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Bitcoin is the first decentralized digital currency in the world that is not governed by a central authority. It was created by a group or individual who used the pseudonym known as Satoshi Nakamoto. Today Bitcoin is the most widely used cryptocurrency in the world and it is the reason for the adoption of blockchain technology in business and everyday life.
Bitcoin is a cryptocurrency created using principles of cryptography and economics. The underlying technology of Bitcoin relies on a blockchain that aids in organizing, retrieving, and storing information.
Bitcoin is said to be inspired by the cyberpunk movement of the late 80s. Members of the movement called, Cypherpunks promote the use of cryptography to maintain an individual’s privacy. They questioned the monetary policy that world economies and banks adopted after the global financial crisis of 2008.
Satoshi Nakamoto released the Bitcoin whitepaper, or research paper, in October 2008. The whitepaper was a short, 9-page proposal for the structure and operation of a peer-to-peer electronic currency. This paved the way for a decentralized payment system that does not rely on any financial intermediaries.
This review of Bitcoin – BTC was created for informational purposes. This article is not intended for promotion.
Several attempts were made to create a decentralized cryptocurrency, but none succeeded. So, let us find out what made Bitcoin the the biggest and first cryptocurrency.
Mining is one of the most important functions of Bitcoin’s blockchain because it helps create new blocks for transactions. This mining process is known as Proof-of-Work, which is used to generate new Bitcoins. Miners are responsible for verifying Bitcoin transactions and adding them to the blockchain by solving complicated mathematical computations using supercomputers. In return, miners are rewarded with Bitcoins.
Transactions are confirmed when a miner generates a valid hash, resulting in the discovery of a new block. When a miner discovers a new block that is accepted by the entire Bitcoin network, the transactions that need to be confirmed are added to this newly generated block which is then added to the blockchain. Miners worldwide use hundreds of thousands of computers to create trillions of hashes.
Bitcoin halving is the reducing of the number of Bitcoin in circulation. Thereby halving the Bitcoin rewards after each set of 210,000 blocks are mined. Assuming a block time of 10 minutes on average, Bitcoin halving will occur every four years.
Some believe that the reduced supply and inflation rate will positively affect the price of Bitcoin. However, critics argue that halving does not create demand, even if it does make the Bitcoin supply scarcer over a period. You can learn more about Bitcoin halving here.
There is no doubt that Bitcoin lacks scalability, but many projects have been undertaken to resolve these issues and better the Bitcoin ecosystem.
To comprehend Bitcoin ETFs, it is necessary first to comprehend what ETFs are.
ETFs (Exchange Traded Funds) are a type of security (investment) that tracks an index, sector, commodity, or other asset. As a result, ETFs can be traded on a stock exchange in the same manner that ordinary stocks can.
There are already three Bitcoin ETFs trading on U.S. stock exchanges; however, they are all future backed, meaning they are backed by paper contracts rather than physical Bitcoin. Bitcoin futures do not directly affect the underlying asset’s price, BTC, because they do not produce any significant buying pressure. Whereas physical Bitcoin ETFs do create material buying pressure for the underlying asset, which directly affects the price of Bitcoin.
More ETFs are still pending approval by the SEC, such as Bitwise spot Bitcoin ETF, Grayscale spot ETF, Nydig spot ETF, which may be accepted or rejected on 1st February, 6th February, and 16th March 2022, respectively. On 16th October 2021, the SEC (Security and Exchange Commission) of the U.S. approved ProShares Bitcoin Strategy ETF filed by ProShares.
Due to the environmental concerns caused by Bitcoin mining, miners have been trying various ways to curb carbon emissions. On 9th June 2021, El Salvador passed Bitcoin as a legal tender which brought immense joy among crypto enthusiasts worldwide. However, the small Central American country did not stop there but soon announced that it would use geothermal energy from volcanoes to generate electricity for mining Bitcoin.
Mint green, a renewable and clean energy startup that uses bitcoin (BTC) mining to monetize heat generation, agreed to a deal to supply the city of North Vancouver, Canada, with heat generated from Bitcoin mining beginning in the winter of 2022. According to the company, this is expected to prevent the equivalent of 22,000 metric tons in carbon emissions per megawatt. The country had also announced plans to build 20 Bitcoin schools with the profits earned from investing in Bitcoin.
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Major companies like Microsoft, Wikipedia, Overstock, Gyft, BMW, Shopify, etc. have started accepting payments in Bitcoin. This has further increased the use of Bitcoin in the global market. Following the footsteps of El Salvador, many countries such as Cuba, Zimbabwe, and Ukraine have now joined the train to accept Bitcoin as a legal payment alternative.
The critics who point out the environmental concerns related to Bitcoin mining often forget that the amount of energy consumed by the banking industry to process payments and mint new currencies is a lot more than Bitcoin may ever use. Miners are migrating to new green technologies to reduce carbon emissions. Bitcoin’s potential to overthrow the traditional banking system has led to its further adoption, year by year.
Since Bitcoin is considered a store of value, its price has surged in recent years. Investors have started realizing that Bitcoin is a way better investment than gold. Banks like Standard Chartered, Banco Santander, Goldman Sachs, Barclays, UBS and Citi Bank are exploring Bitcoin and blockchain technology as a potential option for investment. Morgan Stanley became the first U.S. bank to offer its clients access to Bitcoin funds. JP Morgan followed this by giving its wealth management clients access to six crypto funds. Credit rating agencies like S&P Global have recently unveiled their Bitcoin Index.
There are various steps being taken in support of cryptocurrencies and blockchain technology. The terms blockchain and crypto are often linked to Bitcoin, due to which it has garnered a lot of fame around the world.
However, Bitcoin has a long way to cover for a large-scale adoption or overthrow the traditional payment methods.
It is an undeniable fact that Bitcoin is the first and biggest cryptocurrency that dictates everything in the cryptocurrency market. Therefore, analysts at YCL have closely been observing the price variation in the market.
Disclaimer: Trading and investing in cryptocurrencies (also called digital or virtual currencies, altcoins) involves a substantial risk of loss and is not suitable for every investor. You are solely responsible for the risk and financial resources you use to trade crypto. The content on this website is primarily for informational purposes and does not constitute financial advice.
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