Cryptocurrency is digital which differs from physical, or fiat, currency like cash or means of paying physical currency such as credit and debit cards. Unlike traditional currency, the transactions conducted through digital currency are verified by a decentralized system, instead of acting like a traditional banking setup where transactions are concentrated through one central authority. Since its rise in 2008, Bitcoin (BTC) has been the most well-known and predominant name in the cryptocurrency sphere.
As the world knows it, however, Bitcoin became known by people around the world in 2009. Its most interesting attribute was the fact that its currency was not tied to any involvement from any government or bank.
Bitcoin’s other prominent attribute is the privacy of its transactions as well as the security afforded to the user’s financial and personal data. Bitcoin transactions are recorded in a medium called a “blockchain ledger.”
Bitcoin has recently increased in popularity and appeals to investors who found that trading and exchanging this form of cryptocurrency boosted its value, and therefore how much can be made from it overall. Here are some other interesting facts about the world’s most well-known cryptocurrency.
TOP 10 Shocking Bitcoin Myths and Truths:
1. Bitcoin Originated And Was Founded Based On Economics
The entire concept of what has grown into the Bitcoin we know today originated in 2008, with the idea emerging in the fallout of the 2008 financial-economic crisis. Bitcoin was founded to be an alternative currency, one that was digital and decentralized, not being tied to the financial well-being of any financial or banking institution.
Satoshi Nakamoto, credited with being one of Bitcoin’s primary founders, laid out the plan for the cryptocurrency, motivated by wanting to create something that was undetectable (private) and decentralized. In large part, Bitcoin’s origins were a criticism of the world’s current financial system.
The decentralization of Bitcoin’s transactions meant that it could be validated by a public ledger comprised of transactions that people could digitally store on their electronic devices. This meant that there was no need for any intermediaries when users exchanged Bitcoins with others.
2. The Founders Of The Bitcoin Concept Are Shrowded in Mystery And Controversy
We know Bitcoin was founded in 2008, but there has not been one single person credited fully with its conceptual invention. While Satoshi Nakamoto was a name tied to one of the founders, that is just a name of Japanese origin, no one truly knows the person or entity behind it, but most are reasonably sure that the name is actually a pseudonym. As such, Satoshi is a historical pillar of the development of Bitcoin. Certain individuals have attempted to usurp the title, or issue claims that they were, in fact, Satoshi, including Nick Szabo, Craig Wright, and Dorian Satoshi, but none could actually provide tangible proof to indicate that they were the creator of the Bitcoin cryptocurrency.
3. There Is No Established Price Or Value To Bitcoin
Traditional currency has value because we all agree that it does, and it was only at the turn of the decade that people finally began to accept and they agree on the idea that this form of currency had monetary power behind it, giving Bitcoin a leg up. Having said all that, while people agree that it has value, there is no set value in place.
Consider a $1 bill. We know that its worth is $1. Bitcoin does not apply currency in the same way, acting as a counter to the traditional currency model in the sense that its digital currency is essentially limitless. Since no central government or banking body is controlling or administering it, BTS value isn’t cemented. That would mean that digital currency is agnostic to economic factors like growth and inflation.
So what factors influence Bitcoin? There are primarily two factors involved in influencing how much a Bitcoin’s value is They are first the supply of Bitcoin, and the second is the demand for it. To put it another way, the price of each Bitcoin is worth as much as people are willing to pay for it or to exchange it for in terms of goods and services.
4. The First Bitcoin Purchase Was A Pizza
At first, no one would consider that Bitcoin had an actual value. That is until the first purchase using it was paid. That first purchase happened on May 22, 2010, when Laszlo Hanyecz purchased two Papa John’s pizzas with them, spending 10,000 Bitcoins. That day is of big relevancy to crypto history, with some dubbing the 22 of May as Bitcoin Pizza Day.
It would take more time for other retailers to begin accepting Bitcoin as an actually viable currency, but once that became a normal staple of transactions, Bitcoin became eligible to be exchanged for goods and services. By 2019, the value of Bitcoin was up to $41 for 10,000 BTC (Bitcoin tokens). Today, that same amount is worth $453.
5. Cryptocurrencies Including Bitcoin Require Blockchains To Function
What makes Bitcoin and other cryptocurrencies functionally secure is their operation on a blockchain. The blockchain is composed of “blocks” which are nodes or computers within the blockchain network, an open-source and distributed database that does not operate from any one central location.
By its definition, the blockchain is a perpetually growing list of blocks, or records, bound together through cryptography. Every block in the blockchain contains a cryptographic hash from the previous block, as well as a timestamp and transaction data. This means that the timestamp of the transaction is one of the few traceable aspects of a transaction’s record.
