7 things you should know about Bitcoin
2 min readTable of Contents
Without further ado, we’ll get started right away. In this article, you will find the basics you should know about Bitcoin.
1. Bitcoin is decentralized
Bitcoin has no central institution that affects control. Instead, the cryptocurrency is operated by a network of participants. A consensus mechanism is used to ensure that everything is done correctly. This is called Proof of Work.
2. Bitcoin is a blockchain
It is often said that Bitcoin is based on blockchain technology. Strictly speaking, Bitcoin is a blockchain. In fact, Bitcoin is the best-known use case for the technology that has become a tech buzzword in recent years. The native token of this network is Bitcoin.
3. The transactions are not anonymous
When you make transfers with BTC and send them over the blockchain, they are not anonymous. The cryptocurrency with the highest market capitalization is extremely unsuitable for conducting illegal business. Because with a little know-how, the right information and authorization, the transactions on the blockchain can be traced back quite accurately. Especially if you bought your coins from a centralized exchange. If you want to be anonymous with cryptocurrencies, you should look into privacy coins like Monero (XMR).
4. Bitcoin takes a lot of energy
There is nothing to belittle: to keep the blockchain secure, the network needs a lot of energy. That’s because of the proof-of-work consensus. The “miners” ensure that the network is secure by performing complicated arithmetic tasks. Every investor has to decide for themselves whether this is justified.
5. The offer is limited
The maximum supply of BTC is capped at 21 million units. These will be distributed gradually. At the moment, most of the coins are already in circulation. At the time of writing, there are 19.4 million BTC already floating around on exchanges and wallets.
6. Bitcoin halving is upon us
The distribution of the remaining 1.6 million BTC is defined in the code and will be reduced every 100,000 new blockchain blocks, i.e. approximately every four years. At this event, we are talking about the bitcoin halving, the reward that miners receive for keeping the blockchain secure will be halved from 6.25 to 3.125 bitcoins per block in the coming year.
7. Supply pressure is increasing
In the past, halving has regularly led to Bitcoin price increases afterwards. This is due to the fact that an increasing demand meets a steadily decreasing supply. Whether this will happen again in the coming years depends primarily on whether the cryptocurrency can continue to assert itself.
