Bitcoin 101 – Everything You Need to Know About It
There are numerous online papers that describe what Bitcoin is in great detail, but some still fall flat. Bitcoin mainly refers to a unit of the Bitcoin digital currency, better known as a cryptocurrency. Some might have heard the term incorrectly used when talking about blockchain technology in general.
So what is Bitcoin to the mainstream audience?
Dissimilar to traditional fiat money, there is no local government or central bank dominating over Bitcoin. To keep inflation under control, the supply of Bitcoin that is slowly mined is capped, which means that only 21 million coins will ever exist.
Overall, Bitcoin is much more than just a cryptocurrency to be used for global payments – it is also an unchangeable, global public data register that anyone can use to power blockchain apps.
Bitcoin as Great Medium of Exchange
The basic blockchain technology is created to preserve the decency of data and transactions — the blockchain registers for good all confirmed transactions via a process known as mining. Every transaction is digitally signed and authenticated through cryptographic methods that secure the fact that the funds cannot be spent multiple times.
Bitcoin mining is the process through which new coins are generated. Mining depends on cryptographic hash functions and the Proof-of-Work (PoW) consensus algorithm. Modifying the Bitcoin blockchain via mining asks for the whole system to be unraveled record-by-record, as every block includes the hash of the previous block. To do so would require the offender to expend an extremely insane amount of capital and resources.
What is Blockchain?
As mentioned already, the Bitcoin blockchain is a global distributed ledger that includes data blocks consecutively connected in a chain. Each block has information about the prior block, which is copied and placed on various Bitcoin mining nodes without being linked to one particular server – this makes the exchange of records impossible.
The Bitcoin blockchain is divided and maintained by numerous interconnected parties, so those who participate in the network do not need to put their trust in one person or company to have an accurate copy of the ledger. The structure is permanent and led by a consensus system so that there’s not just one source of making decisions.
How the Bitcoin Blockchain Works
Users circulate transactions onto the Bitcoin (BSV) network, and when the request arrives on the network, it is validated and then added to a pool of pending transactions. The digital signature authenticates its security and accuracy, which can make it impossible for fake transactions to pass.
Bitcoin is a permissionless, P2P financial network, allowing users to transact freely with each other based on the belief that they can be the owners of their data, meaning that the signing of the transaction demonstrates possession.
The applications of the blockchain technology broaden beyond cryptocurrency and money transfer and are useful for a number of other applications, which include many various industries.
What is a Bitcoin Wallet?
Normally, a wallet is a case in which we carry paper money, credit cards, and other objects. While many may believe that a cryptocurrency wallet has the same attributes as a regular wallet, it actually functions differently.
Bitcoin is practically a record of transactions on the blockchain. The coin never leaves the blockchain, so, basically, a cryptocurrency wallet is a misnomer as it doesn’t actually store the coins.
Rather, a Bitcoin wallet is an instrument that cooperates with the Bitcoin SV blockchain to send, receive, and control the Bitcoin allocated to addresses. When a user sends Bitcoin, they are transferring possession of the digital currency from one address to another.
How is Bitcoin Doing Now?
The king coin has seen a lot of action in the last period. After recovering 6.3 percent from a drop to $11,200 on August 11th, Bitcoin’s price seems to be preparing for a third run to the $12,000 mark.
This follows a week of bullish news, amid the weakening of the U.S. dollar. The daily timeframe depicts Bitcoin continuing to make higher lows as the price solidifies into a stricter range between $11,200 and $11,800.
In a recent post, market intelligence firm Stack Funds said:
“A retest of the $12,000 level is in sight as the formation of a bull flag crystallizes. Stack believes that the current market structure will continue to remain intact unless the $10,500 level is breached. Given the current economic backdrop coupled with the weakening dollar, we should continue to see bullish momentum moving forward for Bitcoin.”
The company also highlighted Bitcoin’s increasing association with gold, mentioning that BTC price corrected 2.7 percent as gold retraced by 9 percent this week. As per the firm, a unique feature of Bitcoin is that the asset is somewhat protected from wider market volatility as its association with gold and equities change depending on the price action with each market.
“Despite the recent spike in BTC–Gold correlation touching March highs, the record decline in gold this week has not impacted Bitcoin price significantly, as the digital asset catches back on to the equity-like relationship to maintain its upward price trajectory.”
Eduard Watson Author
An experienced finance writer for more than 10 years, active industry watcher, and gadget enthusiast.