How Do Bitcoins Work? The emergence of cryptocurrency has brought an enormous amount of attention because of its potential to become a new medium of exchange in the 21st century and yet its market acceptance still remains questionable.
This fairly new concept of cryptocurrency and the technology behind it, in fact, date back to 1983 when David Chaum, who is an American computer scientist and cryptographer, created electronic cash called eCash, which aimed to preserve the anonymity of the owner using an algorithm that still remains essential to modern encryption on the web.
In the current technology of cryptocurrency, computerized databases record individual ownership of cryptocurrency and transactions of each individual in a digital ledger using blockchain technology, which allows decentralized control, unlike any other currencies. In addition, the exchanges such as data transfers are encrypted by complex code systems for their security. Cryptocurrencies are tradable digital assets that are regarded as flat currency since they are not backed by any physical commodities.
Bitcoin appeared as the first decentralized cryptocurrency in open source in 2009. And was invented by pseudonymous developer Satoshi Nakamoto. Whose identity remains unknown until today. It is a digital currency that can be sent from user to user. A technology based on blockchain technology without the need for a central bank. The way it is created and supplied to the market is from the process known as mining. Moreover, a process in which it creates new Bitcoins by solving extremely complicated math problems that authenticate its transactions.
And Bitcoins can be exchanged for other currencies, products, and services as well. The price of Bitcoin started at $0.30 per Bitcoin in 2011 and reached its highest price of over $68,000 in November of 2021. However, throughout its duration, there has been high volatility and a speculative bubble in the price of Bitcoin as well.
Now there are many other alternative coins that refer to cryptocurrencies other than Bitcoin since the inception of Bitcoin. Nevertheless, the market capitalization of cryptocurrency has been dominated by Bitcoin. Which accounts for more than 50% of the total value of the market capitalization in the cryptocurrency market.
With a vast amount of attention to this exciting concept of cryptocurrency. There has been a massive influx of capital to the market. And yet the high volatility of Bitcoin must be resolved, for the commercialization and the prospect of Bitcoin to be accepted as an asset.