With a relatively short history, Satashi Nakamoto, Blockchain, and Bitcoin have all become household names that push the limits of how we view global currencies.
Just as popular as its origins, Bitcoin has also become notorious for price swings that often make news headlines and grab the attention of financial traders. It has also led to the creation of other digital currency such as Ethereum, Ripple XRP, Litecoin. Bitcoin even has other crypto currencies that were created when nodes chose not to upgrade to the latest protocol, creating a new currency out of Bitcoin’s old protocols, such as Bitcoin Cash ABC (BABUSD).
Bitcoin was created in 2009 as the first decentralized currency to run on Blockchain technology.
First mentioned in a white paper that was published by someone with the pen name Satoshi Nakamoto, Bitcoin promised the ability to conduct government-free transactions, relying on digital signatures and digital coins instead of on centralized government-issued fiat currencies. All transactions were kept on a ledger which can be publicly accessed, ensuring transparency.
Miners, the individuals who volunteer their personal computing power to the network to keep it running, are paid for in Bitcoin and have a say in new protocols that are adapted to the blockchain network. This allows them to work as a type of central bank, looking out for the best interest of the digital coin as a collective.
Bitcoin’s decentralized and blockchain protocols require all nodes to verify a transaction. Since these computers are spread across the globe and run by various individuals, it is considered very difficult to hack or corrupt.
This is considered by some to be a secure system and has continuously captured public interest since its creation. There have been times, such as in 2017, when Bitcoin jumped 740% in 5 months, reaching as high as $19,807 before plummeting 69% to $5,967.
Despite Bitcoin being well known amongst traders for its price swings, many believe that this leading digital currency is here to stay.
While Bitcoin may be the original digital currency, others have been created since. Yet, Bitcoin has managed to remain unique in a number of ways.
Other cryptocurrencies have been developed since 2009 with the potential to manage digital economies. They focused on developing contracts and digital services that can be paid for using their own specific digital coins.
Bitcoin has remained a form of cross-platform currency. Without being limited for use on specific Bitcoin-only platforms, this cryptocurrency can be used to make purchases anywhere in the world where it is accepted.
In 2020 Bitcoin made headlines when Paypal announced that this popular currency will be recognized as a payment on their platform.
Bitcoin is powered by individuals who offer anywhere from individual computers to full server farms to keep the ledger active and verified.
In exchange, miners are given a predetermined amount of Bitcoin in return for the number of transactions they approve. As more Bitcoin is created, there are built-in ‘Halving’ events built into the protocol every time 210,000 blocks are processed.
It is called a halving event because the amount of Bitcoins a miner is awarded for processing a block becomes half when passing these thresholds.
In comparison, Ripple XRP (XRPUSD) destroys coins whenever a new transaction is verified, allowing their validators to be paid in any form of payment they prefer.
The Bitcoin network requires all active nodes to be able to verify the same transaction and share its ledger with all other network users. This keeps the system transparent and harder to compromise.
While this is not unique to Bitcoin, it is something that other digital currencies, such as Ripple XRP, have laxed their rules in order to reduce processing time.
One of Bitcoin’s most significant downsides is the long verification time, which can take an average of 10 minutes. In comparison, Ethereum’s network takes approximately 13 seconds and Ripple XRP takes approximately 4 seconds to verify transactions.
Bitcoin has a maximum amount of 21 million coins that can be mined or created. Once it reaches this limit, no more Bitcoins can be created and miners will be able to collect transaction fees for their work.
In comparison, Ethereum (ETHBTC) has no limit on how many coins can be mined, while Ripple XRP created 1 billion coins at its inception and destroys a small amount with every transaction.
While there are differences between each type of crypto currency, Bitcoin remains a favourite instrument for traders. All crypto currencies are extremely volatile and subject to various market factors.
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