Bitcoin (BTC)

Manuel Valente

Summary

Introduction
The history of the Bitcoin team
How does Bitcoin work?
Bitcoin, created in response to the 2008 financial crisis?
Understanding the Bitcoin mining concept
Bitcoin, investment opportunity and store of value?
What are Bitcoin tokens used for?
Tokenomics
What are Bitcoin’s projects?
How to buy Bitcoin?
Coinhouse's opinion

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Introduction

Bitcoin first came into being via a document made public on October 31, 2008, which explained the concept.

This document, known as the WhitePaper, is entitled :

“Bitcoin: A Peer to-Peer Electronic Cash System”.

The Bitcoin blockchain: went live on January 3, 2009.

In the early days, only a few computer enthusiasts were interested.
But exchange platforms were soon set up, enabling bitcoins to be exchanged for dollars, and thus setting a price based on supply and demand.

Bitcoin price and value in 2009

On October 12, 2009, 5050 bitcoins were traded for $5.02, or around $0.001 each, marking the beginnings of cryptocurrencies as an investment medium.
Less than two years later, on February 9, 2011, BTC reached parity: on that day, 1 bitcoin = 1 dollar.

Bitcoin’s origins: a fast means of payment

BTC is the Internet’s first international and native means of payment.
This means that anyone with Internet access can use them without restriction.
Transactions are fast, taking a maximum of ten minutes to reach their destination, even if your recipient is on the other side of the world.

More efficient than bank transfers

It’s also more efficient than bank transfers, which can take several days, especially if funds are being transferred internationally.

The BTC network is also inexpensive: it is possible to transfer the equivalent of millions of euros with fees of just a few euros. Because of the sudden movements in its price, the asset is rarely used as a means of payment to buy goods or services. It is seen more as an investment tool, or even as a safe haven, but we’ll look at this in more detail later. Buy Bitcoin quickly and easily with Coinhouse.

The history of the Bitcoin team

Bitcoin was created in 2008 by an anonymous entity under the pseudonym Satoshi Nakamoto, who published a white paper describing a decentralized digital currency system using the blockchain.
The Bitcoin network was launched on January 3, 2009 with the mining of the first block, marking the beginning of the world’s first cryptocurrency.
Nakamoto left the project in 2010, leaving its development to the open-source community.
Since then, Bitcoin has become a pillar of digital finance.
Bitcoin has no central team, but relies on a community of open-source developers.
Core developers, such as Gavin Andresen, Pieter Wuille and Wladimir van der Laan, play a key role in maintaining the Bitcoin Core software.
Governance and enhancements are made by consensus within this decentralized community, with no central controlling authority. Live Bitcoin prices.

How does Bitcoin work?

Bitcoin’s operation is based on a protocol: the blockchain.

This is a digitized account book in which all transactions are recorded.

Bitcoins circulate on this network, and are therefore exclusively digital.
This network has 2 fundamental characteristics:

it is immutable and distributed.
no data stored on the blockchain can be modified or deleted.

There is no central body controlling its operation: data is replicated on tens of thousands of computers worldwide, and anyone can participate in the network and propose modifications. These characteristics give rise to confidence in its use. To diversify your crypto-currency investments, also consider buying stablecoins like USDT. Find out how to buy USDT safely on Coinhouse.” In addition to Bitcoin, stablecoins like USDT offer a stable option for your transactions and investments. Learn more about USDT.

Bitcoin is rare but highly divisible

For the sake of clarity, let’s distinguish between the Bitcoin protocol – which is the network on which all transactions and information are stored – and bitcoins, which are the units of value that are exchanged and whose price is set by supply and demand.

One figure: 21 million.

One of Bitcoin’s fundamental characteristics is that its money creation is predictable.
21 million: this is the total number of Bitcoins that will be available on the futures market, determined by the protocol from the moment of its creation.
This limit gives it an intrinsic rarity, and the parallel is often drawn with precious metals, to the point where Bitcoin is referred to as digital gold.
21 million units for 7 billion people may seem insufficient if Bitcoin is to establish itself as a means of exchange that everyone can use on a daily basis, but this is a false problem.
Bitcoin units are currently divisible up to eight decimal places, and it is possible to go even further if required.
In honor of its creator, the system’s smallest unit is called the satoshi.
One bitcoin is therefore equal to 100,000,000 satoshis, and it’s entirely possible to buy or exchange one thousandth or even one millionth of a bitcoin.

