Bitcoin is the first decentralized monetary experiment in human history, the coin that gave impetus to the entire extraordinary movement of the crypto industry. Today, 15 years after the White paper1, it has entered the hearts, palaces of power, pockets and financial forecasts. And recently, also, on the largest stock exchanges in the world through ETFs. Unique, despite various attempts at imitation. The most reliable blockchain, the most alive and the best project that could ever be dreamed of. We explain it from the technological and financial side, in the simplest possible language, where to store it and how to earn it.
What is Bitcoin (BTC)?
Bitcoin is a digital currency based on the blockchain technology network of the same name, and a financial asset that has recently entered the wallets of not only the most desperate investors, but also institutional investors. Encryption, hashing, peer-to-peer network, security, impossibility of censorship. These are the main concepts around which, by superimposing various technologies, it was born from the pen of Satoshi Nakamoto. This is a pseudonym behind which an unknown person or a group of unknown people, probably from the cryptopunk environment, hides. So many things at once, but let's try to sort out the main ones within the framework of this study.
The first aspect, the most interesting from the point of view of the social and political consequences of PTS, is its nature as a decentralized monetary network.
1. Decentralized cryptocurrency
It is a fully decentralized cryptoasset. Its goal from the very beginning was to offer an alternative monetary network to the fiat currencies we use every day: hryvnia, dollar, etc. A very ambitious program, which also led to some non-trivial and complex design decisions. A choice that always prioritized the network's resistance to attacks, rather than innovations, as is done in other blockchains.
2. Network
In what sense do we talk about the network? It's simple: by Bitcoin we also mean the network that allows nodes to communicate with each other and transfer value. This is the main and perhaps the most interesting part of the entire blockchain, assuming it can be perfectly separated from the coin.
Bitcoin is a peer-to-peer network, meaning it is node-to-node, with no centralized authority to authorize transfers and communications. It is not subject to censorship, as to make a transaction, one only needs to possess a private key for a specific public key, and therefore a specific address.
The network is open to everyone, so in order to have a wallet, you do not need KYC (identification required by banks), and provide any certificates or documents. Just download Bitcoin Core, and in a few minutes we will have all the addresses for sending and receiving assets. Or you can use any alternative, in terms of hardware or other wallets. But about that separately.
3. Proof of Work
Bitcoin uses the PoW blockchain consensus algorithm to accept new blocks. This solution is computationally extremely difficult to make, but extremely easy to verify. The basic concept is that PoW, in this case, is the only and best way to guarantee the characteristics expected by the participants of the network itself. It is the most common target for attacks among Bitcoin detractors, because PoW has a high energy consumption, which some consider wasteful.
These include the recent Greenpeace campaign “Change the Code, Not the Climate.” It would like to convert BTC to a Proof of Stake (PoS) system. Which will not happen. The system is politically stable. It was created precisely to withstand even such attacks.
4. Decentralization
Absolute decentralization is the real mantra of this crypto. The network actually has no central authority: it is peer-to-peer, with nodes connected to each other. However, there are other aspects that make it decentralized conceptually and technically. There is no central database, but the ledger - a book in which all transactions are recorded from the beginning of time (the genesis block - the very first one) is actually public, and its copy exists on all nodes. Anyone can create a node without any restrictions, with hardware requirements that are much lower than in other projects. Especially those that use the PoS system, or have shorter time frames for creating blocks or larger block sizes.
Continuing the theme of decentralization, any changes to the code are proposed through a complex system, and then propagated and accepted by nodes. A kind of democracy, where you can vote, and only widely accepted changes become part of the core. A system that, according to detractors, has held back Bitk's development, but is actually its greatest strength.
5. BTC as a currency
When someone refers to BTC, they mean money: the ability to buy, sell, spend, transfer. The crypto asset has several very interesting features that make it unique not only in the landscape of “old” digital currencies, but also in relation to many emulators, sometimes trying to pass themselves off as its analogue. Today, it has magical indicators:
- BTC/USD Market Cap — 1,935.40B $
- Price at the time of writing — 97.562$
But there is a discourse that has accompanied it for many years. It starts with transaction costs, which in some cases in history have been quite high, and ends with payment terms and the fact that there is no central bank to guarantee them. It may be less “useful” than the hryvnia and the dollar for those of us living in Ukraine and having the privilege of having access to a bank account. For many people in the world, in times of crisis and lack of access to the banking system, it is often one of the few viable alternatives. In Venezuela, it saves people from starvation.
6. Certain monetary policy
The BTC has no central bank to regulate the money supply and decide how much and when to print money. Monetary policy is built into its protocol. Each block is rewarded with a certain number of Bitcoins. This reward is halved every 4 years or so — something you may have heard called a “halving.” A process that will result in a maximum of 21 million blocks by 2140. For some, especially those concerned about the ability of the state to control any payments, this is seen as a disadvantage. For believers in the freedom inherent in Bitcoin, this is an advantage. There is no need to identify yourself or obtain permission to use Bitcoin.
And third-party capture cannot happen unless they have the private keys to your wallet. In most cases, this is an extremely difficult task, even for the most sophisticated police departments in the world. When we read about Bitcoins being seized, it is through third-party exchanges, or through the voluntary transfer of keys to suspects. Without the transfer of keys, no one can seize the assets, because the cryptography that governs them is impossible to overcome, at least not with the current state of technology.
7. Legal tender in several contexts
The most famous case is El Salvador, but something is happening in Madeira. Note: in these contexts we are talking about legal tender. In other countries, including Ukraine, it is legal tender, although no one is obliged to accept it. Other countries will probably follow suit. However, in El Salvador there is a certain departure from this policy under the influence of the International Monetary Fund. However, its use is still free!
