Bitcoin: everything you need to know about the number 1 crypto

Bitcoin: everything you need to know about the number 1 crypto

Bitcoin is redefining the global financial system as a digital currency that is encrypted, decentralized, and accessible anytime. Launched to revolutionize payment methods, it is now a recognized and coveted investment asset.

1. A revolutionary concept: Blockchain
   The functioning of Bitcoin is based on a protocol: the blockchain.

It is a digitized account book in which all transactions are listed.

On this network, bitcoins circulate, which are therefore exclusively digital.
This network has 2 fundamental characteristics:

it is immutable and distributed.
no data recorded on the blockchain can therefore be modified or deleted.
No central body controls how it works: data is replicated on tens of thousands of computers worldwide and anyone can participate in the network and suggest changes.

From these characteristics comes confidence in its use.

To diversify your investments in cryptocurrencies, also consider buying stablecoins like USDT. Learn how to buy USDT safely on Coinhouse.”

1. Bitcoin, a creation in response to the financial crisis of 2008?

Mystery hovers around the creator of Bitcoin.

We know him under the pseudonym: Satoshi Nakamoto.

It could be a person or a group of people, it’s impossible to be certain.

Some specialists claim that Bitcoin was created in response to the 2008 financial crisis, to free itself from banks and states.

However, the rare writings of Satoshi Nakamoto, which go back to the origins of cryptocurrency, do not confirm this theory.

However, the flaws of the traditional banking system are discussed.

In particular the constraint of having recourse to financial institutions as
as intermediaries to guarantee our transactions.

Bitcoin can also function without its original creator, who has no longer been active in the project since 2012.

Satoshi Nakamoto therefore proposes an alternative value exchange system.

He is the first person to have found a solution that works entirely without an intermediary or central management body.

1. A little history about Bitcoin
   Bitcoin was first born via a document made public on October 31, 2008, which explained the concept.

This document, called the “White Paper”, has the title:

“Bitcoin: A Peer to-Peer Electronic Cash System.”

The Bitcoin blockchain: entry into service on January 3, 2009.
In the early days, only a few passionate computer scientists were interested in it.

But exchange platforms were quickly set up, making it possible to exchange bitcoins for dollars, and therefore to set a price according to supply and demand.

Price and value of Bitcoin in 2009
On October 12, 2009, 5,050 bitcoins were exchanged for $5.02, or approximately $0.001 per unit, which marked the beginnings of the use of cryptocurrencies as an investment medium.
Less than two years later, on February 9, 2011, BTC reached parity: that day, 1 bitcoin = 1 dollar.

1. Bitcoin originally: a fast means of payment
   BTC is the first international and Internet-native payment method.

This allows anyone with internet access to be able to use them without limitation.

Transactions are fast, and take around ten minutes maximum to reach their destination, even if your recipient is on the other side of the world.

More efficient than bank transfers

It is also a more efficient system than bank transfers which can take several days, especially if funds are transferred internationally.

The BTC network is also cheap: it is possible to transfer the equivalent of millions of euros with fees of just a few euros.

Due to sudden movements in its price, the asset remains little used as a means of payment to purchase goods or services.

It is seen more as an investment tool, or even as a safe haven, but we will study this question in detail later.

1. Bitcoin is rare but highly divisible
   To make everything clear, let's distinguish between the Bitcoin protocol - which is the network on which all transactions or information are stored - and bitcoins which are the units of value that we exchange and whose price is set by the 'Offer and demand.

A number: 21 million.
One of the fundamental characteristics of Bitcoin is the fact that its monetary creation is predictable. 21 million: this is the total number of bitcoins that will be available on the futures market, determined by the protocol upon its creation. This limit gives it an intrinsic scarcity, and we often draw parallels with precious metals, to the point that we talk about Bitcoin as digital gold.

21 million units for 7 billion humans may seem insufficient if Bitcoin wishes to establish itself as a means of exchange usable by everyone on a daily basis, but this is a false problem.

Bitcoin units are currently divisible up to eight decimal places, and it is possible to go even further if necessary. In honor of its creator, the smallest unit of the system is called the satoshi.

One bitcoin is therefore equal to 100,000,000 satoshis, and it is entirely possible to buy or exchange a thousandth or even a millionth of a bitcoin.

