Bitcoin 101: Everything you need to know about the cryptocurrency that took the world by storm

In 2021, it’s highly unlikely you haven’t heard about cryptocurrency (and blockchain). And in case those terms seem unfamiliar, you’ve certainly heard of Bitcoin. The media doesn’t tire of covering it, the news doesn’t exhaust itself mentioning its historical price movements, and influencers seem to have adopted it as a part of their lives. But what exactly is Bitcoin? Why is it all the rage now? And what does it mean to invest in Bitcoin? This post will give you a brief overview of everything you need to know about Bitcoin, starting from its history and current position to what its future prospects are.

A brief history of BTC

Founded in 2008, Bitcoin or BTC is a cryptocurrency or digital currency founded by Satoshi Nakomoto, a pseudonymous person or group of persons whose identity remains unknown. Unlike traditional currencies, Bitcoin is a decentralized digital currency. Emphasis on decentralized – since it works on a distributed ledger system (securing and saving every transaction ever made on the network), powered by a massive network of computers. A decentralized currency essentially means that no person or central authority owns or controls the currency. This is a crucial feature – since Bitcoin is not a national currency and is not controlled by a central bank or institution. It’s this decentralized, distributed ledger that we call the blockchain.

In other words – if you purchased Bitcoin, it’s entirely in your control. No central authority can oversee it or regulate it. While this also means that all of the responsibility of keeping your Bitcoins secure falls in your hands, the fact that Bitcoin, like other cryptocurrencies, gives you true financial freedom is a major advantage. With just a random string identifying any Bitcoin wallet, unless they know one belongs to you, no one can keep a record of your transactions, what you buy, where you spend your money, etc. And no one (except the free market) will determine its value and price. In national currencies – it’s often the central bank, that,  via policies, impacts inflation and their value relative to other currencies. This is a fairly big differentiator!

As for securing your Bitcoin, several centralized and decentralized cryptocurrency exchange platforms offer secure digital wallets, not just to store money but to send and receive them as well. 

Although several investigations have been conducted to identify the actual person or group of persons, presumed to be Satoshi Nakomoto, there is no conclusive evidence yet.

In its first few months since its inception, Bitcoin access was restricted only to those miners who could validate the Bitcoin blockchain. And in those times, Bitcoin had no monetary value at all, as miners continued to trade them purely for fun. It was only more than a year later, in 2010, that the first Bitcoin transaction took place when a man from Florida traded 10,000 Bitcoin for two Papa John’s pizzas that cost $30. Since then, several Bitcoin transactions took place, essentially through a barter system where goods and services were exchanged for Bitcoin.

Fast forward to now, Bitcoin has taken the world by storm and its value has reached as high as $75,475 as recorded on 13 April 2021. Those two pizzas? They’d be worth $754 million at this rate.

In just a decade, the price of Bitcoin has exploded, crashed and exploded again. What the future of Bitcoin will turn out to be, is something that time will reveal. 

Why BTC is so powerful and impactful

Although there are many cryptocurrencies in today’s market, the power and impact of Bitcoin is genuinely remarkable. It continues to be the most prominent form of cryptocurrency. It remains the volume leader. Some of the factors that have led to such huge popularity of the digital currency are irreversibility of transactions, readily available implementations, ease of divisibility, fungibility, its predictable money supply, economic incentives towards its users, and the fact that there is no central authority and central point of trust.

Another major reason why Bitcoin is popular is that most brands and retail outlets increasingly accept Bitcoin as a legitimate form of payment. From Microsoft to Overstock and even Paypal, Bitcoin is widely accepted in many parts of the world. In addition to this, most crypto exchange platforms support Bitcoin, it is easy to set up and trade, and there are several investors worldwide who have supported the growth of Bitcoin for the past several years. 

With the highest market capitalization than the rest of the cryptocurrencies, Bitcoin is an investor favorite, and the fact that higher market capitalization means lower risk has also played a major role in bringing more people to Bitcoin to make it a very prominent digital currency. 

BTC:  Current Standing

Bitcoin currently represents about a 50% share of the crypto market, and although it can’t be said for sure that Bitcoin will always remain in this position, it still has a current market capitalization of almost $120 trillion. 

Having said that, even as the value of Bitcoin increases day by day, it remains one of the cryptocurrencies with the most volatile trading history. Often, the changes in prices are reflected by investors’ enthusiasm in the currency and market reaction when it does not offer what was promised. In addition to this, several scams and the absence of regulations for the currency have also majorly contributed to its volatility. 

Having experienced a bumpy ride in its price history ever since its inception, the most recent boom in its price was marked by the coronavirus pandemic. At the beginning of 2020, Bitcoin, which was valued at only $8700, closed in for almost $24,140 by the end of November 2020. As the purchasing power of the US dollar weakened in the wake of the pandemic, and investors worried about the future of the global economy, the value of Bitcoin rose while economies and stock markets around continued to crash. 

BTC dominance, or the measure of how much total market capitalization of crypto comprises Bitcoin, continues to change with no fixed position. As of May 2021, BTC dominance is dropping to historically low levels and has already fallen by more than 50% since its high in December 2020. At the same time, altcoins – Ethereum, Dogecoin etc, are leading. 

Experts predict some downward movement for Bitcoin. However, several people are now investing in Bitcoin as a hedge against inflation and more people are expected to follow through this trend. 

Future prospects of BTC

Although Bitcoin will not remain the market leader in the coming years, the future is still very exciting. Even as its value has significantly increased with each passing year, they do plummet occasionally, and the security and scalability of Bitcoin remain largely disputed. However, even with several issues, the mainstream acceptance of Bitcoin in all spheres of life is something to look forward to. With major corporate names like Paypal and Tesla backing Bitcoin, surely, it’s going to get much more common in our everyday lives. In the future, we can expect even financial intermediaries like banks to come forward and allow bitcoin purchases.

Source: UKTN

While volatility continues to cast doubt, more than a handful of experts have also predicted that Bitcoin prices may reach as high as $120,000 or even $180,000 by the end of 2021. Of course, we cannot make (and are not making) any predictions with certainty, but as more investors are diversifying their portfolios and investing in Bitcoin as a major asset class, the sector is certainly the hottest its ever been. As financial freedom, privacy and security are becoming increasingly important concepts in today’s digital world, Bitcoin offers all of that, and this suggests a positive future trend for the cryptocurrency, despite its extreme volatility. 

With its extensive popularity and exposure in the media, Bitcoin will surely make low-cost and high-speed payments a reality. And who knows, by the end of this decade or the next, the value of Bitcoin could even reach $1.2 million, as predicted by experts like Chamath Palihapitiya and Wences Casares. It may even be that the complete opposite happens and Bitcoin value will crash to record levels. But one thing is for sure, Bitcoin is never going to disappear, and it is here to stay.

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