What is Bitcoin (BTC)?
Bitcoin is a digital currency, invented by an anonymous individual or group of programmers under the alias Satoshi Nakamoto. Bitcoin is designed to function as a means of online payment, without the need for financial intermediaries such as banks or credit cards.
Characteristics of Bitcoin
Decentralized: Bitcoin is not controlled by any individual, organization or government. Bitcoin transactions are authenticated by a distributed network of computers around the world.
Supply Limit: The total number of Bitcoins created is limited to 21 million. This makes Bitcoin a scarce asset that can increase in value over time.
Safe: Bitcoin is secured using advanced encryption technology. Bitcoin transactions are irreversible and sacrosanct.
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What is Ethereum?
What is Crypto?
Who created Bitcoin?
The identity of Bitcoin's creator, aka Satoshi Nakamoto, remains one of the cryptocurrency world's biggest mysteries.
All we know is:
Satoshi Nakamoto is an alias name used by the individual or group of people who released Bitcoin in 2009.
Nakamoto published a Bitcoin report titled "Bitcoin: A Peer-to-Peer Electronic Cash System" in 2008 and actively contributed to Bitcoin's development until late 2010.
Since then, Nakamoto has disappeared from the community, no longer communicating or participating in the project.
Many theories have been put forward about Nakamoto's true identity, but none have been confirmed. Some people believe that Nakamoto was an individual, while others believe that it was a group. Prominent names rumored to be Nakamoto include Nick Szabo, Dorian Nakamoto, Craig Wright, and Gavin Andresen, however all have denied this.
The mystery of Nakamoto's identity adds to Bitcoin's appeal. Regardless of who created it, Bitcoin has revolutionized finance and technology, and its influence continues to grow.
Who controls Bitcoin?
Bitcoin is controlled by its owners. These people can use Bitcoin to buy and sell goods and services, or to make investments. They can also participate in validating Bitcoin transactions by running computing nodes.
Computer nodes are computers that participate in the Bitcoin network. They play an important role in validating transactions and maintaining network security.
There are a number of organizations and individuals that have significant influence over Bitcoin, but they do not control it completely. For example, Bitcoin miners are people who use computers to solve complex algorithms and create new Bitcoins. They can influence the value of Bitcoin by controlling the amount of Bitcoin supplied in the market.
Bitcoin exchanges can also influence the value of Bitcoin. They are places where users can buy and sell Bitcoin. Exchanges can influence the value of Bitcoin by adjusting the amount of Bitcoin offered to users.
Governments can also influence Bitcoin. Some governments have issued cryptocurrency regulations, which may affect how Bitcoin is used and traded.
Overall, Bitcoin is a decentralized digital currency, not controlled by any individual, organization or government. However, there are a number of organizations and individuals that have a significant influence on Bitcoin.
How does Bitcoin work?
Bitcoin operates on a technology called blockchain. Blockchain is a distributed ledger, stored on many computers around the world. This ledger records all Bitcoin transactions that have ever been made.
Bitcoin transactions are validated by a process called mining. The mining process uses a complex algorithm to verify the authenticity of transactions. People involved in the mining process are called miners.
How Bitcoin Works
To understand how Bitcoin works, let's look at an example of a Bitcoin transaction. Suppose A wants to send 1 Bitcoin to B. A will create a Bitcoin transaction, recording the amount of Bitcoin sent and the recipient's address. A will send this transaction to the Bitcoin network.
Computer nodes on the Bitcoin network verify A's transaction. This verification process uses the Proof-of-Work algorithm. The Proof-of-Work algorithm requires computer nodes to solve a complex mathematical problem. The first computing node to solve this problem will be rewarded with new Bitcoins.
Once a transaction has been verified, it is added to the blockchain ledger. The blockchain ledger will be updated on all computer nodes on the Bitcoin network.
Thus, a Bitcoin transaction is performed according to the following steps:
The sender creates a Bitcoin transaction.
Transactions are sent to the Bitcoin network.
Computer nodes on the Bitcoin network verify transactions.
Transactions are added to the blockchain ledger.
