Bitcoin is the first and most popular cryptocurrency in the world. It was developed by a person or group of people under a pseudonym Satoshi Nakamoto. It is not known for certain when the development of the Bitcoin cryptocurrency began. The creator of Bitcoin Nakamoto worked on the project until 2008, and already in 2009 the Bitcoin cryptocurrency, presented in the form of a virtual coin, was officially launched.
Bitcoin is an open source payment instrument with the main future – decentralization. In addition, transactions on the Bitcoin network provide participants with the right of absolute anonymity. All data on accounts and transactions are recorded in the blockchain – the ledger of a system consisting of blocks. Each block has its own cryptographic code, which cannot be changed or faked.
What is the core essence of Bitcoin?
The goal of cryptocurrency is to become an ideal means of payment for every inhabitant of the planet, because the true purpose of money is to use it exclusively as a means of payment. A Bitcoin transaction is, in essence, the transfer of value from hand to hand, bypassing any intermediaries. It turns out that the ideal currency, according to the Bitcoin philosophy, should have the following features:
- limited emission.
The Bitcoin network is not controlled by anyone and does not belong to any government, so the cryptocurrency is exempt from taxes. All attempts to regulate cryptocurrency so far do not have much variety – in the territory of a particular country (USA, Japan) it can be used, while in other territories it is illegal (Bolivia, Thailand). In some countries there is an intermediate solution, for example, in Iceland it is impossible to buy Bitcoin and other cryptocurrencies, but, at the same time, you can engage in mining.
Bitcoin operation is not supported by a single hub (a powerful master server), but by millions of miners around the world. To disrupt the operation of a centralized online payment service, intervention in the main storage of information will be required. For example, the Liberty Reserve payment system, known in the past, was closed by the US authorities, and its users simply lost their money.
If it comes to Bitcoin, this is impossible, because the storage of information is the blockchain – the property of the world wide web. Therefore, hacking or shutting down the Bitcoin network is as real as hacking all computers on the planet at the same time or shutting down the Internet worldwide.
To use the Bitcoin cryptocurrency, no verification is required, it is enough to get yourself a wallet address, remember the seed phrase. Bitcoin is supported by a huge number of online services where you can register and create a wallet. Nowadays this is not entirely true, since most exchange sites require personal identification, but there are still services that do not require verification, such as cryptex.net who's goal is to make customers safe and anonymous.
Finally, the limited emission is intended to highlight the value of the cryptocurrency. Bitcoin has 21 million coins, as soon as the last coin is mined, the release of new ones will stop. Traditional currencies used to be backed by gold reserves, but modern central banks simply print banknotes in unlimited quantities. That is why Bitcoin is considered a reserve currency in the world of crypto money and is called "digital gold".
Bitcoin cryptocurrency perspective
In 2009, Bitcoin was worth almost nothing – one US dollar could buy as many as 1,300 coins. However, the rate of the cryptocurrency was constantly growing, attracting the attention of millions of people from all over the world, who are still divided into two camps.
Some welcome Bitcoin, understanding its idea, and even become full-fledged participants in the cryptocurrency movement (traders, miners, investors). Others, on the other hand, call Bitcoin a bubble, and the network itself is a fiction that covers a large-scale financial pyramid.
If you look at the Bitcoin rate chart, you can see a repeating trend – the cryptocurrency grows rapidly, and then very unexpectedly falls, and, as if feeling the bottom, it repels again and continues its flight. The behavior of the bitcoin rate can be predicted, but for this you need to know the main reasons for the rise and fall of Bitcoin.
Bitcoin is the largest speculative instrument today. Bitcoin's daily transaction volume is several billion dollars. The bulk of Bitcoin transactions are carried out on cryptocurrency exchanges – platforms where digital assets are traded.
A huge number of exchanges operate on the Internet – data from the most authoritative and form the average BTC rate, which we learn about from the news with the headlines "Bitcoin has broken a historic maximum" or "Bitcoin has collapsed by 30%." The behavior of traders on such exchanges determines the short-term rate of Bitcoin.
Why is Bitcoin falling and rising?
According to some reports, most of the mined Bitcoin coins are concentrated in the hands of a small circle of people. They have the ability to dictate the market situation, swinging the rate from side to side and get huge profits on this. Artificial rise and fall of the rate are known under the following terms:
These terms can be translated as "inflate" (pump) and "deflate" (dump). The growth of the rate occurs due to the dominance of demand over supply to purchase an asset, respectively, the fall in the rate follows from opposite conditions.
As an example, we can consider the behavior of the bitcoin rate in November-December 2017. Large players decided to make money on the Bitcoin for the Christmas holidays, and in just a month the BTC rate grew from $ 6,000 to $ 20,000 per coin. The demand for the digital asset was colossal, and even yesterday's skeptics began investing in the Bitcoin cryptocurrency.
"Bitcoin's flight to the moon" (a well-known metaphor in the cryptocurrency environment) was accompanied by loud news and statements from major global business figures. Apparently, the pumping was catalyzed by the launch of bitcoin futures trading on the largest American exchanges. Exactly on the day trading started on the CME Group, Bitcoin's price began to fall.
It seems that all the same large players began to sell their BTC assets, and, almost immediately, small representatives of the crypto market joined them with a hope to close Bitcoin positions with some profit. In fact, a completely expected correction took place in the cryptocurrency market, after the next pumping, and Bitcoin again passed the “bursting of the soap bubble” that the opponents of cryptocurrencies are waiting for.
Bitcoin cryptocurrency forecast for 2021
Many cryptocurrency analysts have given very positive forecasts for the Bitcoin exchange rate in 2021. For example, a well-known expert in the field of cryptocurrency Tony Weiss believes that the cryptocurrency rate will reach 50 thousand dollars. In this, analyst Ronnie Moas agrees with him, expecting a new historical maximum for Bitcoin at the end of 2021.
There are also directly opposite predictions with a negative scenario for Bitcoin. According to them, in 2021, Bitcoin is expected to collapse to $ 1,000 and below. Such predictions worth noting as the most of these forecasts belong to people far from cryptocurrencies, or initially hostile to this phenomenon.
Taking into account the peculiarity of the cryptocurrency market, the forecast with the growth of the bitcoin rate in 2021 is more plausible. Bitcoin today is a trend followed all over the world. It is absolutely certain that interest in this virtual coin has not yet reached its peak, so the good old Bitcoin will surprise us more than once.