Bitcoin has become so popular if you hear the word ‘Cryptocurrency’, the first thing that comes to mind is ‘Bitcoin’. With all honesty, Bitcoin has become one of the best-known cryptocurrencies out there. What exactly is Bitcoin? How was it created? Fasten your seat belt as we take a look at some of the features and facts of Bitcoin. This article is designed to simplify what Bitcoin is.
To begin with, Bitcoin is 13 years old currently. In 2009, a group names Satoshi Nakamoto initiated Bitcoin to the world. He is believed to be the greatest holder in regards to Bitcoin quantity in the world. Interestingly, he has been MIA (Missing in Action) for a while now. His identity has been shrouded for a very long time as it has been ages since he was last spoken to.
Satoshi’s premium for creating Bitcoin was to promote an electronic payment facility that worked, using cryptographic evidence as payment solutions rather than trust. Depending on who the users are per time, some use Bitcoin as an investment vehicle. The traditional ‘Buy low’, hold, and ‘sell high’. However, other users readily use payments in form of currency.
Bitcoin by definition is a digital currency whose operation and usage are independent of a bank. Although no banks or financial institutions regulate the usage of Bitcoin, a public ledger is used to save transactional histories of Bitcoin operations.
The US National Security Agency, popularly known as NSA designed an Algorithm known as SHA-256 which Bitcoin’s cryptography is based upon. For this purpose, cracking it is highly impossible. Interestingly, because there is no central authority governing the operation of Bitcoin, any mistake you make during the sending and reception of payment via your Bitcoin address is irreversible.
Regarding security, there have been cases when Bitcoins were allegedly hacked. These high-profile cases of breaches are not a direct compromise of Bitcoin itself, but the platform hosting the currency. Theoretically speaking, if a group of black hat hackers can control about 51% of the amount of Bitcoin available currently, they could create a consensus establishing that they own all of the Bitcoin currently in existence.
Bitcoin enthusiasts could mine the Cryptocurrency easily when it was first launched using basic computers however, users would require a coalition of powerful computers to be able to mine. There have been issues surrounding the mining of Bitcoin as it is power hungry. Factually speaking, because of the high power and extremely powerful computers needed to successfully mine the currency, there are serious implications for the health of the ecosystem.
Research conducted at the University of Cambridge shows that during the first quarter of 2021, mining Bitcoin consumed over 100 terawatts at an hourly rate. Yes, there have been cases of the adoption of Bitcoin as legal tender in some countries like El Salvador. However, the risks associated with Bitcoin include it being a perfect cover for black market transactions.
Bitcoin and every over decentralized currency permit individuals to trade without needing to visit their traditional bank. For Nigerians, you are aware of the hidden charges that are dished out from your accounts now and again. However, decentralized rubbishes this reality as you now deal directly with a peer-to-peer network.
Blockchain generically is vital to our existence as it can be bent to accommodate powerful applications in health, finance, transport, etc.
I opine that we can not overlook the downsides of adopting cryptocurrencies however, there are several negative implications of the traditional processes involving Chemistry and Physics. The atomic and chemical weapons currently being wielded by nations are a byproduct of chemistry. We should allow the misappropriation of the new invention to cultivate malice for the adoption of a new paradigm.
Speaking of volatility, we can all observe and affirm that the global financial market has taken a hit, the global inflation being a pointer to this fact. Bitcoin’s price is far diminished from its all-time high which was above $60,000. The volatile character of the Cryptocurrency has made several millionaires overnight and of course, has sent a couple of folks to the trenches.
While the currency has been triggering off several reactions from different quarters, it may just be possible that depending on the channel of utilization, the anonymity surrounding Bitcoin could be an issue as the government was able to track and retrieve some amounts of Bitcoin paid as ransom to some ransomware attack. Furthermore, its value is not tied to anything, particularly asides from its scarcity. Just like gold, the only hinge holding its value together is the fact is there is someone always willing to buy it at a lower or high price.
Note
- Bitcoin was created by Satoshi Nakamoto
- Bitcoin has no central governing authority
- The ledger of the currency is distributed hence, there is no central storage anywhere.
- All participating miners are responsible for maintaining the network. This is because there is no single central administrator.
- You can create your Bitcoin address without going the KYC route.
Security breaches have been recurrent, particularly this year, I guess not everybody is ready to work legitimately for their money rather, and they prefer to steal off peoples’ assets. There are several ways to secure your crypto assets. This will wave off the possibility of getting hacked. Cold storage security tools help to take your private keys offline. This is particularly done by generating and saving them on devices that are not connected to the internet. Did you know that if you pen down your private keys on a piece of paper, you are using cold storage?
Hardware wallets are another storage system that guarantees security. They are special devices that store private keys and block the possibility of a data breach as they do not share sensitive information with the host computer. Because of the level of security of these peripheral devices, when host computers get compromised with malware, the data on the devices are shielded from unauthorized activities and access.
Exciting right? 🤩
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