This technology is incredibly innovative and powerful, but it isn’t flawless. The blockchain’s constant growth requires that it be stored somewhere, which is incredibly space intensive, requiring gigabytes of storage for all of the incoming block data. As blockchain improves, users are hopeful that the current issues with storage capacity and bandwidth addressed through simplification.
6. Unlike Fiat Transactions, Bitcoin Transactions Cannot Be Traced
Banking transactions are traceable except in some incredibly rare situations, but a Bitcoin is not subject to the same amount of transparency. While the digital stamp of the transaction exists in a clear and recoverable form, the holder of the Bitcoin is kept anonymous. Only what is on the blockchain is recorded from the Bitcoin transactions, and the users are not part of the retained data.
If used, blockchains can be hidden. When personal financial information is on a blockchain, the owners of that information can manage and control the access of any third party to it. Therefore, unless the owner wants it to be revealed, it cannot be disclosed. The Bitcoin user can even hide their IP address by using a VPN or different services. All of this makes Bitcoin an incredibly private medium for all users, allowing for global transactions to be made in an untraceable manner.
7. Losing Your Bitcoin Passcode Or Private Key Results In Disasterous Loss Of All Investments
To be blunt, losing your Bitcoin private key means losing all of your Bitcoins. An example of such a disastrous result is when a British IT worker, James Howels misplaced his hard disk with his Bitcoin private key with 7.500 Bitcoins. The 2010 loss cleaned James out of crypto. To illustrate the magnitude of the value of that sum, consider that today 7,500 BTC is worth $336 million.
To this day Howells is offering $70 million to the trash dump, the place he is from in the UK if they can help him recover his lost hard drive and the private key. This type of loss has resulted in nearly a quarter of all BTC in circulation getting lost permanently.
8. The Whale Of Cryptocurrency Is A Term Referring To Its Value
A whale might be a mammal in common terms, but in crypto-speak it refers to the digital currency, specifically a large volume of it. A Whale holder is someone who holds a large number of tokens of the Bitcoin cryptocurrency, thereby also possessing a significant part of the value associated with them. The reason for the term “whales” specifically is that these owners own so much Bitcoin that their every maneuver has the potential to disrupt the “waters” for the smaller fish.
In financial terms, whales are a problem because by owning as much Bitcoin as these individuals or entities do, they hold a vast amount of wealth and value. When this value isn’t actively being used, Bitcoin does not just experience erratic price volatility, it also has decreased liquidity.
9. Almost 10% Of All Bitcoin Assets Have Been Inactive For More Than A Decade
There are many inactive Bitcoin accounts all over the world, with their combined estimated worth of over $29 billion. As data changes, the volume of Bitcoin that has been stagnant in the owners’ possession accounts for over 60%. 10% of the total Bitcoin supply has not had any activity for more than ten to twelve years, with a rough equivalent of 1.8 million Bitcoin accounts being locked in currently inactive Bitcoin addresses.
10. Mining Bitcoins Is Overwhelmingly Intensive In Terms Of Electricity Usage
Electricity is paramount to mining Bitcoin. Blockchains, the technology that creates secure digital cryptocurrency, mainly dictate the volume of electricity. Since blockchains are databases stored across computers, mining depends entirely on the resource capability of these machines. The more powerful the system of a computer, the higher the capacity for Bitcoin mining. For Bitcoin holders who want to harvest and grow their cryptocurrency, electricity is a very real issue.
Let’s put it this way: if one was to estimate a monthly power bill for the full Bitcoin network, the shocking amount of electricity required is estimated to be more than is used in the same timeframe by the entire country of Ireland.
Bitcoin Myths and Truths: Conclusion
Without question, Bitcoin is the most revolutionary financial innovation of the past two decades. Since it started, hundreds of other cryptocurrencies have been birthed. Some have prospered, while others have failed. Generally speaking, cryptocurrencies are long-term investments due to their market demand being high. As of today, Bitcoin continues to grow in prominence and value.
Don’t miss out on the chance to discover the top 10 realistic reasons why Bitcoin may not succeed. Read the next article now to stay informed and make informed decisions about your investments.
Frequently asked questions:
How Much Electricity Does Mining A Bitcoin Require?
According to the estimates from the Digiconomist’s Bitcoin Energy Consumption Index, one Bitcoin transaction requires 1,449 kWh to complete. This is roughly equivalent to the amount of power that it takes to power a US home for 50 days.
Can Bitcoins Be Mined At Home?
As crypto has matured, mining it has become more challenging but opportunities to use older laptop or desktop computers for mining still exist for some cryptocurrencies, such as Shiba Inu, a 2020 Ethereum-based alternative to DOGE (Dogecoin), also known as a meme coin that was popularized by Elon Musk.
What Is The Right Bitcoin Investment Amount?
There is no minimum investment amount to get started with Bitcoin unless there is one set by the platform through which you invest your crypto. Coinbase, for instance, allows a minimum investment of $2 and up.
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