Anyone who has a social media account and uses the internet has heard about Bitcoin. This article explains the basic components of Bitcoin blockchain and its native token.
What is Bitcoin?
Bit is the smallest unit of storage that a computational device can process or hold. Bitcoin is a type of digital currency that is issued by its eponymous blockchain. Bitcoin was created by an unknown individual or group that identifies as Satoshi Nakamoto.
Bitcoin was created to enable secure and verified online transactions without depending on third-party service providers. Bitcoin introduced decentralized payments and distributed ledgers in 2009.
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Bitcoin is an open-sourced network meaning that that anyone can check and verify transaction records. Bitcoin is also a permissioned network meaning that anyone can join as a node or become a miner. Bitcoin uses Proof-of-Work or PoW consensus mechanism to verify transactions on the network.
What is BTC?
BTC is the denomination used for indicating the native currency of Bitcoin blockchain. BTC reached a value of $69K during the Bull Run of November 2021. However, the flagship currency has since been trading sideways and remained within $30K range.
BTC is comprised of smaller units of the token that are called Ssatoshis or sats. One BTC contains 100 million Satoshis. BTC are fungible tokens meaning that one BTC can be a stand-in for another one. The total amount of BTC is capped at 21 million.
How to Become a Bitcoin Miner?
Bitcoin miners need to fulfill hardware and software requirements in addition to technical skills to join as miners. When Bitcoin was first introduced, it was possible to mine blocks on the platform using personal computer however with time the computational power required to solve the hash became greater.
Therefore, Bitcoin miners now need to upgrade to ASIC or Application Specific Integrated Circuits to generate as high as 220 quintillion hashes per second. Miners can also join an existing mining pool rather than setting up mining devices.
Top Use Cases of Bitcoin
Here are some of the most important utilities for Bitcoin mentioned as under:
Bitcoin was intended to be used as a payment solution. Bitcoin white paper account has shared the roadmap for the flagship currency to be used as a medium of exchange. At the same time, Bitcoin is used to make easier and less hassled transactions across borders.
Bitcoin holders can now transfer value across any part of the world using crypto wallets and trade the coin on all centralized and decentralized exchanges across the globe.
Bitcoin transactions are also possible by scanning QR codes and through biometric verification. Bitcoin have also made remittances easier for users all across the globe as well as introducing alternative payments options for online merchants and e-commerce traders.
Investing and Allocation
Bitcoin has created the spot market for trading cryptocurrencies and inspired a host of new virtual currencies and blockchain networks. There are now thousands of altcoins trading in the crypto markets that investors can pick and add to their trading portfolios.
Bitcoin has continued to retain its market dominance of up to 50% over the entire crypto marketplace. Therefore, it is the most valued cryptocurrency on the platform.
Bitcoin is paired with USD and other fiat currencies and crypto tokens for investors to measure their earnings and calculate most profitable swaps.
Bitcoin has gained notoriety among institutional investors as a trading instrument. There are many countries where Bitcoin is used in derivative contracts such as options, futures, forwards, and swaps etc.
At the same time, Bitcoin is also harboring attention from the investors as an ETF product. There are some ETFs that trace Bitcoin derivatives such as futures while others follow spot BTC prices.
Bitcoin is the top cryptocurrency product and it is also the most popular virtual currency in the world. Crypto market is adding new users and traders every day and it has become a multi-trillion-dollar industry within the span of a century.
However, Bitcoin continues to face regulatory scrutiny that has raised questions about the future of DeFi and crypto sector.
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