Why bitcoin is perceived as valued digital asset?

Why bitcoin is perceived as valued digital asset

Bitcoin is a cryptocurrency that proceeds to hypnotize the world, the first of its kind, Bitcoin was once entirely a whole realm of technology geniuses who were keen to uphold the philosophy of maximizing autonomy, but Bitcoin has a shot to fame with the promise of a wide consumer base. So exactly what's Bitcoin?  Generated and stored electronically, Bitcoin is, in fact, a form of electronic money. The currency is decentralized and runs on the decentralized network that cannot actually be controlled by anyone. It came into being in the year 2009, as a brainchild of a person with the assumed name of Satoshi Nakamoto. Three months after bitcoin, a blockchain implementation paper, was published, Nakamoto released the open source code for bitcoin. Many individuals were very hopeful about the new currency. Bitcoin is the first implementation of the existence of blockchain protocol.

Read more 10 Things You Should Know About Blockchain

Utilizing the P2P technology to function, Bitcoin has the distinctive and flexible feature to engulf anyone who is interested. Its worldwide acceptance is a feature that adds to its popularity. With no accountability to anyone, Bitcoins are fairly unique. 

Brief about bitcoin mining

Bitcoins are sovereign with their unique rules, and are not printed in a clandestine manner by any bank, but mined, they are produced digitally by a good number of individuals involved with a colossal network or community. Miners usually employ huge computing power. A lot of competition is involved with Bitcoin mining. Computers work to solve complex mathematical problems. The competing miners also have a prospect of gaining Bitcoins in the process, by just solving the problem. 

Difficulty levels of those mathematical problems are becoming intense every day. Transactions at the Bitcoin network are inexorable and incessant. And keeping track of these transactions is fairly straightforward. Bitcoin network keeps it methodical, as, during a given time span, all transactions are collected in a block. Blockchainexplorer gives a good idea of current blocks on bitcoin blockchain. The miners are supposed to validate transactions, and everything is listed in a general public ledger, which is simply a collection of blocks, termed as blockchain. Blockchain actually holds the key to the details of any transaction performed through various Bitcoin addresses. Bitcoin integration into people's lives is the most desirable thing right now. This is achieved fairly easily by the emergence of exchanges.

Bitcoin enthusiasts may have a lot of selections when they're looking to acquire this electronic money. A Bitcoin exchange enables consumers to sell or buy Bitcoins by making use of fiat currencies. Exchanges are in abundance, but initially Mt. Gox was the most renowned and extensively used, prior to its collapse. With exchanges, consumers can buy or sell Bitcoins with transfers wired, cash or credit or debit card payment. Enthusiasm and an implacable frenzy always accompany Bitcoins. 

Now, there are two major bitcoins in market viz. bitcoin (legacy) and bitcoin cash born out of philosophical differences amongst the core developers.

Why Bitcoin is so popular

After less than a decade, doubts about the validity and valuation of bitcoin have been laid to rest, as bitcoin has been adopted by users all around the world. Bitcoin has surged in its popularity. 

Here are a number of the reasons Bitcoin has taken off. 

In contrary to what individuals think, bitcoin isn't completely anonymous. Customers need to use a traditional financial provider to connect to a bitcoin exchange and purchase digital currencies. It's still much more private than traditional currencies. According to latest surveys, individuals are more worried about their online privacy than ever before in the past. Bitcoin allows them to purchase goods and services without revealing their identity to merchants. In the past, bitcoin was used mainly for small, personal transactions, online games, and could be used for not so legal activities. 

It became a much more widely accepted currency today. As we discussed above bitcoin transactions are protected with a decentralized ledger known as blockchain so bitcoin wallets won't be exposed each time they perform a digital handshake with an online merchant. 

Bitcoin is valued digital asset

Bitcoin is not controlled by the single organization. Like some other currency, users can use the electronic money to purchase goods and services online and also in some physical stores that accept it as a type of payment. Currency traders may also trade Bitcoins on Bitcoin exchanges. The peer-to-peer payment network is handled by users and miners around the globe. The currency is anonymously transferred directly between users throughout the internet without going through a clearinghouse. (Though variant of cryptocurrency such as XRP/Ripple are available for financial institution, we will skip these for the clarity of this discussion).

The maximum amount in circulation is limited to 21 million. What is the adult population of our planet, between 15 to 60, who can use the money for high-value transactions? Few billions! This makes Bitcoins more valuable as more individuals use them and there is a pressure of its supply as well. After the advent of bitcoin and its price surge across the globe, we have seen a considerable amount of crypto assets or crypto tokens traded across the globe on private crypto exchanges. For all these new crypto tokens or currencies, BTC has become a daddy coin. If we have to draw a parallel to the non-crypto economy, where USD considered as base currency to compare other world fiat currencies, so is the BTC is to other crypto tokens in the crypto economy.

BTC is base cryptocurrency to all crypto tokens similar to USD is base to other world fiat currencies.

As bitcoin maintains public ledger, this makes the electronic money more transparent and predictable. The transparency prevents fraud and dual cost of the same Bitcoins. The electronic money is accepted by a limited number of merchants online and in some mortar and brick retailers. Bitcoin wallets are utilized for storing Bitcoins, private keys, and public addresses and also for anonymously transferring Bitcoins between users. 

Bitcoins or any other cryptocurrency aren't insured and aren't protected or backed by government agencies. They can't be recovered if the secret keys are stolen by a hacker or lost to a failed hard disk drive, or due to the closing of a Bitcoin exchange. 

In case the secret keys are lost, the associated Bitcoins can't be recovered and will be out of circulation. As of now, there is a lot of FUD in the market as most of the governments are trying to find ways to regulate the cryptocurrency market. This causes extreme fluctuation in the prices of bitcoin around the privately managed crypto exchanges. This is evident from below BTC chart.

BTC coinmarketcap 9th Feb 2018

As of writing this article, per coinmarketcap, the total market cap of bitcoin (BTC) stood at $138,965,589,974 USD

So what's your opinion about bitcoin? Does it have real value? Is it worth collecting? Let everyone know by adding comments below.

In next few articles, we will cover comparison among different bitcoin forks. So stay tuned and subscribe to get notified as early as these article are published.

PC: pixabay, pablo

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Mandar Pise Opinions expressed by techsutram contributors are their own. More details

Mandar is a seasoned software professional for more than a decade. He is Cloud, AI, IoT, Blockchain and Fintech enthusiast. He writes to benefit others from his experiences. His overall goal is to help people learn about the Cloud, AI, IoT, Blockchain and Fintech and the effects they will have economically and socially in the future.

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