What is Bitcoin
It is a virtual currency, which uses an algorithm called blockchain, operating on a P2P network, in order to be a non-centralized and secure currency. There are many definitions in that sentence, we will work with them below:
Blockchain
Blockchain is an algorithm in which your code is based on a chain of blocks. Each block refers to a unique identification of the previous block. For a block to be valid, it is necessary that it uses the information from the previous hash plus its own content (transaction value information, portfolio where the value is coming from, where the value goes to, etc.) to generate a new hash. This hash, if valid, is registered in the chain, so it will be used for the calculation of the next block. The hash calculation requires a high computational power, so that whoever presents this result presents what is called proof of work. This result is difficult to calculate, but it is easily verifiable. Whoever presents it receives a bitcoin amount in their wallet.
Some particularities of the bitcoin blockchain:
- The hash calculation difficulty has not been the same since its creation. It has grown over time, and this has made the use of personal computers in calculating the hash unviable.
- Proof of Work is not the only way to make blockchain work, there is also the Proof of Stake, which is being adopted by another cryptocurrency, Ethereum. More details will be discussed on the page about this cryptocurrency
P2P
The P2P network (peer-to-peer), is a network whose main characteristic is that it is decentralized. This feature is very important in the case of an unofficial cryptocurrency in any country, as there is no central server on which governments can enforce a cryptocurrency restriction.
In the P2P network, all computers participating in the network are not only clients, but also servers. When searching for a certain information on the network, the information is searched on all computers on the network. Once the information is downloaded, your computer becomes another source of information for another customer.
In addition to cryptocurrencies, Torrents also make extensive use of the P2P network structure. A torrent file has the information of a particular file, the search was made on several computers in the world that shared and searched for that same file.
History
Bitcoin emerged in 2009 based on an article created by Satoshi Nakamoto in 2007. It is unknown whether Sakamoto is really a person or a group, so the authorship of this article is unknown.
In the early years, its characteristic of a secure, virtual currency, not controlled by governments, made it widely used on the black market.
But these same characteristics were soon seen with the good eyes of those who wanted greater freedom from the countries 'central banks, which often interfere in the countries' economic policies.
As such, transactions since 2013 have grown a lot, and Bitcoin's value has gone from a few cents to even tens of thousands of dollars in less than 10 years.
Like everything in the investment world, it is not known whether the future trend is upward or downward. However, Bitcoin has definitely gone beyond the scale of a risky invention to a serious currency in the business world.