What is Bitcoin System?

Bitcoin is a cryptocurrency or virtual currency, specifically the first that develop. Like any other, Bitcoin is a virtual currency that exchanges products or services. The difference with the traditional currencies of the rest of the world —such as the dollar or the peso— is that it is not at the expense of a central bank, it does not depend on any financial authority, and it does not physically exist.

Origin of Bitcoin

The cryptocurrency turned into born in 2009 whilst someone with the pseudonym Satoshi Nakamoto emailed an article to cryptography and virtual code specialists. In it, he described the characteristics of this digital money. He attached a code to carry out the so-called ‘mining’ of this virtual currency, the process to validate and carry out the transactions. Still, Nakamoto’s identity and whether he is a single person or a group of them are unknown.

The idea of ​​having a safe currency outside the system and the control of the banks caused a furore. More and more people adopted it to make transactions, and little by little, it became popular.

How does Bitcoin work?

Bitcoin is born and lives in the blockchain (chain of blocks). And what is blockchain? It is challenging to offer a simple explanation, so we better give an example. Imagine that the Internet is a school playground. There, the kids exchange stamps, food or toys, but all contacts carry out under the control of the teacher, who keeps a commission.

One day, the children agree to ‘decentralize’ their exchanges and create a communal and transparent account book. This book comprises equal blocks or nodes, where the exchange information is updated automatically, and each child has admission to one of them.

They cannot be altered with or falsified, and a central authority is no longer necessary. Simplifying, the blockchain is a community, transparent, secure database in the hands of all users who want to use it to exchange information, goods or services.

How much is Bitcoin worth?

One of the main arguments is whether bitcoin has the face of traditional money and whether it can be legal tenders such as the dollar, euro or peso. Critics say no because its value fluctuates wildly: one day, it can rise 30 per cent, but the next, it can fall 20 per cent. In April, the cryptocurrency hit a record high of $63,410.3 per bitcoin (about 1.3 million pesos), and by then, its value had risen 800 per cent in 12 months. Since then, the price has dropped 50% to around $33,000.

Despite the skepticism, bitcoin increased its use to sell products and services, encouraging greater adoption. It increases its value. But Javier Molina, an analyst and spokesman for eToro, explains that for something to be money, it must fulfil three things: that it be a store of value, that it be a unit of measurement, and that it Be a medium of exchange. It only complies with the latter, but its high price volatility makes it difficult to be a stable and reliable currency in the short term.

Are Bitcoins safe?

Today, Bitcoin is secure and private as a payment method, although it is not yet accepte on most major platforms. So, if you want to buy some Bitcoin to make personal purchases with them, we can say that yes, they are safe.

But it is not a safe financial asset if you want to use them to make a fortune by buying low and selling high. If you don’t fully understand how this game works, it is not a good idea to play trading because the price can drop anytime without warning, and you can lose almost all your money or wait. For months or years, the selling price equals the purchase price.

Conclusion

Bitcoin software has a hard limit of 21 million coins inherent it. According to data from Blockchain.com, 90% of all bitcoins are mine. CoinDesk estimates that the remaining 10% will be mine for at least 100 years. If needed, more bits could potentially create in the future (there are 1 million of them in Bitcoin), but for smaller and smaller transactions.

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