What is Bitcoin?
Bitcoin is the universal payment system originally launched as an open-source software in 2009 by the person or group of people known as Satoshi Nakamoto. Unlike the classic banking models, Bitcoin has qualities such as anonymity or decentralization thanks to the blockchain technology that is used to validate the transactions. Due to these characteristics, user interest in this digital currency has been increasing, which has generated an enormous volume of cryptocurrencies being issued to the market following the Bitcoin pattern.
The first and most popular cryptocurrency
Currently, the Bitcoin is the cryptocurrency that has the biggest nominal market price and the largest market capitalization. Its importance is such that it is considered unique, treating the rest of digital currencies as Alternative Coins (altcoins). In this group, we can find open source systems such as Ethereum, Ripple or Litecoin.
There are many factors that condition the high volatility of Bitcoin. Similarly to what happens with common assets and the currency pairs in the foreign exchange market, the increasing or decreasing interest of the public raises and/or lowers its market price. However, it also has certain specificities such as the absence of current regulation or pressure from governments. This keeps its value in constant movement, that the individual investor should frequently confront with the Bitcoin analysis.
The individual investor should differentiate the anonymity of the cryptocurrencies with the fact that transaction processes are recorded and validated using the Blockchain technology. Otherwise, the Bitcoins pass-through information would not be available. However, the process of performing this data recording requires a high computational work, as well as a lot of time.
To do the mining, individual processes are carried by the users, who are responsible for recording that information in blocks, which will join the unchanging blockchain. On the other hand, as a reward, the miners will obtain for their collaboration a small number of bitcoins in the process known as Bitcoin mining. Likewise, this term also applies to the creation and distribution of Bitcoin. According to the latest Bitcoin News, the total number of Bitcoin mined is about the half of the total number of Bitcoin created during the previous year. Such diminishing number of newly mined Bitcoin means that the total number of 21 million Bitcoins in circulation will only be created by 2030.
Bitcoin Wallets are private systems where individual investors store their Bitcoin mined or obtained through transaction or sale of services. According to their characteristics, the Bitcoin Wallets are classified into 4 different models:
- Web: One of the most commonly used options due to the speed at which it operates. This means a web hosting from where investors carry out all their transactions.
- Desktop: For desktop wallet, investors must download a special application to their computers or mobile phones. Certain operations, such as balance inquiry, do not require an internet connection.
- Hardware: One of the safest options to hold the Bitcoin wallet is the hardware. They work as physical external hard drives where investors store information about the total balance in a very reliable way.
- Paper: Along with the hardware wallets, the safest option. However, its process is slower requiring its passage through the online Wallet.