is a currency that faces volatility, just like any other asset. Thus, to invest in bitcoin, it is crucial to follow the market and watch for bearish moments, representing a buying opportunity.
What is bitcoin’s price today?
Check the last week’s chart with the bitcoin price:
How is bitcoin quoted?
The bitcoin quote is based on the price of the latest trades on the market, which operates globally, 24 hours a day, seven days a week.
Much like the price formation of a commodity, the bitcoin quote rises or falls according to the relationship between supply and demand.
How to follow the bitcoin price?
In practice, there is no single bitcoin price. Instead, the price displayed on some services, such as TradingView, is a weighted average of the price on the main exchanges. Thus, there may be differences in values between exchanges, which allows for a price arbitrage between them.
Some services like Coin Trade Monitor show what arbitrage opportunities are, widely used in algo-trading strategies.
To learn more about bitcoin and buying opportunities, check out the latest analysis by Transfero’s experts. According to them, there is a bullish possibility in the short term.