Bitcoin was the first cryptocurrency (also referred to as digital currency or virtual) to be developed. The real identity of the developer is unknown and he/she only goes by the pseudonymous, Satoshi Nakamoto.
It was invented after the 2008 financial crisis and as a cryptocurrency, it uses blockchain technology meaning it is decentralized. It is therefore not regulated by any financial institution like central banks like the fiat currencies are but rather its operations are determined by its users.
And as a virtual currency, there are no physical banknotes or coins for Bitcoin. It only exists in digital form.
How does Bitcoin work?
Currently (January 2021) there are about 18.6 million Bitcoins in circulation. However, more Bitcoins are added into the market through mining and the total amount of Bitcoin that shall be in circulation once all the Bitcoins are mined is capped at 21 million.
Bitcoin Miners perform two tasks, verifying blocks of Bitcoin transactions and adding them to the Bitcoin blockchain and Mining new Bitcoins by solving complex mathematical problems to find new Bitcoin blocks and adding them to the Bitcoin blockchain.
Each Bitcoin miner is rewarded for the mining and the reward reduces with time. The reward is normally halved after every 4 years (after every 210,000 blocks are mined).
Apart from miners who obtain rewards in Bitcoin, others obtain Bitcoins by purchasing them from other holders through a peer-to-peer exchange or receive them from other holders as a payment for service or good.
And to store The Bitcoin, one must have a Bitcoin Wallet, which receives and sends the digital coins.
Bitcoin is used as a payment option around the world and it has not found any other use like other cryptocurrencies like Ethereum which through their smart contracts technology have found a variety of uses in various sectors. Many businesses especially online businesses are now accepting Bitcoin as a mode of payment. Companies and institutions are also converting their investments from US dollars into Bitcoins.
Apart from paying for services and goods, one can also trade Bitcoin or its derivative products on cryptocurrency exchanges.
Why is Bitcoin so popular?
Since it was introduced in 2009, Bitcoin has remained the most valued cryptocurrencies around the world. Currently, one Bitcoin coin is worth over $30,000.
Its value has had several monsters bullish through which its value has rapidly risen like in the current rally where it has moved from pricing at $19,000 per coin to over $30,000 per coin in just two months period.
It has proved to be such a good investment opportunity that even big companies and Institutions like Square and PayPal among others have chosen to invest in it.