Bitcoin is the flagship coin of the whole crypto industry. It is the biggest token out there that directly affects the market and represents over a fifth of its total value. For the mainstream audience, BTC has been something that produced amazing success stories about overnight billionaires and incredible profitability.
The reality check that occurred in 2022 was a huge hit to the positions of cryptocurrencies in the global financial market with the whole market contracting by more than 60% in just over one quarter. The period many experts called the “crypto winter” shook the faith of some enthusiasts. Nevertheless, Bitcoin remained strong and, in some cases, performed better than the stock market.
What is Bitcoin exactly?
Without getting into the technological mumbo-jumbo, we will instead focus on the utility and concept of Bitcoin in general terms. A short historical recap of events looks somewhat like this:
- In 2008, an anonymous developer Satoshi Nakamoto published the code for Bitcoin;
- A group of enthusiasts started using it and continued development;
- In 2016, BTC took off and started making noise in the mainstream media;
- In 2021, Bitcoin reached its ATH of $69,041 after an impressive Bull Run.
Initially, Bitcoin was conceived as an alternative to government-controlled fiat money. The philosophy behind the creation of BTC was based on the idea of creating a decentralized monetary system where no one could tamper with books or print money uncontrollably.
Blockchain is a technology that is older than many belief. While some people are convinced that blockchain as a term appeared only after the arrival of Bitcoin, the concept was discussed at the beginning of the 90s with many experts talking about the benefits of having a system that would be immutable and resilient to any external influence.
Bitcoin is a network comprised of blocks of data with each block adding new information to the network that cannot be edited by any means due to the concept that we call Proof-of-Work. To add a new block, computers must solve a complicated mathematical task. Only then, a new block can be added. This system prevents someone from adding an illegitimate entry. Many experts are saying that it is akin to a digital ledger.
The utility of Bitcoin
This network is all about keeping records of Bitcoin transactions between participants. Any movement of a token can be traced back to its original form meaning that you cannot tamper with preexisting data, but you can use the history of transactions to verify the existence and validity of each coin in circulation.
Another important aspect of the network is its eventual anti-inflationary nature with the final number of tokens being known at the moment of its conception. Eventually, we will reach the maximum supply volume (21 million BTC) and will never see any new tokens added to the network. In the very long run, it could create some issues, but, for now, everything seems to be going just fine.
The network supports sending and receiving tokens that can be broken down into partitions without any issues. There is a bottom limit of 0.00001BTC meaning that there could theoretically be over 210 trillion minimum units of BTC to use. While the current throughput of the network is very limited, options like the Lightning Network (a network built on top of the mainnet) allow users to send BTC nearly instantly and for a relatively low price.
Currently, you can trade BTC on the spot market with over 200 different cryptocurrency exchanges offering BTC pairings on their platforms. There are several big players like Binance and FTC, but smaller exchanges also exist and can even offer better deals.
The market of BTC derivatives is also quite large with millions of retail traders engaging with perpetual futures based on Bitcoin. If you are interested in trading Bitcoin, you should be focused on choosing the right CEX platform and learning more about the current shape of the crypto market.