The World’s Fastest-Growing Cryptocurrency Is Bitcoin
Bitcoin is currently the fastest growing cryptocurrency in the world. Created in 2009 by Satoshi Nakamoto, Bitcoin is the largest cryptocurrency globally by market capitalization and the most popular, holding onto this distinction since its inception.
Bitcoin is a digital currency. It is created and held digitally on computers across the world. Unlike traditional currencies, Bitcoin is a decentralized currency, giving users absolute control of their transactions and digital assets. Transactions on the Bitcoin network are recorded on a ledger known as a blockchain.
The blockchain is a public ledger, meaning that all transactions are publicly available and scrutinized by the network users. This ensures transparency and security of the network because if the records are publicly available, it becomes almost impossible to carry out frauds like double-spending. Users of the network can see how much bitcoin a wallet has. However, they cannot trace a user through the bitcoin address.
Transactions on the Bitcoin network are verified by miners and then added to the blockchain. They are rewarded for their work by way of transaction fees and new bitcoins. The current reward for miners stands at 6.25 BTC and is halved every 210,000 blocks mined.
So How Does Bitcoin Work?
The workings of Bitcoin are easier to understand once you have grasped a few concepts.
- Blockchain: Blockchain technology is the core on which cryptocurrencies like Bitcoin are based. A blockchain is a public ledger. Each transaction on the Bitcoin network is stored in the ledger, creating a permanent record of all transactions.
- Private keys and public keys: Bitcoin wallets contain a private key and a public key. These keys allow users to initiate and digitally sign a transaction.
- Miners: Miners are members of the Bitcoin community. They verify all transactions using powerful computers before adding them to the blockchain.
Since the blockchain is a public ledger, the details of all transactions conducted on the Bitcoin network are available to the public. The transactions are verified by miners and then added to the blockchain. Transactions are also verified through user wallets, which can verify the transactions through the protected digital signatures. Each block takes around ten minutes to mine.
Read More: What Is Bitcoin? A Beginner's Guide
How Safe Is Bitcoin?
Bitcoin is one of the safest cryptocurrencies in the market.
- Bitcoin is encrypted and uses blockchain technology, which helps secure all transactions on the Bitcoin network.
- Transactions are recorded on the blockchain. The transactions are open to scrutiny, ensuring complete transparency of the system and increasing security by ensuring that no fraud like double spending can occur.
- Bitcoin is decentralized, meaning it is free from the influence of any central authority or government. Individuals and businesses using the Bitcoin network become part of a vast, decentralized network. Another advantage of using a decentralized network is that if part of the network goes down, the network is still functional, and transactions can still take place.
What About Bitcoin Transactions?
Transactions on the Bitcoin network are stored in a public ledger, accessible to anyone who wants to scrutinize the records. The bitcoin wallet uses a private key. Transactions can be signed and accessed only by using the private key. The private key is used to provide proof that the transaction originated from the owner of the wallet.
Read Also: Bitcoin Price Analysis for 2021
What Are The Advantages Of Bitcoin?
Bitcoin has several advantages that traditional currencies and payments systems lack. Some of the advantages are:
Bitcoin is popular because of the autonomy that it gives users. It gives users complete control of their money and how they spend it.
Bitcoin is a decentralized cryptocurrency. This means that it is not under the influence of, or regulated by a central authority or government, making it immune from third party regulation or manipulation.
✅ Fast payments:
Bitcoin transactions only take a few minutes to complete, unlike transactions done through banks, which take several hours to several days to process.
Once a bitcoin transaction is completed, it cannot be reversed unless the recipient reverses the transaction. This ensures the receipt of payment.
What Are The Disadvantages Of Bitcoin?
Bitcoin has some disadvantages as well. Some of the disadvantages are
Bitcoin’s popularity makes it vulnerable to scams like fraud, Ponzi schemes, and hacking attacks.
Bitcoin is a volatile cryptocurrency, and looking at the history of Bitcoin, it has seen some periods of extreme volatility. The volatility is beneficial for short-term trading but is not suitable for long-term trading.
What Is Driving Up The Price Of Bitcoin?
Bitcoin is the fastest growing cryptocurrency in the world. 2020 and the start of 2021 saw Bitcoin soar to record-breaking prices. Let’s look at what is behind the increase in the price of Bitcoin.
1. Growing institutional interest:
Since the start of 2020, there has been an increase in institutional interest in Bitcoin. This factor will play a significant role in driving up the price of Bitcoin. More and more institutions are looking at using Bitcoin and blockchain technology.
Traditional platforms like PayPal are also driving up interest in Bitcoin. PayPal recently announced that users of the service could buy, sell and accept Bitcoin as a payment mode. This move has given PayPal’s 350 million strong user base access to Bitcoin. Looking at PayPal, its competitors have also moved to announce similar strategies, driving up accessibility to Bitcoin and fueling its price rise.
Bitcoin is also used as a store of value by investors, as it is a fixed asset. Unlike traditional currencies, Bitcoin does not face any inflationary pressures. Inflation has hurt the purchasing power of traditional currencies, making investors hedge against rising inflation, investing in assets like Bitcoin, and, as a result, driving up its value.
4. Bitcoins are scarce:
Bitcoin is capped at 21 million, miners can mine no more than 21 million bitcoins, making Bitcoin extremely scarce and driving up its price.
Read More: What Will Drive the Bitcoin Price In 2021?
Is Bitcoin A Good Investment in 2021?
The last year saw Bitcoin taking a big hit when the pandemic struck. However, Bitcoin brushed these losses aside, and Bitcoin rallied spectacularly. The cryptocurrency breached the $40,000 mark.
So to answer if Bitcoin is a good investment in 2021? Crypto Experts have predicted that Bitcoin could cross $100,000 by the end of 2021 and go up to $300,000 by 2022. There is a possibility that Bitcoin can meet these expectations, making it an exciting investment opportunity.
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Virtual currencies are highly volatile. Your capital is at risk