Bitcoin (BTC) is by far the most popular cryptocurrency on the market and this isn’t something that is going to change soon. There are numerous popular altcoins such as Ethereum (ETH), Litecoin (LTC), and others, but they aren’t even remotely close to the enormous trading volumes and market capitalization that BTC has been achieving for years.
The situation with BTC hasn’t always been so bright and the coin that has achieved enormous financial value and popularity among crypto enthusiasts, financial brokers, startups, companies, and institutional investors first started out relatively small.
Let’s take a look at what exactly is Bitcoin, how it started as the first decentralized cryptocurrency and achieved such widespread popularity and acceptance.
The Beginnings of Bitcoin: The First Cryptocurrency
Bitcoin was launched in 2009 by a mysterious individual called Satoshi Nakamoto, who published the BTC whitepaper that laid out the basics of the first cryptocurrency in the world. At the time, the concept was something really innovative and revolutionary: the idea was to create a form of digital cash that doesn’t physically exist, and which can be used for transactions, payments, and store of value through its blockchain technology.
There were no cryptocurrencies in the world before BTC. The concept of a digital cash system seemed pretty strange and untrustworthy to proponents of traditional financial systems and central banks, but crypto enthusiasts and tech geeks were fascinated with the idea. In just a couple of years, Bitcoin started gaining popularity and the crypto community started exponentially growing, thanks to the top-of-the-line BTC blockchain and the numerous financial opportunities that were presented through the use of BTC.
Slow bank transfers, bureaucracy, paperwork, and scrutiny from government agencies while transferring funds suddenly became something people and companies could mostly avoid with the use of Bitcoin.
The Bitcoin Blockchain
Not only was BTC the first cryptocurrency but it was also a pioneer in blockchain technology, which today is used in numerous industries, from finance, logistics, and entertainment all the way to smart homes and health care. In 2009, the BTC blockchain was the first such network.
Basically, a blockchain is a sort of digital database that acts as a distributed ledger, uses cryptography, and records all transaction data of every single transfer that has happened on that network. The data is grouped into blocks of information that are set into chronological order, from the first block to the last one.
The size of each block of the BTC blockchain is 1MB of data and it can contain all sorts of information along with transaction data. When a BTC user wants to send some of their coins to another user as payment or as a money transfer, the transaction goes through the blockchain and has to be verified by system nodes that are actually Bitcoin miners.
Each transaction has to be verified by multiple miners as legit in order to get processed. This method of verification of transfers is called Proof-of-work and ensures that no fraudulent transactions and scams are happening and that no one can double-spend the same assets or try to create a fake transfer and compromise someone else’s BTC.
This means that the Bitcoin network has top-notch security and transactions are safe because of the decentralized method of verifying transfers on the public ledger. This technology was pioneered by Bitcoin and quickly became very popular in various industries because of the endless types of data that can be transferred and managed with a blockchain, along with the great security features.
Unlike company stocks and the price of oil or gold, cryptocurrencies can have highly volatile periods of price fluctuation. This is best noticed in the case of Bitcoin, which has had numerous highly volatile periods since its launch in 2009. From a cryptocurrency barely worth anything, BTC had periods when it jumped to the worth of a couple of US dollars, hundreds of dollars, all the way to a worth of several tens of thousands of dollars that made it one of the most valuable financial assets in the world.
Over the years, individual investors, financial experts, economists, and investment funds from all over the world have recognized the potential gains from the high volatility of Bitcoin’s price and have invested various sums in BTC. People or companies that jumped on the Bitcoin train in the early 2010s and held on to large amounts of the coin for years ended up with enormous profits.
Inflation Proof Compared to Fiat Money Like USD
One of the reasons investors started buying and trading large amounts of Bitcoin is that after the global economic crisis of 2008 it was clear that traditional currencies such as USD or EUR are susceptible to crashes of value and inflation in times of economic turmoil.
With Bitcoin and other cryptos, the situation is entirely different. BTC doesn’t depend on any fiat currency or other assets such as oil or gold. The coin’s value is based on the will of people to hold it and use it, thus making it independent of potential real-world economic crises and a great store of value in turbulent times.
This feature is especially attractive when it comes to Bitcoin since the digital currency is used by millions of people on a daily basis for all sorts of transfers, which guarantees that even in times of crisis BTC would be a safe store of value.
Bitcoin Use Cases
Bitcoin has gone a long way since its launch in 2009. Today it has numerous use cases, and the number of people using BTC on a daily basis is constantly growing. The whole BTC ecosystem has grown from a relatively small community of crypto enthusiasts to a network that includes millions of people. They’re all using it as a decentralized, digital asset and the coin is being included in the service portfolio of companies worldwide that see the potential of BTC.