Bitcoin, created in response to the 2008 financial crisis?

Mystery surrounds Bitcoin’s creator.

He goes by the pseudonym Satoshi Nakamoto.

It may be one person or a group of people, but it’s impossible to be certain.

Some specialists claim that Bitcoin was created in response to the 2008 financial crisis, as a way of breaking free from banks and governments. But Satoshi Nakamoto’s rare writings, which go back to the origin of the cryptocurrencydo not support this theory.
It does, however, discuss the shortcomings of the traditional banking system.

In particular, the need to use financial institutions as intermediaries to guarantee our transactions.

Bitcoin can operate without its original creator, who has not been active in the project since 2012.
Satoshi Nakamoto thus proposes an alternative value exchange system.
He is the first person to have found a solution that functions entirely without intermediaries or central management bodies.

Understanding the Bitcoin mining concept

People called miners are volunteers who use their computers to validate transactions and secure the Bitcoin network.

Through this action, known as “proof of work”, they are at the origin of money creation: the aim is to solve a mathematical equation, and the first machine to solve it receives a reward in bitcoins.

This is why the analogy is sometimes made with gold: miners “discover” a new block of the Bitcoin blockchain every time an equation is solved.
Like the gold digger who has worked hard in a mine, the miner receives Bitcoins as a reward for committing computing power and enabling the network to function.
The difference is that with Bitcoin, everything is digital and the total number of units is determined in advance.
Miners are also remunerated by transaction fees, the amount of which varies according to network usage, from a few cents to several tens of euros. Bitcoin and mining: a real industry Today, bitcoin mining has become industrialized.
These are known as “mining farms”, and are usually large-scale facilities housing thousands of computers dedicated to mining.
These farms are often owned by companies, as mining is a capital-intensive business: to be competitive, you need a lot of hardware.
Equipment that consumes a lot of energy and gives off heat, requiring air-conditioning.
Certain countries in the world are favored for this activity because of their cold winters and low electricity costs.
Mining remains a technical subject, which we’ll cover in greater detail in this article.

Bitcoin, investment opportunity and store of value?

You’ve probably heard Bitcoin compared to digital gold.

A number of features support this observation:

Like gold, bitcoins are in limited supply, which introduces a notion of scarcity and is likely to drive up the price of the asset.
Bitcoin frees itself from government money creation.

In these times of economic uncertainty, this characteristic can give Bitcoin the status of a safe haven, in the sense that state currencies could depreciate with the phenomenon of inflation.

Open a Bitcoin account can be very interesting.
But while buying bitcoin as an investment may be a wise choice, you mustn’t overlook its high volatility.
Indeed, its value can rise or fall sharply in the space of just a few days.
As Bitcoins are not subject to any regulation, they are regularly the focus of speculation.

What are Bitcoin tokens used for?

Bitcoin tokens (BTC) are primarily used as a form of decentralized, secure digital currency, enabling peer-to-peer transactions without intermediaries such as banks.
Thanks to blockchain technology, every transaction is transparent, immutable and verifiable, offering a reliable alternative to traditional financial systems.
BTC is used for a variety of purposes, from fast and inexpensive international payments to access to decentralized financial services(DeFi), extending its usefulness in the modern digital economy.

