Not a single week goes by without ‘Bitcoin’ making it to the headlines! The digital currency that started ‘it all’ is often considered the synonym of cryptocurrency. However, it wasn’t until last year when Bitcoin generated the true hype among like-minded investors.
Surpassing its average limits over $65,000, February last year, Bitcoin was considered the most profitable investment after big industry giants like Elon Musk and Starbucks openly adopted it. However, while the wild volatility rate might continue to hit the headlines, BTC isn’t the choice for novice investors before knowing all the currency’s ins and outs.
Therefore, let’s take a closer look at the world’s first cryptocurrency, Bitcoin.
But first, a quick backstory!
Bitcoin has its story going back to 2009 when it was invented by an anonymous person (or a group) going by the name Satoshi Nakamoto. As per the statements, his stated goal was to create an electronic cash system that was completely decentralised, without any central authority or a server.
Following the start of his movement, Satoshi vanished in 2011 after cultivating the technology and concept of the ecosystem. However, before disappearing, Nakamoto turned over the domains and source code to other people in the bitcoin community.
Now, to give you a better idea, here’s a bit of a technical description of the currency.
What is Bitcoin?
Bitcoin is a digital currency that has gained popularity due to its decentralised nature! This currency can be used to sell, buy, and even exchange directly, without the need of any intermediary like a bank. A revolution in the electronic payment system, this currency works on the token of trust due to its public ledger approach.
Every transaction made in bitcoin is recorded over the public ledger, accessible to everyone, making it almost impossible to reverse transactions or try faking them. Thanks to its decentralised nature, it is anonymous and not backed by any financial or issuing institution.
However, the only downside to this cryptocurrency is that nothing guarantees the value of their currency besides the proof that is baked in the system’s heart.
What determines the value of BTC?
Ultimately, the value of a bitcoin boils down to one single factor; the ‘amount’ people are willing to pay for it! It’s a bit similar to the way stocks are priced.
The protocol established by Satoshi Nakamoto highlights that BTC has an upper limit of 21 million, i.e., only 21 million units of bitcoin can ever be mined. To give you an estimate, almost 19 million BTC has been mined, leaving behind 2 million.
This highlights a limited supply (similar to the case of gold and other precious metals) but holds no real intrinsic value as there are numerous economic and mathematical theories behind the number 21 million. This way, bitcoin stands out from the stocks, which usually has some relationship with the company’s potential earnings.
Now, without the presence of any central authority at the supply end, the “value” of BTC is entirely upon its interpretation. This is why the “price discovery” aspect is the primary reason behind bitcoin’s volatile nature.
Bitcoin over the years
Since its public launch in 2009, Bitcoin has never failed to highlight its volatile nature, with prices dramatically fluctuating in value. The coin, which once began with no value in 2009, spiked up to $123 in October 2013 before settling for $1237 that year.
However, it wasn’t until 2016 when the prices gradually moved to over $900 by year, before hovering around $1000 in 2017 and making its giant leap to around $19,000 by December. This is where mainstream investors, economists, governments, and scientists started developing an interest and developing alternate cryptocurrencies to compete with Bitcoin.
Fast forward to February 2022, one BTC now trades for over $40,000. But since its supply is limited to 21 million coins, many investors expect the price to move up the graph over time, especially with more investors getting into the ecosystem.
What can I do with Bitcoin?
If you’re a new investor thinking of the possibilities of your bitcoins, the list’s endless! Today, you can buy anything from a car to grocery items and apparel. However, many companies continue to be left behind in adopting the BTC trend at large. Further, many investors who fear the volatile nature of bitcoins look for a more innovative way to make the most of their returns at a higher rate.
Guess what? There’s a smart way to do it too! If you want to escape from the volatile nature and lock in your BTC to a specific value, you could convert them to digital gift cards. Yes, with the presence of a bitcoin gift card at the Coingate and other similar exchange platforms, you can tap into endless possibilities of purchase.