Bitcoin is the most popular cryptocurrency, both in terms of mainstream awareness as well as buy and sell volume. It is based on an open-source technology and operates with no central authority. This means that nobody owns or controls the network and everyone can take part. Bitcoin was conceived in 2008 by a person or group going by the name Satoshi Nakamoto, whose real identity is still unknown. Bitcoin’s supply is limited to a fixed number of 21,000,000 units.
Following its early days in 2009, the Bitcoin price did not cross USD 100 until 2013 and briefly crossed USD 1000 in 2014.
Suffering after the hack of Mt. Gox in 2014, the largest cryptocurrency exchange at the time, and the attack on the Bitstamp exchange in 2015, the Bitcoin value dropped back down sharply and did not break above its November 2013 high again until March 2017.
From there, the BTC price rose steadily throughout 2017 to reach a first all-time-high (ATH) of USD 19,783.06 on the 17th of December, 2017 and entered the infamous “crypto winter” at the beginning of 2018, a phase known for its low cryptocurrency prices which lasted for more than one year.
The Bitcoin price did not start its real recovery until mid-2019, from which point it steadily climbed towards its new all-time-high to hit USD 28,537 on the 30th of December, 2020 as new institutional players are entering the market.
The Bitcoin (BTC) price is known for its high price volatility in comparison to traditional markets, which means that prices move up and down very quickly, often within minutes. The cause for this high volatility is the relatively small size of the global cryptocurrency market, which means that the trading of comparatively small amounts can result in massive price fluctuations.
Bitcoin’s current price development depends on market conditions and the demand for Bitcoin. The BTC price is influenced by news regarding impending regulatory measures in markets, Bitcoin halvings, economic developments and many other factors.
For this reason, Bitcoin price predictions are unreliable and always speculatory. This is something that every buyer of Bitcoin should keep in mind. An effective way to deal with such price fluctuations is to set up a Bitcoin savings plan in order to benefit from the cost averaging effect.
Manage your money yourself
If you invest your money in a bank, the bank promises that you will get the money back at a later date. However, you do not manage the money yourself, and you have to trust that the bank will not go bankrupt, lose money through speculation, or keep only part of the money available. Bitcoin does not require trust in banks or financial services providers because, as a user, you always have your money in your own hands.
DID YOU KNOW?
In a traditional bank, it would be, in theory, no problem to exchange a number on the central booking server or simply halve the account balance. However, we trust that banks will not do that.
Transparency and security
There are no account balances with Bitcoin currency. In the Bitcoin wallet of choice, a current "account balance" of the Bitcoin address is visible, however, this number is not stored in the Bitcoin network (the so-called blockchain). Instead, since the beginnings of Bitcoin in 2009, all transactions between all Bitcoin addresses that have ever been made are on public display. If someone were to view all the transactions from the beginning to the present day, it is completely transparent which amount was moved to which address and when.
This way it is determined which address currently has which account balance. Therefore, an individual participant cannot cheat and omit or add transactions because all other participants in the Bitcoin network would recognise the fraudulent transaction.
A "wallet" is a virtual "purse" in which you can store, receive and send Bitcoin and other cryptocurrencies through a program that can be downloaded from the internet for free. Depending on the type of wallet, it can be used on desktop, mobile phone or tablet. However, storing Bitcoin and other cryptocurrencies is the safest in a hardware wallet that is not connected to the internet.
Even if you say colloquially that you have your coins in a wallet, that is not entirely correct. Bitcoin is always on the blockchain, the wallet merely contains the private key, which points to the Bitcoin in the blockchain.
Many of the benefits of Bitcoin have already been described in the previous text. To emphasise these benefits again and to dispel any doubts, here is a comparison to fiat money.
“Fiat money" is legal money issued by a state authority without intrinsic (internal) value. It serves as a medium of exchange and is the opposite of commodity money (for example, silver, gold). Commodity money has an intrinsic value inherent in its material properties.
Suppose you want to borrow money from the bank. You decide on a loan with a term of ten years. The bank credits a sum of €10,000 to you and the following happens in the background: There is no actual transaction made from A to B, the bank does not get the €10,000 from a larger bank. It also does not generate new paper money. After only numbers are entered on a display, the balance changes and confirms the "receipt" of the loan to someone. Thus, the next ten years you pay back money that was never printed but only digitally generated.
In the case of Bitcoin, it isn’t possible for a third party to type something, to change or to create anything. Bitcoin is not a tangible good, but it is limited and it is impossible to change it. The properties of blockchain technology ensure a cryptocurrency is highly secure. The way you handle your assets is entirely up to you and there is no need for a third person or intermediary authority to have additional access to your private data. You have access to the Bitcoin payment system 24/7 and can send money anytime, anywhere in the world - interest-free and in minutes.
All participants in the Bitcoin network are organised in a peer to peer network and are on fully equal terms. Since there is no central monitoring authority, nobody can be excluded from the Bitcoin network. The Bitcoin network manages and mines bitcoins. At the same time, the network is a payment system in which transfers are made and documented.
The Bitcoin system and its function are incorporated in the source code and can be viewed by anyone. Modifications by a single participant in the network must be accepted by the majority of all participants by consensus. That is what Bitcoin security is based on because you would have to convince the majority of users in the world to make certain changes.
For this reason, nobody can simply change properties of the network. Development of the total money supply is predetermined in the source code and thus cannot be altered. This measure is a hedge against possible inflation (devaluation).
