In 2017 the world was seized with crypto mania. Bitcoin, the founding father of all cryptocurrencies experienced a 20-fold price boost, capitalization rising to $320 billion, first bitcoin billionaires, hard forks, bitcoin futures, and so on. Today it is in the world’s spotlight and many people are asking themselves: is Bitcoin the currency of the future or just a fad?
Bitcoin is an electronic decentralized payment system and a cryptocurrency which came into being in 2009. Bitcoins exist only in a virtual realm as strings of digits that comply with certain conditions. The ceiling of the total number of bitcoins is 21 million.
Bitcoin is a sequence of digits
Cryptocurrency is emitted automatically, while the rate of emission is pegged to the network’s growth. Participation in maintaining the network is compensated for with coins and commissions and is called mining. As a matter of fact, it is the selling of computing power for the result of putting it to use.
This is how bitcoins are mined
Since market participants recognize the cryptocurrency’s value, it is possible to take and give it as part of settlements without government pushback, therefore cryptocurrency is a medium of exchange. The price of a cryptocurrency is determined by supply and demand.
Bitcoin is based on a chain of blocks or Blockchain—a structured database with certain rules regulating the formation of transaction chains and information access which prevent data theft, fraud, etc. It is a global registry where unalterable and unforgeable information processing rules are described. The system’s decentralization makes manipulations and fraud undoable.
A block contains a list of transactions, each of those contains a file confirming that one address sent funds to another address. Each bitcoin contains information about all transactions it has ever been a part of.
Blockchain—chain of blocks
Bitcoin’s popularity is rising especially in those places, where the local currency is losing its value, and the people are trying to preserve their wealth. In this instance, Bitcoin acts as gold. It is a long-term investment insured by the revolutionary technology which lies at the foundation of Bitcoin.
Payments without commissions or middlemen, no limits on cross-border flow of capital, anonymity, and security, freedom of settlements and emission are conducive to the rapid spread of cryptocurrency as indicated by the growing volume of transactions: bitcoins are accepted in stores, restaurants, bitcoin ATMs pop up on the streets of some cities.
Subway accepts Bitcoin
As you know, the total number of bitcoins is capped at 21 million, 4 million of which has been lost forever (owners lost access to wallets). As the result, we have roughly 17 million bitcoins per 7 billion people, or just one bitcoin per 410 people.