Bitcoin

Bitcoin is the original cryptocurrency and has changed the face of the digital currency world since its creation in 2008. It’s the first decentralised digital currency and has grown to be the biggest cryptocurrency. As of mid 2017 it had a market cap of $40 billion. In this post we’ll look at what is Bitcoin, how and where you can buy it and compare it to other cryptocurrencies and fiat money.

What is Bitcoin?

Bitcoin is more than just digital money, it’s a paradigm shift in how we think about value and transactions. Launched in 2008 by unknown entity called Satoshi Nakamoto Bitcoin introduced the concept of blockchain technology. This is a decentralised ledger that records all transactions across a network of computers. This innovation was the foundation for a new era of financial transactions. It operated outside of traditional banking systems.

Bitcoin’s Market Presence

As the biggest cryptocurrency by market share, it’s hard to ignore Bitcoin. Its market cap of nearly $40 billion in June 2017 shows how big it is in the digital currency market. Bitcoin’s value is driven by its scarcity, with a total supply of 21 million and increasing adoption by merchants and investors.

Why is Bitcoin Valuable?

Scarcity: 21 million supply, like gold.

Decentralisation: Not controlled by governments or financial institutions, no manipulation.

Security: Transactions are secured by cryptography and the blockchain, fraud and counterfeiting proof.

Adoption: More merchants and platforms accepting Bitcoin, more utility and value.

How to Buy Bitcoin

If you want to buy Bitcoin there are several options  

Dealers: Bitcoin dealers buy and sell BTC. They provide liquidity to the market. They make money from the spread between their bid and ask price. You might pay slightly higher fee than market rate  

Exchanges: Digital exchanges are platforms where buyers and sellers meet to trade Bitcoin. There are two types  

Backend Exchanges: These are underlying systems that facilitate transactions. Like GDAX which is used by Coinbase. Backend exchanges often have lower prices due to lower overhead costs  

Frontend/UI Exchanges: These are user facing platforms that offer different interfaces to trade. Like Coinbase and CEX.io. Prices can vary between frontend exchanges due to differences in their backend systems  

Local Purchases: Some websites act as local marketplaces where you can trade Bitcoin for local currency. These platforms connect buyers and sellers directly like online classifieds. They may offer competitive rates

Other options

Bitcoin’s success has spawned many other cryptocurrencies known as altcoins. These alternative coins offer various improvements or innovations over Bitcoin. Here are examples  

Ethereum (ETH): Considered Bitcoin’s biggest rival Ethereum has smart contracts. These are self executing contracts with terms written into code. This allows for wide range of dApps. It has made Ethereum the go-to platform for building blockchain solutions. You can run an Ethereum node using a Web3 hosting server.

Ripple (XRP): Ripple focuses on making cross border payments faster and cheaper than traditional banking systems  

Litecoin (LTC): A “lighter” version of Bitcoin, Litecoin has faster transaction times. It uses different hashing algorithm to improve upon Bitcoin’s scalability and speed  

Cardano (ADA): Cardano is a blockchain platform that’s research driven. It aims to create more secure and scalable infrastructure for dApps

The Future of Cryptocurrencies

Will cryptocurrencies like Bitcoin replace fiat currencies? It’s a complicated and speculative question. Digital currencies have many advantages. There is decentralization. There are lower fees. However they also face big challenges:  

Regulation: Governments and regulatory bodies around the world are still figuring out how to regulate cryptocurrencies. The legal and tax implications of using digital currencies remain up for debate  

Volatility: Cryptocurrencies are volatile. They make for a risky investment. They are a less stable medium of exchange than traditional fiat currencies  

Adoption: Widespread adoption of cryptocurrencies for everyday use is still in progress. Some businesses accept Bitcoin. Mainstream acceptance is not yet universal  

Technical Challenges: Scaling solutions and technological advancements are needed to address transaction speed and network congestion issue.

Conclusion

Bitcoin has certainly left a mark on the financial world. It introduced the concept of decentralized digital currencies. It laid the groundwork for many blockchain innovations. 

Decentralization allows for transactions without intermediaries. This innovation has transformed traditional financial systems. Many industries now explore how to integrate blockchain technology into their operations. As a result companies are adopting various aspects of this new financial ecosystem. The promise of increased transparency and security continues to attract interest.