Bitcoin (BTC)The exchange rate of one BTC at 15:16 UTC is 66760$
It may be said that “Bitcoin” is a protocol that implements an independent currency and payment system. That is, if we consider other electronic money or payment systems, for example, “WebMoney” or “PayPal”, they are electronic means of payment that operate with existing currencies: dollar, euro, pound, etc. “Bitcoin” is both: a separate currency and a payment system that manages this currency. It is important to realize that it is an independent payment system, that means, there is no organization that can control its work.
Note: hereinafter, the word “Bitcoin” will be used when it comes to the payment network or protocol, and the word “bitcoin” if the currency or the corresponding coins are meant.
In an attempt to understand what “Bitcoin” is, people often turn to “Wikipedia”, which says that “it is a peer-to-peer payment system that uses its own coins as units of value, and cryptographic methods are used to ensure the functioning and protection of the system.” For a person who is not experienced in payment systems matters, such a definition may turn out to be difficult and not fully understood, especially if he never heard of “Bitcoin” before. Lets try to find a more understandable definition. The best of the analogies found in publications on this topic is the comparison with “digital gold”.
It may be assumed that the creator of “Bitcoin” really tried to reproduce all the properties of gold, such as a limited amount, the complexity of mining, independence from a single organization, the impossibility of its simulated reproduction. The fact that “Bitcoin” accurately reproduces these properties digitally can be considered a major breakthrough in computer science.
Using “Bitcoin”, you can send a payment to anyone, anywhere. You need Internet access, a digital wallet and the address of the recipient to do this. Many of the restrictions typical for a regular international transfer are simply missing. No additional permissions are required to make a payment. Therefore, people who supported anarchism, liberal ideas, complete privacy, etc. became interested in Bitcoin. It was initially in these social circles that “Bitcoin” gained its fame. Later, they were joined by computer geeks (cypherpunks, hackers), as well as scientists, for whom “Bitcoin” became an object for research and interesting experiments. As soon as the price of bitcoin became at least somehow noticeable, it began to attract the attention of entrepreneurs and speculators who tried to capitalize on exchange rate fluctuations. For an ordinary person, the main interest is the absence of compulsory registration and the ability to make payments without third-party involvement.
If we take such payment systems as “PayPal” or “WebMoney”, they are controlled by specific companies, where it is possible to come with a search, confiscate servers or block the accounts. In the case of “Bitcoin”, there is no “Bitcoin company” that keeps coin accounts or confirms transactions. This means that transactions are not subject to censorship. This quality is very important, we will discuss how it is achieved later.
No one knows for certain who first proposed this technology and called it “Bitcoin”. It is officially known that it was someone under the “Satoshi Nakamoto” pseudonym. Perhaps it is one person, but there are suggestions that a group of people may be behind the pseudonym. Satoshi registered the “bitcoin.org” domain in 2008, released the first article, and published the initial version of the source code of the protocol. Until 2011, messages from the “Satoshi Nakamoto” pseudonym appeared on the relevant forums and in email newsletters. He later wrote that he had decided to focus on other priorities and stopped public communications.
Nevertheless, it is worth recognizing that Satoshi Nakamoto did not come up with the idea of creating Bitcoin all of a sudden. In his article “Bitcoin: A Peer-to-Peer Electronic Cash System,” he mentioned two other key projects. These were previous attempts to create an independent digital currency: “HashCash” by Dr. Adam Back and “B-Money” by engineer Wei Dai. The first introduced a proof-of-work approach, originally created to combat email spam, and the second introduced a network model for distributed storage of transaction data and the use of a cryptographic signature for money transfers.
Thus, Satoshi used an already tested concept for the implementation of “Bitcoin”, having managed to solve the remaining problems of early attempts, which their creators failed to do. It is believed that there are few people who would be able to discern a kind of embryo of an independent digital currency in the aforementioned failed projects.
The main reason why many people are so interested in cryptocurrencies is their price increase. And the first question that worries many is: “How is it actually formed?”. The price of the bitcoin is determined strictly according to the law of supply and demand. There is no person who makes the decision similar to: “Today the price of bitcoin will be this, and tomorrow it will be other.” Of course, there are manipulations on the market, but they cannot drastically affect the price of a coin.
At most, the price is formed on the exchange. It is exchanges that allow people to simply declare their desire to buy or sell coins. There is a huge number of trading platforms in the world. On each of them, the price of the bitcoin can be different, because it is determined by the supply and demand ratio that is created by users of a particular site. At the time of its appearance, the price of the bitcoin was not determined at all. Later, people began to carry out the first exchanges of bitcoins for coins of other currencies in a certain ratio, while not using automatic exchanges and specialized platforms. And the first purchase of a real product (two pizza boxes) was made only in 2010, at a cost of a few cents per coin. Then the rate began to grow and in 2011 reached its local peak, but after that it decreased again.
When it comes to price formation, it is fair to say that lost wallet keys or those that are not being used for some reason can play a significant role in the overall picture. It is known that Satoshi has about a million bitcoins, which he never spent. If now there would be evidence that he destroyed the keys, and the corresponding coins went out of circulation, then the price of bitcoin could change significantly.
Remarkable fact is that in order to perform some of the functions of “Bitcoin”, its price is not important, since it allows you to transfer assets over the Internet. If a user needs to make a money transfer from Ukraine to China, he can use Bitcoin as a transport for value - buy it in Kharkiv for hryvnia, and sell it in Shanghai for yuan. It doesnt matter if it costs $200 or $60,000.
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