10 Fascinating Facts About Bitcoin You Need To Know
#1. What is Bitcoin?
Bitcoin is a decentralized digital currency created in 2009 whose transactions are 1) peer-to-peer, and 2) recorded on a public ledger.
What does all this mean? Decentralized means there’s no single authority or power entity (like a government) in charge of running it. Traditional, centralized currencies–like the U.S. dollar are subject to government regulations that affect the currency’s overall value, such as inflation rates, reserve requirements, & available supply.
Decentralization gets rid of all of that by putting the power into the people’s hands. The “digital currency” part means it’s purely electronic. It can’t be printed into paper or coin form like dollars & cents.
While you technically can print your private key on paper in the form of a paper wallet, this is merely a code that gives you access to your electronic funds.
The paper itself (or the private key printed on it has no redeemable value other than giving you access to the wallet & the Bitcoin stored in it, which can obviously vary based on the amounts sent & received to it.
Bitcoin’s transactions are peer-to-peer, or take place directly from one person or business to another without the need for an intermediary (like Visa, PayPal or your local bank).
Each transaction is also recorded & verified on an open ledger so that each & every transaction (plus the transaction amount) is open & available to the public.
But don’t worry, because despite transactions being broadcast out into the open, the identities of both the sender & receiver are protected by cryptographically hidden serial numbers called public keys, which are long strings of numbers & letters that make it pretty much impossible to expose the identity behind it.
#2. What are the benefits of using Bitcoin?
Such a system of decentralizing digital currencies is revolutionary! The traditional sense of money as we currently know it is essentially just an accounting system, or pretty much just a record of IOUs. Controlling this large-scale “accounting system” for entire nations requires central banks & governments alike to control and manage them. Of course, putting the power into the hands of a few leaves A LOT of room for human error, corruption and inefficiencies within the system.
Bitcoin does away with the need for third-party regulation by operating on a collective consensus-based system called the block chain. Not only does this automate the entire accounting process, but it also minimizes transaction fees due to the fact that it’s so easily transferable. Every single Bitcoin is accounted for & user identity remains anonymous. Additionally, putting its operations in to the hands of people all over the world means it’s a system that’s virtually impossible to hack, let alone susceptible to being shut down!
#3. How does it work?
To say that the technology behind Bitcoin is sophisticated would be an understatement, so I’m going to attempt to explain it herein the simplest way possible.
The underlying technology behind Bitcoin is called the blockchain, which is the public ledger where each & every Bitcoin transaction is recorded, no matter how small or large the amount.
The blockchain is made up of a network of nodes or computers that communicate with one another in order to ensure that the ledger is not only accurate, but up-to-date as well.
Let’s say I’m sending 1 Bitcoin to you at home. As soon as I send this Bitcoin, the transaction is broadcast to the blockchain, and several nodes within the network proceed to verify this transaction, add it to the public ledger, then send an updated copy of the ledger to all the other nodes in the network. Once our transaction is verified, it’s grouped into a “block” of other transactions & added to the chain of past blocks to forever go down in accounting history; hence the name “blockchain.
This sophisticated system of verification removes any possibility of double spending a Bitcoin because if two or more nodes validating the same transaction come up with different amounts and ultimately, differing ledgers the transaction becomes void.
#4. Mining
As I stated earlier, the blockchain is comprised of a network of nodes, or computers. These nodes are responsible for maintaining the integrity of the blockchain by verifying transactions, updating the public ledger and broadcasting this new version of the ledger to all the other nodes in the network.
This whole process is called “mining,” and miners are incentivized by being rewarded a certain amount of Bitcoin for every transaction they verify.
There’s a total available supply of 21,000,000 Bitcoin to be mined. As of today, new blocks are mined every 10minutes on average, with each block generating 12. 5 new Bitcoin as rewards to miners. This rate will continue until the year 2020 at 6, when 25 new Bitcoin are rewarded per mined block. Four years later, rewards will be halved again at 3. 125 new Bitcoin rewarded per block. This “halving” process is set to occur every four years until the year 2140, when all 21,000,000 Bitcoin will have been mined & in circulation.
#5. Who created Bitcoin?
Bitcoin was created by an unknown person who goes by the name Satoshi Nakamoto. Although he’s yet to reveal his identity and so far has not broadcast any plans to do so there are several possibilities who people suspect it to be.
The New Yorker believes it to be Irish cryptography student Michael Clear, while Vice thinks it’s either Gavin Andresen, Jed McCaleb, or Shinichi Mochizuki. Newsweek magazine claims it’s an old Japanese engineer from California whose name is actually Satoshi Nakomoto.
The list goes on & on, and all we know is that all suspects deny the “accusations” of being Satoshi. This stems from two concerns: 1) privacy, and 2) safety. Privacy & anonymity is one of the most highly valued factors contributing to Bitcoin’s success, so it’s only makes sense why Bitcoin’s creator would wanna stay as anonymous as possible. Regarding safety, close to 32. 5 thousand blocks were mined in 2009 alone with a reward rate of 50 Bitcoin per block.