The safety of Bitcoin
Bitcoin is secured by blockchain technology. The blockchain ledger is encrypted using advanced cryptographic technology. This makes Bitcoin transactions irreversible and sacrosanct.
Additionally, the Bitcoin network is a distributed network. This means that there is no single point that can control the network. This makes Bitcoin difficult to attack.
Advantages and disadvantages of Bitcoin
Advantage:
Decentralized: Bitcoin is not controlled by any individual, organization or government. This makes Bitcoin safer and more secure than traditional currencies.
Supply Limit: The total number of Bitcoins created is limited to 21 million. This makes Bitcoin a scarce asset that can increase in value over time.
Safe: Bitcoin is secured using advanced encryption technology. Bitcoin transactions are irreversible and sacrosanct.
Defect:
Fluctuating value: Bitcoin's value can fluctuate widely, making it risky to invest in.
New technology: Bitcoin is a new technology and there are still many potential risks.
Lack of adoption: Bitcoin is still not as widely accepted as traditional currencies.
History of formation and development of Bitcoin
(source Coin68)
2008
Domain name Bitcoin.Org was registered - August 18, 2008
The domain name “Bitcoin.org” was registered by an anonymous individual using privacy protection services. Although the identity of the subscriber remains unknown, many speculate it could be Satoshi Nakamoto.
Domain name bitcoin.org
Today, the domain is maintained by an open source community of developers and volunteers working on the Bitcoin Core software and related projects.
Bitcoin Whitepaper released - October 31, 2008
The Bitcoin Whitepaper, titled “Bitcoin: A Peer-to-Peer Electronic Cash System,” released by Satoshi Nakamoto, described a decentralized digital currency system for peer-to-peer transactions using blockchain.
2009
First Bitcoin block mined - January 3, 2009
Satoshi Nakamoto mined the first block of Bitcoin, this is called “Genesis Block” (Block 0 or Block 1). This block has a message in the coinbase parameter, which reads: The Times 03/Jan/2009 Chancellor on brink of second bailout for banks. This message emphasizes Bitcoin's goal of providing an alternative to centralized financial institutions. This block contains the first 50 Bitcoins ever mined, marking the beginning of a new era in decentralized, peer-to-peer transactions.
First Bitcoin transaction - January 12, 2009
Just days after the Bitcoin network launched, Satoshi Nakamoto sent 10 Bitcoins to Hal Finney, signaling that Bitcoin would soon be used as a currency.
2010
Bitcoin Pizza Day - 22/5/2010
The first commercial Bitcoin transaction occurred when Laszlo Hanyecz paid 10,000 Bitcoin for two Papa John's pizzas in Jacksonville, Florida.
2012
First Bitcoin Halving - November 28, 2012
The first Bitcoin Halving event has taken place. During the first Bitcoin halving, the block reward was reduced from 50 Bitcoins to 25 Bitcoins.
2013
First Bitcoin ATM - May 2, 2013
The first Bitcoin ATM was installed in Vancouver, Canada in October 2013, marking the beginning of a global trend. Bitcoin ATMs are designed to provide users with a convenient and fast way to participate in the cryptocurrency market with cash.
2016
Lightning Network Whitepaper released - January 14, 2016
Joseph Poon and Thaddeus Dryja have released the Lightning Network whitepaper, proposing an off-chain protocol for faster and scalable processing of transactions on the Bitcoin blockchain. This protocol is proposed to solve Bitcoin's scalability problem by handling off-chain transactions and multi-signature payment channels.
2017
Bitcoin Cash Hard Fork - 1/8/2017
The Bitcoin Cash hard fork originated from the Bitcoin community's dispute over its future. While many embraced the Segregated Witness (SegWit) soft fork, a group of miners and developers opted for a hard fork, giving birth to Bitcoin Cash (BCH) to increase transaction speeds with lower fees.
2021
Bitcoin officially reached a capitalization of 1 trillion USD - January 19, 2021
Bitcoin price reached 54,000 USD, bringing this cryptocurrency to a capitalization of 1 trillion USD after 13 years since its inception.
