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Bitcoin. is a unit of binary information and a coin (a piece of money ), is a cryptocurrency otherwise known as cryptographic currency.

 

Bitcoin

Bitcoin

In the case of the unitary denomination, it is written “bitcoin” and, in the case of the peer-to-peer payment system, it is written “Bitcoin”.

 

The idea of creation

The idea was first presented in November 2008 by a person, or group of people, under the pseudonym Satoshi Nakamoto. The source code of the reference implementation was published in 2009. The objective is to create a decentralized and peer-to-peer system to exchange monetary value by freeing itself from any third-party organization, such as financial institutions.

Alternative currency

The G20 (Group of Twenty: intergovernmental forum made up of nineteen countries with the most developed economies) considers Bitcoin to be a “crypto-asset”. The term “crypto-asset” refers to “virtual assets stored on an electronic medium allowing a community of users accepting them as payment to carry out transactions without having to resort to legal tender”.

Functioning

To create and manage bitcoins, Bitcoin relies on software. In this software, bitcoins are created according to a protocol that pays agents (called “miners”) for processing transactions. These agents use their computing power to verify, secure, and record transactions in a virtual register, called the blockchain, in French  (chaîne de blocs), a name which comes from the fact that the basic entity of Bitcoin is called a block, and the blocks are then linked into a chain, the blockchain.

Bitcoin transaction

For each new block accepted, the verification-securing-registration activity, called mining, is remunerated by newly created bitcoins and by the fees of the processed transactions6. Bitcoins as a currency or commodity that can be traded for other commodities, currencies, products, or services. The cryptocurrency exchange rate is set on specialized marketplaces and fluctuates according to the law of supply and demand.

It is possible to buy bitcoins online on specialized platforms, physical terminals, or in exchange for any good or service with a person who already owns them (the transaction can be done from smartphone to smartphone). The platforms also make it possible to monitor in real-time the evolution of the price of bitcoin in other currencies or cryptocurrencies.

Account unit

The unit of account of Bitcoin is bitcoin. Its issue is limited to 21 million units, each divisible up to the eighth decimal place (called Satoshi or sat). The official currency symbol Bitcoin Symbol was registered and accepted in 2015 with Unicode. The corresponding acronyms, used by exchange platforms, are BTC and XBT. Unofficial symbols used include ฿ and Ƀ.

Decentralization

The system operates without a central authority or single administrator. It is managed in a decentralized manner thanks to the consensus of all the nodes in the network. Bitcoin is the largest decentralized cryptographic currency, with a capitalization of $793 billion as of January 1, 2022 ($545 billion as of January 1, 2021, $130 billion as of January 1, 2020).

The system is considered decentralized in the absence of an easily identifiable central control organization.

The first uses of Bitcoin

In its early days, bitcoin was only used by a niche of insiders. The first exchange platform opened in March 2010; bitcoin was trading there at 0.003 USD per unit. That year, American computer scientist Laszlo Hanyecz symbolically bought two pizzas for the sum of 10,000 BTC (or $25). This event is considered the first transaction paid in bitcoins.

Means of payment

The use of Bitcoin for purchasing goods and services remains a marginal practice, however, it tends to become more popular in developing countries, but also indirectly in Western society, particularly with the rise of “crypto-card” payments. " supported by companies like VISA or Master Card, as well as by its integration with the transactional system of the Paypal firm.

Safe investment

In a country at risk of hyperinflation causing savings in local currency to melt away, purchasing bitcoin would be a way to protect against it since its total number of units issued is limited. Financial experts support its propensity to become a haven rather than a means of payment. Conversely, others believe that it is far too volatile to free itself from the speculative movements which have made its reputation, nevertheless, Bitcoin has only existed since 2009, and a possible status will only be definable after an initial period of intense volatility. As for the question of whether the market value it represents will be able to reach or even exceed that of gold, the subject remains debated.

Speculative asset

The game of supply and demand applied to bitcoin has historically resulted in dizzying phases of speculation supported by a considerable number of specialized funds. More recently, it is financial institutions that have shown their consideration of bitcoin and digital currencies.

Market size

Although there are a large number of crypto assets in circulation, the market is dominated mainly by Bitcoin (408 billion euros) which is in first place, followed by Ethereum (181.2 billion euros). These first two crypto assets represent almost two-thirds of the total market value. As of July 19, 2022, according to CoinMarketCap, there are 20,265 cryptoassets, or cryptocurrencies, worth €992 billion.