Being in its infancy stages & due to a lack of popularity back then, it’s safe to assume that Satoshi was responsible for mining a majority of the blocks during Bitcoin’s first few years, and thus, holds most (if not, all) of the 1,624,500 Bitcoin mined exclusively in 2009; let alone in 2010 and the proceeding years. Owning such a large number of Bitcoin today would make him a multibillionaire AND the target of criminals, the government, and the media alike.
Knowing this, it is absolutely understandable why Satoshi wants to keep his identity under wraps!
#6. How much is Bitcoin worth?
Bitcoin had just reached $7,300 per coin. But this price was definitely not immediate, Bitcoin has come a long way since its inception in 2009. In fact, back in 2009, a man named Kristoffer Koch bought 5,000 Bitcoin for $27.
That’s just over half a cent per Bitcoin! At the all-time high rate of $7,300 per Bitcoin, his 5,000 Bitcoin wallet would now be worth $36.5 million! Despite its price volatility, financial analysts & economists are predicting these prices to go up even further.
The more main stream Bitcoin gets & the more it’s adopted as a normal, day to-day currency or payment method, the higher the demand for it will be, and thus, the higher its price will rise. Recently, it was even rumored that Amazon.Com would start accepting Bitcoin payments.
Even though this rumor was quickly debunked, experts believe that if a company of that magnitude would ever jump on board, that it will cause the Bitcoin price to skyrocket.
#7. What’s Bitcoin used for?
The first real-world purchase Bitcoin was used for was in 2010 when Laszlo Hanyecz bought two Papa John’s pizzas for 10,000 Bitcoin, which today would have exceeded $90 0,000,000! It wasn’t until Ross Ulbricht launched the Silk Road in 2011 that Bitcoin took a bigger leap forward in terms of applicability.
For those who don’t know, the Silk Road was a dark web marketplace to purchase anything & everything illegal you could think of: drugs, prostitutes, child pornography, and even hired assassins! Bitcoin’s anonymous nature provided a level of protection & a sense of security that both buyers & sellers could comfortably confide their transactions in.
The Silk Road was shut down in 2013 & Ulbricht was ultimately arrested & sentenced to life in prison.
The FBI seized over 144,000 Bitcoin during Ulbricht’s arrest, which they then auctioned off to venture capitalist investor Tim Draper. Although this big hit to the dark web caused a significant dip in Bitcoin’s overall value, it made a very fast recovery & within 2-3days leveled out to nearly its original price before the Silk Road was shut down.
2015 reported over 100,000 merchants who officially accept Bitcoin as an optional payment method, the likes of which include PayPal, Expedia,& all Shopify-based stores. It’s been so revolutionary to the financial industry that banks, hedge funds, and even national governments are researching waysin which they can implement both Bitcoin & blockchain technology into their infrastructure.
8. Why is Bitcoin so Popular?
My first personal encounter with Bitcoin was when my former roommate in Las Vegas told me he purchased a bunch of them to be able to buy some “recreational substances” from the Silk Road. Since then it’s been experiencing a meteoric rise to fame. Early adopters show strong support for Bitcoin due to its decentralized nature & how it can topple governments & financial institutions.
But much of the rise in popularity can also be credited to pure hype. Its first all-time high peaked in 2013 at over $1,200 per coin, which “piqued” a lot of interest at the time. This sparked corporations to create brand new departments within their companies dedicated solely to research-and-development in the cryptocurrency space, as well as how blockchain technology could potentially be implemented within their company’s infrastructure to improve business efficiency & transparency.
Its 2017 all-time high saw a huge drop & Bitcoin’s value leveled out for another few years until June of 2018 when it peaked at just under$3,000 per coin.
It peaked again only three months later in September of 2017 at just under $5,000 per coin, and yet again one month later in October of 2017 when it passed the $6,300 mark; naturally each peak brings in more & more waves of hype, Interest & adoption.
Governments now face themselves in a tough predicament: how are they supposed to regulate something that can’t be regulated? Although it’s legal in almost all countries, there are still a small handful in which laws range from not allowing its citizens to transact in Bitcoin, to making it outright illegal to own it; those countries being Vietnam, Iceland, Bolivia, Ecuador, Kyrgyzstan, and Bangladesh. These countries see Bitcoin, as well as it underlying technology, as disruptive. But in my mind, this is merely an obvious sign that it works. And that it works well!
9. Will I make or lose money by investing in Bitcoin?
Bitcoin’s prices are very volatile in nature. But there is something to be said about its consistent rise in prominence since 2009, and it’s not going anywhere anytime soon. JPMorgan’s CEO Jamie Dimon said in September of 2017 that Bitcoin is a “fraud,” yet I personally believe that this statement was made public because 1) he has a vested interest in traditional fiat currencies, and 2) he was trying to launch fear, uncertainty, and doubt (aka “FUD”) towards cryptocurrency’s general direction to dissuade already-reluctant investors from buying in. After all, he is the head of the 10th largest multinational banking & financial services company in the world.
10. How do I get my hands on it?
There are now a ton of different online exchanges you can use to deposit traditional fiat currency to trade for Bitcoin.
The simplest & most user friendly for those looking to buy in would be Coinbase, There are other marketplaces out there like LocalBitcoins.Com that connect buyers & sellers of certain countries to facilitate over the counter trades.
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