Bitcoin Price (BTC)

Bitcoin is the first cryptocurrency that allows people to make online transactions without the need for an intermediary such as a bank. The Bitcoin blockchain was launched in 2009 by the pseudonymous Satoshi Nakamoto, making Bitcoin the world’s first bonafide cryptocurrency.

Bitcoin is completely decentralized, meaning no government or organization controls it. Instead, transactions are verified and recorded on a public digital ledger called the blockchain.

Bitcoin price history

Bitcoin's price is driven by a variety of factors such as regulatory changes, market speculation, and technological advancements.

When the Bitcoin blockchain was first launched in 2009, the BTC price was essentially nil–Bitcoin had no true value. The first transaction was executed in January 2009 when Satoshi Nakamoto sent 10 Bitcoins to Hal Finney, a computer programmer.

When the first Bitcoin exchange, BitcoinMarket.com, was launched in 2010, the Bitcoin price started to rise. The price was around $0.08 in June 2010, and by December, it had reached $0.30.

In 2012, in an effort to restore the reputation of Bitcoin after several scandals, the Bitcoin Foundation was founded to try to promote Bitcoin’s development and uptake.

Bitcoin’s value continued to grow over the years. In 2017, the Bitcoin price experienced extreme volatility, reaching a high of $19,783 in December before crashing down to $3,500 a year later.

In 2020, Bitcoin's price experienced a significant surge, reaching $20,000 in December. This was due to both increased institutional adoption and the COVID-19 pandemic.

In 2021, the Bitcoin price continued to increase. The BTC price reached $64,863 in April before experiencing a sharp decline to around $30,000-40,000 in May. In November, the BTC price reached an all-time high of $68,789.

Who started Bitcoin (BTC)?

Bitcoin was founded by Satoshi Nakamoto, the pseudonymous person or persons whose identity is unknown to this day (though many have guessed at who is behind the name). Nakamoto authored the Bitcoin white paper, which was published in 2008, a year before Bitcoin launched. The smallest unit of Bitcoin is named after Nakamoto (1 Satoshi = 0.00000001 BTC).

How does Bitcoin work?

Unlike fiat currencies, Bitcoin is issued and stored on the blockchain. Securing the network, preventing double-spending, and regulating BTC circulation all occur through a process called mining.

Anyone can mine Bitcoin, which is key to the network's decentralization. Bitcoin mining uses what’s called the Proof of Work consensus mechanism–the oldest and one of the most secure consensus algorithms available–in which miners compete with each other to solve mathematical puzzles.

Bitcoin miners use specialized hardware and software to compete with each other to validate transactions and add new blocks to the Bitcoin blockchain.

How is Bitcoin different from other cryptocurrencies?

Through the process of Bitcoin mining, a capped supply of 21 million BTC is ensured, meaning that there will never be more than 21 million Bitcoins in circulation at any given point in time. This limit is known as the hard cap and is etched in Bitcoin’s source code by design. Many Bitcoin proponents cite the hard cap as central to Bitcoin’s value. It keeps the cryptocurrency scarce, and is also the reason some people refer to Bitcoin as "digital gold".

While other cryptocurrencies (like Ethereum) use a consensus mechanism called Proof of Stake in which network validators “stake” a certain amount of the network's native cryptocurrency to validate transactions, Bitcoin uses what’s called Proof of Work, which functions via a process called mining.

During the Bitcoin mining process, Bitcoin transactions are validated by solving a series of complex mathematical problems known as cryptographic hash functions. The people who solve these problems, miners, are rewarded with Bitcoin. The more computing power miners have, the more likely they are to solve the hash function and earn rewards.

In May 2021, a voluntary organization called the Bitcoin Mining Council was formed. The purpose of the council is to promote transparency, educate the public, and improve sustainability practices in Bitcoin mining.

How are new Bitcoins created?

Bitcoin transactions are verified through a process called mining. Each block is linked to the previous block and secured using cryptography, forming a chain of blocks (hence the name “blockchain”). 

Bitcoin uses the Proof of Work consensus mechanism. This makes Bitcoin resistant to “51% attacks”, which are vulnerabilities in a blockchain network in which an attacker who controls more than half of the network's computing power can manipulate the system and double-spend tokens, block legitimate transactions, and rewrite transaction history.

Bitcoin is resistant to this type of attack because in order to add a new block to the blockchain, an attacker would need to control more than 50% of the mining power in the network.

Buyers should learn about the most common cryptocurrency scams, how to spot them, and what to do if they have fallen victim to one.

Bitcoin upgrades

The distributed ledger used by blockchains is immutable. So, how can it be improved to meet the new needs of its users? The way Bitcoin and most other cryptocurrencies solve this is by implementing what’s called a "fork". 

A fork is when a distributed ledger is split into two different versions, each having its own blockchain. Forks can either be hard or soft. A hard fork (like Bitcoin Cash) is when the two versions are not compatible with each other, which means that the two different versions of the blockchain cannot be used together. A soft fork is when the two versions are compatible with each other, which means that both versions of the blockchain can be used together.

One of Bitcoin’s more recent upgrades is the Taproot Upgrade, which has several goals. The primary goal is to improve Bitcoin's privacy and make it more scalable. In essence, the Taproot solution is aimed at reducing the space required to store the blockchain and speeding up transaction confirmation times. It also enables smart contracts on the Bitcoin network, which will make it a more versatile network with limitless utility.

With the Taproot upgrade, the Bitcoin network can offer users faster transaction confirmation times and reduced storage requirements for the blockchain, which is a critical factor for the network's long-term sustainability.

Bitcoin forks 

Bitcoin forks occur when the software code is duplicated and modified, resulting in two distinct chains that share a common origin. 

There are two types of forks: soft forks and hard forks. Soft forks are upgrades that enable both upgraded and un-upgraded nodes to interact with one another. On the other hand, hard forks are upgrades that don't allow un-upgraded nodes to interact with upgraded ones. 

Bitcoin Cash is an example of a hard fork of Bitcoin, as it introduced significant changes to the Bitcoin protocol that made it incompatible with the original chain.

How does Bitcoin halving affect Bitcoin’s price?

Satoshi Nakamoto encoded certain rules that would govern how the Bitcoin network would function. These rules still operate today. 

One of these rules is Bitcoin halving: the process in which the block reward for verified transactions on the Bitcoin network is reduced by 50%. Halving takes place every four years, with the last BTC expected to be mined in the year 2140. 

Building upon the basic principles of supply and demand, Bitcoin halving operates to combat inflation and increase the value of the cryptocurrency.

The price of BTC is not directly linked to halving. Prices generally fluctuate. There is no proof that a price surge or drop is directly correlated with Bitcoin halving. The price movements observed around the Bitcoin halving events are purely circumstantial.

Bitcoin energy consumption

Bitcoin's energy consumption has been a topic of controversy since the Bitcoin network became widely used. It has been estimated that the Bitcoin mining process uses as much electricity as the entire country of Denmark. Mining is essentially a race in which there is only one winner who takes home the prize, and all other participants get nothing.

In a network that has thousands of miners competing to validate transactions, only one miner is rewarded per validation. The net energy consumption per transaction therefore continues to climb regardless of network throughput.

By shifting from a Proof of Work consensus mechanism to Proof of Stake, blockchains like Ethereum have lowered their energy consumption by over 99.99%. In this case, however, mining would not be possible.

Other interesting facts about Bitcoin 

• Bitcoin Pizza Day commemorates when Laszlo Hanyecz bought two pizza pies in 2010 for the low price of 10,000 BTC

• Bitcoin dumpster divers are people that scavenge for discarded hard drives that potentially contain large amounts of BTC