1. How is the price of Bitcoin fixed?

The Bitcoin price is set, as with raw materials or precious metals, solely through supply and demand.

There are exchange platforms on which a significant number of transactions are carried out every day, making it possible to set a price.

More generally, the price is influenced by a myriad of daily factors:

news, good or bad,
the global economic context,
internal dynamics of the market.

1. Understand the concept of Bitcoin mining
   People called miners are volunteers who use their computers to validate transactions and secure the Bitcoin network.

Through this action, known as “proof of work”, they are at the origin of monetary creation: the goal is to solve a mathematical equation, and the first machine to solve it receives a reward in bitcoins.

This is why the analogy is sometimes made with gold: miners “discover” a new block of the Bitcoin blockchain each time an equation is solved.

Like the gold miner who has worked hard in a mine, the miner receives the bitcoins as a reward for committing computing power and allowing the network to function. The difference is that with Bitcoin, everything is digital and the total number of units is determined in advance.

Miners are also paid with transaction fees, the amount of which varies depending on the use of the network, from a few cents to several tens of euros.

Bitcoins and mining: a real industry

Today, bitcoin mining has become industrialized.

We speak of “mining farms”: they designate a place, usually large, in which thousands of computers assigned to mining activities are grouped together.

It is often companies that own these farms because it is an activity that requires investment: to be competitive, you need to have a lot of equipment. Equipment that consumes a lot of energy and releases heat, which requires air conditioning.

Some countries around the world are favored for this activity due to their cold winter and low cost of electricity. Mining remains a technical subject, we cover it in more detail in this article.

1. Bitcoin, investment opportunity and store of value?
   You have probably already heard Bitcoin being compared to digital gold.

As a result, several characteristics validate this observation:

Just like gold, bitcoins are in limited quantity, which introduces a notion of scarcity and is likely to increase the price of the asset.
Bitcoin frees itself from the monetary creation of States.
In these times of economic uncertainty, this characteristic can give Bitcoin the status of a safe haven, in the sense that state currencies could depreciate with the phenomenon of inflation. Opening a Bitcoin account can be very interesting.

But be careful, while buying bitcoins for investment purposes can prove to be a wise choice, its high volatility should not be overlooked.

Indeed, its value can rise or fall sharply in just a few days. Not being subject to any regulation, Bitcoins are regularly the scene of speculation.

1. Advantages and disadvantages of bitcoin
   Advantages :
   The first advantage of bitcoin is that it can be used as an anonymous means of payment. But this cryptocurrency has many other advantages:

• Transfers are almost instantaneous (less than 10 minutes);
• Transfer fees are zero. Payment fees are lower than other more traditional solutions (PayPal, bank cards, etc.);
• There is no limit to the amounts that can be transferred;
• Trade takes place on a global level, without intermediaries for storage and transfer;
• Anyone can trade bitcoins;
• It is a decentralized system, not dependent on any institution;
• Total transparency of exchanges is guaranteed: each transaction is recorded in the blockchain, a public database;
• It is an attractive investment opportunity. The gains can be quick.

The inconvenients :

Bitcoin also has several disadvantages. It is essential to know them before investing or embarking on mining this cryptomania:

• The Advantages still little known. Almost everyone has heard of bitcoin, but this concept remains little understood by the general public;
• Transactions are irreversible. It is not possible to cancel a bitcoin payment once made, even in the event of an error;
• Its independence from institutions and the absence of intermediaries is not without consequences: bitcoin is not regulated or guaranteed by a central authority;
• Users should take special precautions to protect their investment. It is essential to secure your computer and your online wallet. In the event of hacking or loss of access, the user has no recourse. The user must also be very vigilant in choosing the wallet provider.
• The price of bitcoin experiences high volatility, it can be significantly impacted by all kinds of events. However, this should evolve towards greater stability when more individuals and businesses use this cryptocurrency.

Bitcoin News March 2024
In 2024, Bitcoin returns to peaks. The most popular crypto reached a new record value on March 14, 2024 with a price exceeding $73,000.

Additionally, institutional investor interest in Bitcoin ETFs has reached a new high, with an inflow of $417 million (source: Tradingview.com), while traditional funds like GBTC are experiencing a drawdown.
This trend highlights the growing preference for Spot Bitcoin ETFs, providing direct exposure to the cryptocurrency, over more expensive and less flexible options.