Bitcoin becomes legal currency in El Salvador - September 7, 2021
On September 7, 2021, El Salvador became the first country to recognize Bitcoin as legal tender alongside the USD. President Nayib Bukele's goal is to increase financial inclusion, attract investment and reduce remittance costs. Bitcoin is now accepted by many different businesses in El Salvador.
2023
Ordinals Protocol Launched - January 21, 2021
Developer Casey Rodarmor introduced the Ordinals protocol on Bitcoin. Ordinals gained widespread attention with the introduction of inscription, which allows users to attach content and data to satoshis and write them directly to the Bitcoin blockchain through transactions.
BRC-20 standard launched - March 8, 2023
A twitter user with the username @Domo introduced an experimental token standard called “BRC-20”. The introduction of BRC-20 has created more applications for the Bitcoin blockchain.
How to buy Bitcoin?
Bitcoin trading platform
A Bitcoin exchange is an online platform that allows you to buy, sell, and trade Bitcoin. Some popular Bitcoin exchanges include:
Binance
OK
Bybit
Use the following link to register an account on the exchanges and receive incentives":
see more
To buy Bitcoin on an exchange, you need to create an account and fund it with fiat currency, such as USD or EUR. You can then use this money to buy Bitcoin.
What are the benefits of Bitcoin?
Bitcoin has several benefits, including:
Decentralized: Bitcoin can be used by anyone, regardless of country, religion or politics. This makes Bitcoin a suitable payment option for people living in countries with unstable economies or with governments that tightly control the currency.
Limited Supply: Bitcoin's limited supply makes it scarcer and more valuable over time. This can make Bitcoin an attractive investment.
Secure: Bitcoin's advanced encryption technology helps protect Bitcoin transactions from hacking or alteration. This makes Bitcoin a more secure payment option than traditional currencies.
Low transaction fees: Bitcoin transaction fees are typically much lower than those of traditional currencies. This makes Bitcoin a more efficient payment option.
Globality: Bitcoin can be used to send money around the world quickly and easily. This makes Bitcoin a convenient payment option for international transactions.
Risks when investing in Bitcoin
Bitcoin is a new cryptocurrency and there are still many potential risks. Here are some key risks to consider when investing in Bitcoin:
Fluctuating value: Bitcoin's value can fluctuate widely, making it a risky investment. For example, the price of Bitcoin increased from around $3,000 in 2017 to over $68,000 in 2021, but then fell below $30,000 in 2022.
New technology: Bitcoin is a new technology and there are still many potential risks. For example, there is the possibility of cyber attacks on the Bitcoin network or vulnerabilities in its protocol.
Lack of adoption: Bitcoin is still not as widely accepted as traditional currencies. This means it can be difficult to find people who accept Bitcoin to purchase goods or services.
There are also some specific risks associated with storing Bitcoin. For example, you could lose access to your Bitcoins if you forget your password or if your wallet is hacked.
Is Bitcoin investment taxed?
According to current Vietnamese law, Bitcoin and similar cryptocurrencies are not considered legal currencies. Therefore, buying, selling and exchanging Bitcoin is not considered a business activity and is not taxed.
However, to avoid the risk of tax arrears, Bitcoin investors in Vietnam should pay attention to updating current legal regulations and fulfill full tax obligations, if any.
What is Bitcoin halving?
Bitcoin halving is a periodic event in the Bitcoin network in which the reward to miners for verifying transactions and creating new blocks is halved. Halving occurs every 210,000 or so blocks mined, or about 4 years.
Purpose of halving
The purpose of halving is to control the rate of new Bitcoin creation and prevent inflation. The total supply of Bitcoin is limited to 21 million, and halving helps ensure that all Bitcoin will eventually be mined over time.
History of halving
The first halving took place in November 2012, when the reward was reduced from 50 BTC to 25 BTC per block mined. The second halving took place in July 2016, when the reward was reduced from 25 BTC to 12.5 BTC. The third halving took place in May 2020, when rewards were reduced from 12.5 BTC to 6.25 BTC.
Next halving
The next halving is expected to take place around April 2024. At that time, the reward will decrease from 6.25 BTC to 3,125 BTC.
