All you need to know about Bitcoin

Bitcoin is an electronic encrypted currency also known as cryptocurrency which is a decentralized financial network that does not rely on centralized management or intermediaries for the exchange of money and traditional, such as banks, but operates peer-to-peer without any intermediary, using encryption, and all the transfers are recorded in a public record called Blockchain that everyone can see with complete transparency.

Invention of Bitcoin

The Bitcoin program was created in January 2009 by a person or group of people who called themselves Satoshi Nakamoto, and it was not known who was responsible for this innovation until May when Craig S. Wright, a computer engineer and Australian entrepreneur, admitted. The program is open source and any developer can get a copy of it and develop and republish it freely.

On January 3, 2009, Satoshi Nakamoto mined the first bitcoin, and as a result obtained the first block called the Genesis Block, becoming the first block in what came to be known as the blockchain, and sent ten bitcoins to Hal Finney, who was able to successfully lead in the second. January 10, 2009.

2010 saw the first bitcoin purchase when the developer and programmer Laszlo Hanyecz paid 10,000 Bitcoins for two pizzas from Papa John’s.

Satoshi Nakamoto mining and retained one million bitcoins before Nakamoto’s name disappeared forever, holding the chain and encryption keys Gavin Andresen and becoming chiefly responsible for the development of Bitcoin. He is credited with making Bitcoin completely decentralized.

Bitcoin price

2011-2012

The price of bitcoin in 2011 rose from $ 0.3 to 5.27 at the end of the year, after rising to more than $ 30 in June of the same year, and in the following year 2012, the price of bitcoin rose from 5.27 to $ 13.3 at the end of the year.

2013-2016

March 2013 saw a sudden rise in the price of Bitcoin to about $ 48, and on April 10 the price rose again to $ 259, falling after three days to only $ 45, and the price of Bitcoin continued to swing up and down to exceed the $ 1,000 mark and settle at 770 At the end of the year.

In 2014, the Bitcoin exchange rate fell to $ 314, rising to $ 434 in 2015, and Bitcoin returned to the $ 1,000 mark at the end of 2016 to $ 998.

2017-2018

2017 saw the biggest rise in Bitcoin history, with the price of Bitcoin reaching $ 19,783 on December 17, ending the year with a price drop of $ 13,412.

In early 2018, China announced a ban on Bitcoin in local markets, pushing the price of bitcoin down to less than $ 4,000 by the end of the year.

Symbol and parts

Symbolizes Bitcoin global symbol ₿ represents one thousand of Bitcoin and symbolized MBTC, called the smaller part listed in micros Bitcoin, one million of Bitcoin, and is considered satoshi the smallest part of Bitcoin and represents one part out of 100 million part of Bitcoin.

How can I enter the Bitcoin market and is profit guaranteed?

Certainly not, it is not so easy and profit is not guaranteed when investing in Bitcoin or any technology emanating from it, always important to remain cautious, Bitcoin is a great space for creativity, and investing time and resources in anything related to Bitcoin requires the spirit of adventure, although Bitcoin markets have developed rapidly Great exchange rate has increased incredibly.

There are several ways to get bitcoin. You can sell any product or service in exchange for a bitcoin in return for later investment. You can buy bitcoin for any conventional currency at the daily exchange rate. Of course, bitcoin can be obtained through competitive mining operations. Today requires very expensive hardware, or invest in cloud mining services that you pay for bitcoin mining on its hardware.

Blockchain

It is the general record in which all bitcoin conversions are recorded, as well as all the newly developed bitcoins, and consists of a large number of blocks, each block includes all the contents of the preceding block and so on until we reach the original block Genesis block and all blocks and links between them secured by a strong encryption system.

When a conversion is performed, the network nodes record and validate the process by typing, encrypting, and distributing the entire process details to all nodes. About 10 minutes, a block containing several acceptable conversions is created, added to the blockchain and quickly deployed to all network nodes.

The software, which manages all Bitcoin production and conversion processes, tracks all purchases and conversions to ensure that no bitcoin is spent twice as much, ensuring security and non-theft.