When BTC was first launched, the aim was to provide users with a practical, fast and trustworthy form of digital cash. A Bitcoin transfer takes around 10 minutes to get processed through the blockchain, unlike bank transfers that can take hours, days, or sometimes even more than a week when various intermediary banks are a part of an international transaction.
The speed and reliability of BTC transactions made the coin a highly attractive payment method in just a few years after its launch.
Store of Value
Because it’s literally inflation-proof, BTC has been used for years now as a great method for storing value. Classic currencies inflate over time, BTC doesn’t, and this is why it’s great for keeping savings or storing long-term investment funds in Bitcoin.
Borrowing and Lending Funds
When you want to borrow or lend money traditionally, you need to include a bank, especially if you want to borrow money by raising a credit. Also, you need to implicate legal and financial advisors in order to create specific contracts that are in accordance with local laws in the country where you’re borrowing or lending funds. If you want to borrow money or lend it internationally, the procedure is even more complex and sometimes even impossible to facilitate.
BTC, on the other hand, enables the creation of lightning-fast financial agreements between interested parties on their own terms, with no financial institutions or state authorities implicated in the agreement. Borrowing and lending funds is a quick and easy operation when using BTC, without paperwork and the need for approval from any other authority apart from the interested parties.
Parts of the crypto community are closely intertwined with the gaming community so it was only natural for numerous gaming platforms, websites, and developer teams to gravitate towards including BTC in their ecosystems. Numerous gaming platforms offer purchases of games, premium upgrades, and special features using BTC, which is becoming widely accepted in the gaming community.
Tokenization of Assets
Bitcoin has made possible the tokenization of assets, by giving them value in BTC, i.e. representing them in the form of digital coins. For example products and services can be paid for on numerous platforms in the form of BTC, without even giving a fiat money value to them. You can buy a product that is for example worth 0.00025 BTC, which means that the real-world fiat currency value is made irrelevant in the digital ecosystem which can tokenize all sorts of assets from tech equipment to cars and real estate.
This way liquidity is added to assets that are less liquid or illiquid, making economic exchange and purchases more convenient and transparent using the BTC blockchain that keeps publicly available records of all transactions, unlike fiat currency.
Bitcoin mining is another lucrative factor that has contributed to the widespread popularity of the coin. In order to create new units of BTC and put them in circulation, miners use the computational power of their GPU mining rigs. Rigs are specially equipped computers designed for mining Bitcoin, in order to process and verify Bitcoin transactions on the blockchain while solving mathematical tasks that contribute to the creation of new BTC blocks.
When new blocks of the BTC blockchain are discovered, miners are awarded new bitcoins and this is how the mining process basically works. When Bitcoin first appeared, there was only a small number of miners, with Satoshi Nakamoto being among the first ones, but as the currency grew popular, millions of people worldwide started mining the coin.
Individuals that started mining Bitcoin early on and held on to a portion of their coins achieved substantial financial gains given the fact that BTC has been achieving numerous all-time high fiat money values since 2020.
Bitcoin and Crypto Exchange Platforms
In 2010, less than a year after the launch of BTC, the Bitcoin market was launched, which was the first web platform for buying and selling BTC. As the acceptance of the coin grew and more people started joining the cryptocurrency market, the need for an easy, fast and practical method of buying and selling BTC emerged. In the beginning of BTC, the only way you could get some of the coins was either by mining it or if you managed to find an individual willing to sell you some of their BTC.
This is why cryptocurrency exchange platforms were created as a fast, reliable, and practical medium of exchange of BTC and other altcoins. As new cryptocurrencies started appearing, exchange platforms included these altcoins in their portfolio of supported cryptos, but numerous exchange platforms remained specialized only in BTC. These platforms are referred to as Bitcoin exchanges, but most exchanges deal with numerous altcoins besides BTC.
The biggest and most popular crypto exchange platforms such as Kraken, Binance, or Coinbase have multi-million dollars worth of daily BTC trades and exchanges, which clearly shows how popular BTC has become. Different exchange platforms offer their users various features and different exchange rates, which means profitable brokerage opportunities.
Exchanging BTC on these platforms has become one of the most attractive aspects of trading cryptocurrency and among brokers, it’s very popular to keep an eye on different exchanges and then buy BTC at a lower price on one platform, while selling it for a larger sum at another exchange.
A Few Words Before You Go…
Bitcoin is a true technological phenomenon that shook up the world of finance. From a digital asset that was perceived as something strange, to a currency with a multibillion-dollar market cap bought by investment funds and individuals such as Elon Musk for his company Tesla, BTC has truly evolved.
Despite the existence of thousands of other altcoins, BTC is still rising in popularity, with numerous web platforms and trading services such as Paypal accepting it as a payment method. You can even use your credit cards to buy BTC today.
These are some of the reasons for Bitcoin’s popularity that should show you it is definitely worth investing in the first and most valuable virtual currency.