Tokenomics

Limited supply: One of Bitcoin’s key features is its limited total supply of 21 million BTC, which creates digital scarcity.
This cap is encoded in the Bitcoin protocol and cannot be changed without a global network consensus, making it resistant to inflation.
Halving (Reward reduction): New Bitcoins are created through a process called mining, where miners validate transactions and secure the network by solving cryptographic problems.
As a reward, they receive new Bitcoins.
Every four years or so, this reward is halved in an event known as“halving“, which reduces the rate of creation of new Bitcoins and contributes to the gradual decrease in inflation.
The last halving took place in April 2024.
Decentralized distribution: Bitcoin is distributed via mining, a process accessible to anyone with the necessary hardware and an Internet connection.
This favors decentralized distribution of tokens, compared with traditional financial systems where central institutions control money creation.
Deflation and scarcity: Unlike fiat currencies, which can be printed in large quantities, Bitcoin is designed to be deflationary due to its fixed supply and periodic halving.
This potential deflation makes it an attractive store of value for investors seeking protection against the inflation of traditional currencies.
Utility as a medium of exchange and store of value: Although Bitcoin is used primarily as a store of value, its tokenomics also make it viable for peer-to-peer transactions, international payments, and in some cases, DeFi applications and smart contracts on compatible networks.

What are Bitcoin’s projects?

Projects around Bitcoin focus primarily on improving its network and its usefulness as a digital currency and store of value.
Among notable initiatives, the development of the Lightning Network aims to solve scalability issues by enabling fast, low-cost off-chain transactions.
Other projects focus on privacy and security, such as Taproot, which improves transaction efficiency and user privacy.
In addition, efforts are being made to make Bitcoin more accessible and user-friendly, including wallet solutions, Bitcoin-integrated DeFi apps, and platforms that facilitate payments and BTC exchanges in the global economy.
In 2024, Bitcoin is back on top.
The most popular crypto reached a new record high on March 14, 2024, with a price exceeding $73,000.
What’s more, institutional investor interest in Bitcoin ETFs reached a new peak, with an inflow of $417 million (source: Tradingview.com), while traditional funds such as GBTC are experiencing a retreat.
This trend highlights the growing preference for Spot Bitcoin ETFs, offering direct exposure to the cryptocurrency, over more expensive and less flexible options.

How to buy Bitcoin?

Create an account: Go to the Coinhouse website and register by creating an account. You’ll need to provide your personal details and verify your identity by uploading required documents, such as ID and proof of address.
Make a deposit: Once your account has been verified, log in and deposit euro funds into your Coinhouse account.
You can make a deposit by bank transfer or use a credit card.
Buy Bitcoin: After depositing funds, access the purchase section on the platform.
Select Bitcoin (BTC) from the list of available cryptocurrencies, enter the amount you wish to purchase and confirm your purchase.
You can buy BTC with USDT or USDC.
BTC storage: Your purchased Bitcoins will be stored in your Coinhouse crypto wallet. You can also transfer your BTC to an external wallet for added security.

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Coinhouse's opinion

The benefits:

Bitcoin’s first advantage is that it can be used as an anonymous means of payment.
But this cryptocurrency has many other advantages:
– Transfers are virtually instantaneous (less than 10 minutes); – Transfer fees are zero.
Payment fees are lower than other, more traditional solutions (PayPal, bank cards, etc.); – There is no limit to the amounts that can be transferred; – Exchanges take place on a global level, with no intermediaries for storage and transfer; – Anyone can exchange bitcoins; – It’s a decentralized system, not dependent on any institution; – Total transparency of exchanges is guaranteed: every transaction is recorded in the blockchain, a public database; – It’s an attractive investment opportunity.
Gains can be rapid.

Disadvantages:

Bitcoin also comes with a number of drawbacks.
It’s essential to be aware of them before investing in or mining this cryptomania: – The system is still relatively unknown.
Almost everyone has heard of bitcoin, but the concept remains little understood by the general public; – Transactions are irreversible.
It is not possible to cancel a bitcoin payment once made, even in the event of an error; – Its independence from institutions and the absence of intermediaries is not without consequence: bitcoin is not regulated or guaranteed by a central authority; – Users must take special precautions to protect their investment.
It is essential to secure your computer and your online wallet.
In the event of hacking or loss of access, the user has no recourse.
Users must also be extremely vigilant in their choice of wallet provider.
– The bitcoin price is highly volatile, and can be significantly impacted by all kinds of events.
However, this should evolve towards greater stability as more individuals and companies use this cryptocurrency.