It’s little wonder that the first cryptocurrency to date was ready to make its entry against the backdrop of the global meltdown and financial disaster in 2008 when massive banks got called out for mishandling clients’ money, taking astronomical fees, cheating the system, and so on. Bitcoin forerunners sought to make the seller responsible for their money, stop interest fees, remove third parties, and improve transactions’ transparency. Simply put, the goal was to build a decentralized ecosystem that permitted users to hold sway over their money and be informed about what was happening with their funds. As Bitcoin price continued to rise, the vision began to take shape – you can now buy Bitcoin p2p or with a credit or debit card, among other readily accessible ways.
It shouldn’t come as a shocker that renowned universities like the Massachusetts Institute of Technology, University of Oxford, and Duke University teach Bitcoin to an increasingly large number of students. Bitcoin revolutionized the financial landscape and almost any industry, and experts bet on its longevity and power to fix the vulnerabilities seeping into the banking system.
Despite crypto’s massive popularity, thoroughly understanding the concept and use cases can present difficulties. Crypto is still a dumbfounding technology for many, making it just about the time you learned the essentials of Bitcoin yourself and steered clear of any misinformation, confusion, half-truths, and so on. So, what makes Bitcoin work and pushes it at over $99.65K?
How Bitcoin emerged amid global crisis
Bitcoin, the heralding crypto, was first brought up a little after the Lehman Brothers bank crisis, in November 2008. Being in direct relation to the global financial emergency of those times, it couldn’t have possibly hidden the weaknesses of the traditional monetary system. Satoshi Nakamoto, a pseudonymous developer or group of devs considered the creators of Bitcoin, released a white paper, highlighting the key innovations and features. Ever since it has come a long way in a spectacularly short time. This paper charted the principles of a decentralized digital currency that would enable online payments to be sent from one party straight to another without the involvement of a financial institution.
Fast-forward to today, Bitcoin and other cryptos now boast their exchange rates, price indexes, and APIs, short for application programming interfaces. Massive companies worldwide began considering accepting Bitcoin as payment. From valuing close to nothing to being priced at over $99K about weeks ago, websites endorse it, companies like PayPal and Del use it, forums talk about it, and governments derive inspiration from it to create similar financial products. Over 15K businesses worldwide have greenlighted Bitcoin payments and use, with most of them being small businesses that may initially come across as something other than this future-oriented and adjustable.
Bitcoin challenged a well-rooted global system
Bitcoin’s arrival made traditional financial systems difficult by providing a variant to their ubiquitous services that didn’t need their involvement or approval. It fascinated individuals who were well aware of and willing to fight the inefficiencies of the conventional monetary system, especially as the 2008 crisis trickled down from the top of the system to the smallest business and ordinary purchaser. This development revealed the systematic risks and blew the whistle on the unfair practices in traditional banking and financial policies.
From a niche venture to a globally known and recognized asset, Bitcoin has come a long way and now inspires the development of endless other cryptocurrencies. It brings decentralized finance closer to anyone, seeing its main features and attributes improve over time and new ones being developed.
The main features of Bitcoin
Here are the main features and attributes that make Bitcoin the revered digital currency that it is.
- Blockchain. Resembling a database where transactions and data are stored forever and readily available to any user, blockchain is anything but a new idea. The concept of a database where users must change a whole track of transactions to modify the one of interest has long existed, but it wasn’t until 2008 that someone succeeded in giving way to the notion. This groundbreaking development was essential in fixing the “double-spending” issue without getting third parties mixed up.
- Proof of work. There are several ways to create and release cryptocurrency, and Bitcoin uses the proof-of-work consensus mechanism. This mainly depends on an operation where miners solve complicated mathematical problems to validate transactions and add them to the chain, where they’re to be stored forever. This way, new Bitcoins are created and put at users’ disposal.
- Decentralization. Contrasting traditional currencies, Bitcoin isn’t controlled or issued by a government, central bank, or any central authority. Instead, it works on a decentralized network of computers, expertly known as nodes, that jointly keep the blockchain ledger of transactions.
What gives Bitcoin value
Throughout time, individuals learned that some types of money are more efficient than others and that all the big hits had in common were portability, divisibility, longevity, fungibility, and scarcity. Sea shells worked as money thanks to the shortage of supply that characterized them. Fast-forward to today, “money” has become the general public asset that serves as a universally accepted tool for service and good exchange. Since banks can issue as much money as they want, triggering inflation rate rises and devaluing money, the emergence of an asset that did the opposite would undoubtedly make all the headlines.
Bitcoin has a limited supply cap of 21MN coins, created to imitate the shortage that characterizes platinum, gold, and other precious metals. After the limit of the coin in existence is reached, no other Bitcoin will be created, and assuming the asset continues to be as valuable as it is today, those possessing fractions of it may see their investment rise in value.
The fact that Bitcoin is scarce can be traded for and used as a variant of fiat money, can be accessed anywhere with a mere internet connection, and has other achievements ensures that this crypto will pass the test of time.