Impact of halving on Bitcoin price
The impact of halving on Bitcoin price is unpredictable. The theory is that a reduction in the new supply of Bitcoin could lead to an increase in price over time, as demand for Bitcoin exceeds supply. However, other factors such as market sentiment and regulation can also affect Bitcoin price.
Types of Bitcoin storage wallets
A Bitcoin Wallet is a secure storage for your Bitcoin assets, allowing you to send, receive, and manage balances. Like regular wallets, Bitcoin wallets do not actually contain Bitcoin, but rather contain the private keys needed to access the Bitcoin stored on the blockchain. There are many different types of Bitcoin wallets, each with its own advantages and disadvantages. Here are some of the most popular wallets:
Hot wallets
Hot wallets are stored on devices such as computers, mobile phones or tablets and are directly connected to the internet.
Advantages: Easy to use, convenient for frequent transactions, often free.
Disadvantages: Less secure than cold wallets, vulnerable to hacker attacks.
Hot wallet example:
Coinbase Wallet
Exodus Wallet
Electrum
Cold wallets
Cold wallets are specialized hardware devices designed to securely store Bitcoin. They are not connected to the internet, making them less vulnerable to attacks than hot wallets.
Pros: Very secure, ideal for long-term Bitcoin storage.
Disadvantages: Less convenient than hot wallets, requires basic technical knowledge to use.
Cold wallet example:
Model One vault
Ledger Nano S
KeepKey
Paper wallets
A paper wallet is a sheet of paper with your public and private keys printed on it. The private key is kept secret, while the public key is used to receive Bitcoins.
Pros: Very safe, free.
Disadvantages: Can be damaged or lost, difficult to use for transactions.
Multi-signature wallets
Multi-signature wallets require multiple private signatures to perform Bitcoin transactions. This makes them more secure than wallets that only require one signature.
Pros: Very secure, ideal for storing Bitcoins of a group of people.
Cons: Can be complicated to set up and use.
Exchange wallets
An exchange wallet is where you store the Bitcoin you buy on a cryptocurrency exchange.
Advantages: Easy to use, convenient for transactions.
Cons: Less secure than personal wallets, you don't fully control your private keys.
Choosing which wallet is right for you depends on your needs and the level of risk you accept. If you are a beginner and only have a small amount of Bitcoin, then a hot wallet can be a good choice. If you have large amounts of Bitcoin and want to store them safely for long periods of time, cold wallets are a better choice. Paper wallets and multi-signature wallets are other secure options, but they can be more difficult to use. Exchange wallets are convenient for trading but less secure.
Should I buy Bitcoin or not?
Whether or not to buy Bitcoin is a personal decision that depends on many factors, including:
Your risk tolerance: Bitcoin is a high-risk asset, its value can fluctuate widely. If you cannot afford the risk of losing money, then Bitcoin may not be right for you.
Your knowledge of cryptocurrency: Bitcoin is a complex technology and requires certain knowledge to understand and use. If you don't understand Bitcoin well, then you could be at risk.
Your investment goal: Are you investing in Bitcoin to make a profit, or to use it as a means of payment? If you are investing in Bitcoin to make a profit, then you need to have a clear understanding of the factors that influence Bitcoin price. If you are using Bitcoin as a means of payment, then you need to make sure you can use it where you need it.
But there is a trend of large organizations increasingly participating in Bitcoin investment, such as MicroStrategy, an American software company, which bought 129,218 Bitcoin worth about 6.3 billion USD. MicroStrategy bought Bitcoin as a long-term investment and said it believes Bitcoin has the potential to become a global currency.
Tesla, an American electric car company, purchased 43,200 Bitcoin worth about $2.5 billion. Tesla has purchased Bitcoin as a means of payment and said it believes Bitcoin could become more popular in the future.
Venture capital funds, who invest in high-tech companies, are also starting to invest in Bitcoin. According to blockchain research firm Grayscale, venture capital funds hold about 650,000 Bitcoin.
summary
Above is all the information you need to know about Bitcoin, the most influential factor in the cryptocurrency market. Through this article, Dung hopes you will gain an overview of basic information about Bitcoin.
