Bitcoin is basically an electronic payment system, but it is open as well as a technology for creating new types of money. The following article is especially for you newcomers.
Bitcoin is a technology for handling financial transactions, as well as issuing money. This technology runs in a special network and is transmitted on the Internet, without the involvement of banking services as intermediaries or direct supervision by the state.
By its designer, namely Satoshi Nakamoto, Bitcoin is described as a peer-to-peer electronic money system (Bitcoin: A Peer-to-Peer Electronic Cash System). This system is now commonly known as blockchain technology or distributed ledger technology.
Meanwhile, on the official website, Bitcoin.org: "Bitcoin is an innovative payment network and a new kind of money".
While the name of the money, also known as Bitcoin (BTC) - originally the letter "B" is written with a lowercase "b" - bitcoin (BTC).
Details about the system are set out in a 9-page whitepaper published on October 31, 2018, on Bitcoin.org.
The system was first launched by Satoshi Nakamoto on January 4, 2009, using the Bitcoin Core software.
The Bitcoin system is not controlled centrally by any particular government or company, nor by certain groups of people.
Bitcoin is controlled in a decentralized manner and is open in nature. Anyone can join the system without being the central entity controlling the whole system. Even the Bitcoin source code can be accessed by anyone on the Github site.
How is BTC Money Issued?
In the Bitcoin system, what is meant by money is not money that is created, issued, and circulated by the central bank of a country, such as the US dollar or rupiah.
Bitcoin money, abbreviated as BTC, is pure electronic/digital money and is transacted with new technology, namely blockchain-via the Internet.
BTC money is issued in imitation of the gold mining system (mining), which requires special equipment and energy that is not cheap.
The deeper the gold is mined from the bowels of the earth, the greater the production costs incurred by the miners, as is the case with BTC using mining machines, for example, the ASIC (application-specific integrated circuit) type.
Transactions and Issuance
For example, when Joko sends 1 BTC to Wati, the transaction must be confirmed and validated by a party called a miner.
That is the main task of miners that use special hardware called ASIC. Well, for his services, because the equipment requires a large amount of electrical energy, he is rewarded with BTC digital money.
This process occurs on average every 10 minutes (1 block transaction). This BTC reward (already mined) is also the new supply of BTC to the market.
The first time the Bitcoin system was running, on average every 10 minutes, 50 BTC was mined.
So, based on Satoshi Nakamoto's design, the Halving mechanism applies so that the supply of new BTC is reduced by half. Here's how to make BTC scarce.
Halving is programmed in such a way as to occur every 210,000 blocks (equivalent to an average span of 4 years). Remember, the period for every 1 block is an average of once every 10 minutes.
The first halving took place on November 28, 2012. At that time, the miners' new BTC rewards were reduced from 50 BTC to 25 BTC.
Then the Second Halving, 9 July 2016, reduced again from 25 BTC to 12.5 BTC. Then the third halving, May 11, 2020 (May 12, 2020, West Indonesia Time), halved again, from 12.5 BTC to 6.25 BTC. And later in 2024, it will be halved again, namely from 6.25 BTC to 3.125 BTC.
The halving will occur continuously, according to the specified program code (deterministic), until the BTC is mined.
With the same halving speed, which is every 4 years, Bitcoin will be mined out in 2140, when the BTC supply reaches 21,000,000 BTC. And that's the maximum amount of Bitcoin that can be mined, it can't be added, only 21 million BTC.
As of December 6, 2020, at 23:21 WIB, BTC in circulation (already mined) was 18,563,781 BTC. So there are 2,436,219 BTC left unmined.
So, from 11 May 2020 (Third Halving) until before the Fourth Halving (2024), the amount of BTC mined every day is 900 BTC. Later in the Fourth Halving period, it will be halved, namely 450 BTC every day, and so on.
So, it can be concluded, that the Halving mechanism strictly controls how much BTC can be mined in order to reach the scarcity level within a certain period.
Why is BTC Value and Precious?
Before we answer that, we must first differentiate the meaning of value (value) and price (price). Value is understood as anything that is given by the object to the user. It is more about quality (quality) than quantity.
Bitcoin is considered valuable because it has advantages or advantages relative to other financial technologies, for example, it is direct (peer-to-peer), open, scarce in supply, transparent and transaction costs are relatively cheaper and delivered faster than banking services.
So, based on that value comes the price, which allows a person to give a quantity (quantity) of rupiah or dollars to buy the BTC money.
Price, of course, applies to a natural economic system, which is determined by supply and demand. The more demand (buying), the higher the price in the market, and vice versa.
Soaring in 2020
2020 was recorded as the second golden period for Bitcoin, because the price on November 30, 2020, set a new record high, more than 19,800 per BTC . Previously this happened in mid-December 2017.
With this latest record, the price of BTC is predicted to continue to rise. Based on Bloomberg Intelligence predictions, the price of BTC is predicted to be more than the US $ 50,000 per BTC in 2021.
What is bitcoin? The question has numerous answers but technically just a software which has impacted fundamentally any system operating at the moment😌
I also think that we should take this question a couple of steps ahead and ask the question that what will bring BTC and community driven solid altcoins such as ETH, BCH and LTC ( you may even add XRP though it is different than the others)