Conversion process

When a user sends several bitcoins, it specifies the address that he wants to reach and the amount to be sent. , And if there is an increase in the amount, outputs from the blockchain are generated to reproduce outputs that are parts of the previous inputs, and then converted back to the sender.

Bitcoin extractors charge for transfers based on the storage space used and not the amount to be converted. These fees are measured in satellites per byte Sat / b. It will cost more than sending a huge amount at once.

How to Own Bitcoin

A blockchain contains addresses for each existing bitcoin. Creating a bitcoin requires randomly selecting a valid available address and calculating the corresponding private bitcoin key. This process is done in a fraction of a second. In contrast, reversing the process and knowing the private bitcoin private key already exists is mathematically impossible.

Therefore, the user can publish the bitcoin address without fear of knowing the private keys of the Bitcoins, and the user will not be able to spend any bitcoin without his knowledge of the private keys and his digital signature, so that the network verifies the information given and the use of a generic code in the transfers to ensure that the owner’s name and personal information is not disclosed.

What happens when private keys are lost

The user will not be able to prove his / her ID for any amount when his / her key is lost, and the bitcoins in the account will be worthless and unusable. In December 2017, about 980,000 Bitcoins were stolen from cryptocurrency records by stealing private keys, the largest theft in Bitcoin history.

Bitcoin Mining

It is a continuous record-keeping process that takes place through the use of the tremendous processing capacity of the computers in use. Miners who call themselves miners or prospectors keep the key chain coordinated and complete. Verify them by netting the network and then adding them to the blockchain, so the prospector gets a specific amount of 12.5 bitcoin/block.

The new block is not accepted without proof of Proof-of-Work, a system that requires the prospector to choose a number called nonce to process the block based on that number to obtain a smaller, easily verifiable block to facilitate the process for all prospectors.

By checking the validity of each block one after another, and the interconnectedness of all blocks within the blockchain, all this makes a modification to the blockchain very difficult in light of a large number of prospectors who carefully follow everything within the system.

Pooled mining

Most prospectors integrate their mining equipment’s ability to obtain greater processing power, which will enable them to form and verify a block in less time to acquire new bitcoins and transfer fees, as working individually requires a long wait to form and verify a block before others.

Bitcoin supplies

The miner gets an amount for adding each new block to the blockchain. As of July 2016, 12.5 bitcoin is added when a new block is added to the blockchain and is transferred to the prospector who added that block. This amount will be halved every 210 thousand blocks, ie every 4 By 2140, we will reach the upper limit of 21 million Bitcoins set by Satoshi Nakamoto, and the cost of mass mining will be close to zero.

Governor of Bitcoin

The wallet stores the information necessary to complete the conversion in Bitcoin. The Bitcoins you own can never be separated from the blockchain at all.

To explain the principle of electronic portfolios, it is necessary to define the types of Bitcoin users.

  • Full client: which verifies conversions directly by downloading a full version of a series of blocks of more than 65 GB called Bitcoin core, which is the most secure and effective method, and does not need a reliable external intermediary, and the full user can verify the validity of bitcoins and added blocks Recently, but the large size of the blockchain and its need for superior processing capacity and powerful hardware, not all users can be within the full client framework and will need wallets for their bitcoins.
  • Lightweight client: who needs to deal with a full client who has the full version of the series of blocks to complete their transfers and payments through their devices such as smartphones or personal computers, and this is done through e-wallets, and the method requires great trust in the customer Full to ensure the validity of bitcoins.

There are three types of electronic wallets for cryptocurrencies:

Online wallet: Cloud services that provide the handling of the blockchain via the Internet without the need for strong hardware, and requires great confidence in these service providers and their security measures, because of the fear of cyber attacks that could put users’ data at risk of stealing their assets. Type of wallets as applications running on smartphones and laptops.

Physical wallet: whereupon stores the necessary credentials to complete the transfer operations without an internet connection, and represents a piece of paper printed with the private key ( the simplest types of physical portfolios) can be your key to print on a piece of metal and hide electronic ornately, so that the private key is automatically destroyed When used, and after the high prices of Bitcoin to record levels are becoming those metal pieces of gold.

There is a last type of hardware-based on a piece of hardware similar to external storage USB and called Hardware Wallet through which the user can make all financial transactions such as payment and transfer of funds safely and easily.

