Beginner's Guide On All-Things Bitcoin: Value, Pricing, And How It Works
|Published: 16th February 2021 12:12|
If you are looking to understand more about one of the most valuable cryptocurrencies to date, here is an insider-look at all-things Bitcoin. From Bitcoin’s value, pricing, and brief history, learn about how this digital currency makes the world go round today.
Bitcoin: Its Beginnings
2009 marks the genesis of Bitcoin as open-source software. The copyright of said type of software is basically a license for all users to not only use, but change, distribute, and study the same, across N number of users. And regardless of global location.
Contrary to misconceptions, the idea of open-source software did not start with Bitcoin. However, Bitcoin is the pioneer of all cryptocurrencies (by Satoshi Nakamoto, many of whom are unsure whether the said entity is a person or a group of people). It is the first of the first generation of digital currency sans fiat-backed assets and value.
Bitcoin: What Is It?
Bitcoin is a kind, or a “brand”, of cryptocurrency that has no physical equivalent. Unlike “hard” money found in your bank account or in your wallet, there are no actual coins to represent bitcoins.
This is because cryptocurrencies are not your conventional commodity. They are not supported nor circulated by government-regulated financial institutions such as banks. What they are, are intangible balances which are archived in a decentralized ledger. Said decentralized ledger is referred to as a “blockchain”.
Decentralization in this context is defined as mentioned in the paragraph before--- it is not linked to any third party or intermediary body. It runs on its own. This means that its value is not dictated by the economies nor of governments.
What Are Blockchains?
Blockchains are an important term in understanding bitcoins because these are the very foundation of said virtual currency. The system behind bitcoins is backed by a set of computers called “miners” or “nodes”. These nodes run the code of this pioneer-cryptocurrency and they safeguard its blockchain.
A blockchain is a kind of database, and can further be explained as a “group of blocks”. Every single block archives a series of transactions. What is distinctive about blockchain technology is that all the blocks and linked together. Therefore, pieces of information are chained to one another and are kept in chronological order.
New pieces of data are collected in new blocks. When said new blocks are filled, they are linked to the previous block. So on, and so forth. This very framework is what makes the entire system gain great security. The system itself cannot be “cheated”.
Still, bitcoin miners serve as the second line of defence (behind a thick shield-wall--- blockchain technology) in the event that attacks take place. They can simply divert all information to a separate blockchain, rendering the attacker void of any relevant data. Or any data, altogether.
Bitcoin Pricing And Value
Dissimilar to commodities and stocks, bitcoins do not have an “actual” value. They don’t have a price that is based on economic stability and/or instability. Instead, their value, and ultimately, pricing, are dependent on the demand of the cryptocurrency itself. This, and the limited number of bitcoins all over the Earth.
Other factors namely the pricing of competing digital-currencies, bitcoin production cost, and the like are considered minor players in determining BTC price. Be that as it may, supply and demand are the primary control variables here.