8. Lightning Network (LN) support
Support is important because it allows for faster and more scalable BTC transactions. Without going into technical details, it can be noted that many payment services that offer support today are based on LN, a special Layer 2 payment protocol that allows for a more functional system related to BTC, even for micropayments.
In fact, the aspect of Bitcoin as a potential currency is one of the fronts. These attacks are quite weak, at least when it comes to future potential. The Bitcoin network already carries very large volumes today, and in the future they may become even larger. As for the speed of payments, given the impossibility of further cancellation of transactions, it is in any case faster than a bank transfer. And given the final closure of the transaction, even faster than the card system.
9. Bitcoin as an investment
It is the aspect that has historically been the most analyzed and for many has become the vector that allowed them to get closer to this reality. Just a few years ago, very few people invested in Bitcoin, especially among technology enthusiasts.
However, today BTC is part of the portfolios of large investment funds, governments, financial and non-financial companies, and even independent traders. Analysis of BTC from this side reveals completely different considerations than those used to analyze the payment network and currency aspect. Although the first two are fundamental to understanding the uniqueness of investing in Bitcoin.
As an investment, Bitcoin has taken on a whole new dimension since the Bitcoin Spot ETF became available in the US. Today, it is already being seen as the digital gold of the future.
Where to store PTS
Regarding the concept of a Bitcoin wallet, it is necessary to clarify something. One of the most common misconceptions is that it is where crypto assets will be stored. In fact, what is called a wallet is a system of public and private keys, with the public key acting as an address for receiving crypto. And with the help of the private key, transactions are verified. Most people are interested in a wallet for receiving Bitcoin and for securely conducting transactions. There are several alternatives:
● Bitcoin Core
Those who install it can create as many addresses as they want and use them to receive or send transactions. This system is the most classic way to get a Bitcoin wallet.
● Electrum
This is a full-fledged wallet that you can manage as you see fit. It is one of the most common options even among the most advanced users. It costs nothing, and is a great option.
● Ledger X
We enter the world of hardware wallets, which allow us to store our keys on a physical device. It is probably the best when considered as a companion software with high functionality.
● Ledger S
This is the cheapest version, but still useful for those who need a physical wallet. It supports up to 3 protocols simultaneously. For those who only need access to crypto, this is more than enough.
● Custodial wallet
Cryptocurrency exchanges offer so-called custodial wallets, meaning you don't have the private keys for them. They pose serious security issues. Experienced crypto traders remember the adage: your keys are not your coins.
How to earn Bitcoin
We won't bore you with tales of cranes and the like. Those times are long gone, and in order to really earn Bitcoin, you need to really work or invest. Here are a few options:
● Trade
Trading is a popular way to make money. However, this approach requires a willingness to invest, analyze trading charts, and take risks. Platforms now provide the information and tools you need to trade cryptocurrencies. The advantage of trading digital currencies is that it is available 24 hours a day, 7 days a week. You can trade conveniently if you use the right platform. In addition, some exchanges can do the trading for you. This way, you don’t have to spend all day in front of your computer.
Profit from trading is a result of the trader's skill in analyzing market situations and charts. It is possible to use exchange trading tools for greater efficiency. Requires initial investment.
● Investing and HODL
You can invest in Bitcoin and hold it. This means buying and holding coins in anticipation of a price increase. Investing is a good option for people who believe in the positive future of Bitcoin. HODL is everyday slang for long-term investment in digital currency, an abbreviation for “Hold On for Dear Life.”
When investing, you need to research the market and industry to determine the best time to buy and sell coins. If you decide to invest for the long term, choose a hardware wallet to store Bitcoins. It is not so easy to hack.
● Mining
Mining involves solving cryptographic problems to add new blocks to the blockchain network. However, this method requires technical knowledge, powerful computers, and that you are already wealthy. It costs a lot of money to enjoy. Some miners made huge fortunes in the early stages of the cryptocurrency revolution. But modern miners cannot even compensate for the electricity consumed to mine a coin.
However, you can use cloud platforms where you only pay once to join the pool. You don’t have to mine and worry about electricity bills. With cloud mining, you rent equipment and other miners do the work for you. But 99% is a scam, so you need to investigate everything carefully.
● Payments in the PTS
You can earn crypto by accepting payments in cryptocurrency for the goods or services you sell. It doesn’t matter if you are a small seller, a freelancer, a copywriter, or you run a large business, you can accept it as one of your payment options. With Bitcoin, payments are accepted from all over the world. You don’t need to rely on a third party to process your payments. All you need is a digital currency wallet where you will store your coins. However, always consider the volatility (value fluctuations) of Bitcoin to avoid losses in pricing.
● Lending (lending)
Another way to invest in cryptocurrency is to lend it to others in exchange for interest. Ideally, this can be profitable. However, you should be careful not to lose your cryptocurrency. It is best to use a reliable platform to lend your Bitcoins and make a profit.
● Other ways
Other ways to make money with cryptocurrencies include using partnerships and affiliate websites. However, take your time to try out different ways to make money with Bitcoin and choose the one that works best for you.
Conclusion
Many investors consider Bitcoin as a potential investment that can make money in various ways. The amount of money a person can make depends on the path and method they choose, as well as their willingness to take risks. However, before you get started, it is worth familiarizing yourself with the different investment methods. In addition, you should analyze the market and choose the right platform for investing in crypto. The value of BTC is volatile, as it can fall or rise in a matter of hours. Therefore, you should not invest all your savings in Bitcoin at once.
