These days, cryptocurrencies are a hot topic in the financial world. Some love these virtual assets, while others treat them with skepticism, but regardless of which of the two parties you belong to, it’s undeniable that cryptocurrencies are here to stay. Their history is short and yet, incredibly exciting, showing how powerful, innovative technology can transform the world in unexpected ways.
Contrary to popular belief, cryptocurrencies didn’t start with Bitcoin – prior to it, there were multiple attempts to develop a digital asset, but they didn’t succeed because of the double spending problem. The first person who introduced the concept of cryptocurrencies was a computer engineer named Wei Dai, who published a paper discussing the idea of “B-money”. The same year, Nick Szabo drafted Bit Gold, which aimed to create a decentralized digital currency. He was motivated by the inefficiencies of the traditional financial system, like the need for metal to produce coins. And while these two ideas never came to fruition, they fueled the creation of Bitcoin.
While it faced many challenges in the past, Bitcoin has managed to overcome them all, shining even in the darkest of times. Time and time again, it has proven its resilience, recovering from bear markets and gaining a solid position.
The birth of a revolutionary form of currency
In 2019, Satoshi Nakamoto published Bitcoin’s white paper describing the purpose of the Bitcoin blockchain network. This is an important date in Bitcoin’s history, as it has carved the path for the following events in the crypto space. Four months later, Nakamoto, whose identity is still anonymous even today, mined the first block on the network, known as the Genesis Block. Bitcoin was used for the first time to purchase two pizzas, which is commemorated today as the Bitcoin Pizza Day. After this point, Bitcoin gradually increased in popularity, resulting in the creation of alternative cryptocurrencies known as altcoins.
The price of Bitcoin first hit $1000 in 2013 but was then followed by a decline resulting in considerable losses. However, the cryptocurrency came back stronger, with its price rising again and proving its incredible potential for growth.
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How does Bitcoin work?
Bitcoin is a virtual asset you can store on a crypto exchange or your digital wallet. Each coin is equivalent to the current BTC price; however, owning only partial shares of the coins is also possible.
Getting started with Bitcoin doesn’t necessarily require understanding technical details. First, you have to install a Bitcoin wallet on your phone or computer, and you’ll then be generated an address that you can share with your friends to carry out transactions. These transactions occur on the blockchain – a shared public ledger that supports the entire Bitcoin network. The data within the blockchain is encrypted by utilizing solid methods, which are a significant part of the security puzzle. This way, the data is immutable and is kept private and secure.
Bitcoin gives people the much-desired financial freedom
Since Bitcoin’s launch, there has been a long debate about whether this cryptocurrency can genuinely transform the financial world. While it’s pretty hard to predict the future of digital currencies, it’s evident that they provide people with a new level of sovereignty, putting individuals on par with both corporations and states.
Society has never seen this before, as banks and states can deny access to the financial system. Fiat money is often a tool of power; however, Bitcoin changes this through its decentralized structure, as it eliminates financial institutions from the equation. Bitcoin is inclusive and free of limitations, giving users control over their assets through a private key. Billions of people, especially women, are excluded from the traditional financial system, but Bitcoin opens the door to great opportunities for unbanked communities. By taking control of their finances, people have new avenues to evolve professionally and improve their lives.
In other words, this revolutionary asset is carving the path to financial independence for people worldwide, having the power to advance human rights. First, Bitcoin’s utility is essential to individuals living under an authoritarian political regime, who can preserve their freedoms by transacting outside the limits of the government. Moreover, Bitcoin gives people more privacy, which is a luxury in many countries. Online activity is becoming a significant part of modern society, and data collection has never been more rampant than it is today, making it difficult to circumvent forms of surveillance. However, vulnerable groups can’t afford critical privacy tools like a VPN. Bitcoin provides a solution for this issue, protecting users’ anonymity when transactions are executed.
Unlike banks, Bitcoin is open 24 hours a day, 7 days a week, throughout the entire year, which means you can send payments even during weekends or holidays. Moreover, at this moment, no license is required to use Bitcoin, so that everyone can use it regardless of purpose. As experts call it, Bitcoin is permissionless, with no censorship or gatekeepers.
Although empowering, Bitcoin isn’t risk-free
We previously talked about the power Bitcoin gives people, but as a famous quote says: “With great power comes great responsibility”. Or, otherwise said, using Bitcoin requires an increased level of responsibility, as there is no hotline or CEO you can sue and no deposit insurance. This means that once you make a mistake and lose all your money, you must deal with the consequences, as nothing can be done about it.
That said, there are different ways to mitigate risks when investing in Bitcoin. For instance, it is never wise to put all your hard-earned money into a volatile asset like crypto believing, buying into the false belief that you will make a profit immediately. Instead, you must take an honest look at your current financial state and decide whether it is the right time to invest in cryptocurrencies. Suppose you need the money for another reason in the immediate future; in that case, it may not be a good idea to join the crypto space at this time. However, suppose you do have enough money and are willing to take a shot. In that case, it’s crucial to adopt a long-term perspective and not rush into making decisions without first researching, as this could have lasting consequences.
From its birth and until now, Bitcoin has proven its worth over and over again. With its quick transaction times and secure encryption technology, it has become an appealing option for those looking to gain an additional stream of revenue. Its future seems promising, and although no one can tell for sure how things will unfold in the crypto space, Bitcoin will likely remain at the top for a long time.