Pros of Bitcoin

Freedom in financial transactions

It is possible to send or receive bitcoins from anywhere in the world and at any time, unlike traditional banking transactions that monitor and set conditions for the customer, but Bitcoin owners have absolute discretion with their money.

Low fees are optional

There are no specific bitcoin conversion fees, and all e-wallets allow the customer to determine the fees that he will pay to complete his transaction more quickly. As mentioned, the fees are not calculated according to the amount to be transferred. The 100,000 Bitcoin transfer fees are the same as one Bitcoin transfer fee.

Less risk for traders

Bitcoin transactions are safe and irreversible and do not require access to the customer’s personal information. This protects traders from the risk of fraud, and this opens up more room to enter new markets at no additional cost.

Confidentiality and full control of funds

Bitcoin owners are in full control of their money and transactions.No one is forced to pay any additional fees. And all transactions are done without personal information. This helps to prevent impersonation, exploitation of fraud and theft of money.

Credibility of dealing

All the information about every bitcoin mining and where it has been spent is available to everyone in real-time.

Cons of Bitcoin

Degree of acceptance

Many people are worried about dealing with Bitcoin, and every day we find an additional number of companies that list Bitcoin among the accepted currencies in their dealings. As the Bitcoin market evolves and the technology matures, Bitcoin prices can become more stable.

Continuous development

Many open-source Bitcoin services are still in beta, and these features are being continually developed and developed to make the Bitcoin market safer and easier to access for the general public. To maturity.

Great power consumption

The operation of the Bitcoin market consumes a very large amount of electricity. Multi-core processors and mining centers need a lot of power to run and more energy to cool the hardware used. In contrast, Bitcoin supporters compare electricity consumption to the high costs of operating banks and keeping the money. , The electricity needed to operate the used equipment will not exceed 2% of global energy consumption.

Many prospectors are looking for climate-cool places to build mining stations such as Iceland, where the climate is cold all year long, including those who use alternative energy to ease electricity bills such as wind and hydropower. China previously topped the list of countries most mining Bitcoin because of the government subsidies for electricity and cheaply available electricity For citizens.

Decentralization and tendency to centralization

We mentioned earlier that Bitcoin is a decentralized currency, as there is no main server for everyone, but the entire network works in a peer-to-peer way, and there is no one place to store all network data, the blockchain is divided and distributed and can be owned by anyone on their PC and developed and produced Additional blocks and receive money for this block.

Of course, everyone can create new Bitcoin addresses, like bank accounts without anyone’s approval, and use them to transfer money freely.

A large number of researchers point out that Bitcoin is on the way to centralization, not all customers can be full customers, but that most of the customers are ordinary customers need intermediaries to conduct the conversion operations, and all prospectors are working to establish clusters to increase their profit and compete strongly in the Bitcoin markets, Many companies also control the market, such as maintenance and control groups and online portfolio founders.

Decentralization requires that a group of prospectors does not hold more than 50% of the total market, as this will allow them to control all transactions which will centralize the Bitcoin market. The Ghash.io mining conglomerate controlled 51% of the total market. 70% of the world total.

Where the value of Bitcoin comes from

Its value is because it is a form of money, has the characteristics of traditional money based on mathematics and not on gold or silver or on the authorities that issue traditional paper money, Bitcoin is supported by mathematics and has a growing support base of users, traders and companies who trust Bitcoin, and other currencies derive Bitcoin is worth having people accept it as a method of payment.

How the Bitcoin price is determined

The price of Bitcoin is determined by the base of supply and demand, where the price increases as demand increases and the price fall when supply increases and demand decreases. As the number of Bitcoins in the market is limited and few and does not increase rapidly, we find that Bitcoin achieves fantastic prices compared to conventional currencies.

Is Bitcoin just a bubble, and will it be a worthless day?

Anything is possible, history has seen a lot of failed currencies that are no longer in use today, for example, the German mark. Everything in the Bitcoin world is possible.

Confidence is one of the most important factors that increase or decrease the price of bitcoin, and only customer decisions determine the global price. The question that no one can answer is whether Bitcoin will become a globally recognized currency or will it disappear forever?