BTC - Bitcoin

History of Bitcoin

In 2007, Bitcoin (BTC) was created by an anonymous person or group using the pseudonym Satoshi Nakamoto with the vision of a transaction system in which participants do not need to rely on trust or a central authority. The domain bitcoin.org was registered on October 31, 2008. 

On January 9, 2009, Bitcoin was officially launched with the first block called “Genesis Block,” or Block 0, accompanied by a message criticizing the failure of traditional banks. This was deemed as Bitcoin's response to the failures of traditional financial institutions during the 2008 financial crisis. 

The first transaction took place on January 12, 2009, when Satoshi sent 10 Bitcoins to Hal Finney. On October 5, 2009, Bitcoin's value was first established at 1 USD = 1,309.03 BTC. In the following years, Bitcoin's price experienced significant fluctuations, drawing global attention and becoming widely accepted in stores, exchanges, and even ATMs.

Bitcoin has also faced numerous challenges, such as the bankruptcy of the Mt.Gox exchange in 2014 and increased regulatory scrutiny from governments. However, Bitcoin has continued to evolve, with upgrades like the Taproot update in 2021 and favorable policies such as that of El Salvador which recognized it as legal tender.

The most recent event was in January 2024, when the SEC approved 11 spot Bitcoin ETFs, marking official recognition from major financial institutions and driving Bitcoin's price to its highest since the beginning of 2024.

How Bitcoin (BTC) works

Bitcoin operates on a decentralized peer-to-peer network, fundamentally different from traditional currencies, as it is not controlled by any central authority or central bank.

It relies on a peer-to-peer protocol over the internet, enabling users to transact directly with each other. Bitcoin issuance is automated, capped at a fixed supply, and follows predefined algorithms, ensuring that its creation and distribution are transparent and predictable.

Computers that are engaged in mining validate and record transactions onto a distributed ledger, serving as the accounting system for the network. This ledger, maintained through blockchain technology, ensures transparency and security. Each Bitcoin is divisible into 100 million smaller units, known as Satoshis, allowing for precise and flexible transactions.

The main components of the Bitcoin system include the blockchain, miners, and Bitcoin wallets.

How are Bitcoin mining transaction fees determined?

The transaction fees vary depending on the state of network resources. Bitcoin miners receive rewards in Bitcoin (BTC) when they create blocks containing transaction logs.

The amount of Bitcoin issued when a new block is created occurs approximately every 10 minutes. The reward will decrease over time, and it is expected that by May 2024, the reward for each block will be 3.125 Bitcoin, continuing until a total of 21 million Bitcoin have been issued by 2140.

Besides mining, users can acquire Bitcoin through currency exchanges, services, or goods transactions.

The purpose of using Bitcoin

Bitcoin is the first cryptocurrency to achieve widespread usage, particularly in the rapidly evolving field of e-commerce. Many businesses have opted to accept Bitcoin as a payment method, not only to streamline their transaction processes but also to reduce associated costs. 

This shift towards cryptocurrency reflects a growing trend of businesses embracing technological innovation to enhance efficiency and cater to the preferences of tech-savvy consumers.

In Vietnam, the acceptance of Bitcoin is still limited to a small number of service sectors. However, several global companies have opened their doors to Vietnamese users, enabling them to make payments with Bitcoin for a variety of transactions. 

For instance, phone top-up services like BitRefill allow users to easily recharge their mobile accounts using Bitcoin. Additionally, major platforms such as Expedia facilitate the booking of flights, reserving hotels, and renting cars, further integrating Bitcoin into everyday financial activities. This accessibility marks a significant step towards mainstream acceptance of cryptocurrency in the Vietnamese market.

Beyond its use as a payment method, Bitcoin is increasingly regarded as a “digital gold” asset for investment and a means of wealth preservation.

Factors influencing Bitcoin’s value

Bitcoin has experienced multiple fluctuations since its introduction in 2009. As of 2024, the SEC approved 11 spot Bitcoin ETFs, leading to a recovery in Bitcoin's price, which rose to a peak of $49,059.05. This recognition from financial authorities has fostered confidence and optimism regarding the long-term potential of BTC.

The price of Bitcoin (BTC) is influenced by several key factors:

• Supply: With a capped supply of 21 million BTC, any increase in demand without a corresponding rise in supply leads to price appreciation.

• Demand: Higher demand from investors contributes to price increases; conversely, a decline in demand results in lower prices.

• Global Economic Circumstances: Economic instability and inflation often drive individuals to Bitcoin as a safe haven, thus enhancing its value.

• Regulation and Legal Policies: Strict government regulations can dampen investment interest, while legal recognition can boost prices.

• Market and Business Acceptance: Acceptance by major companies, such as Tesla and PayPal, for transactions can significantly enhance Bitcoin's value.

• Market Sentiment: Investor sentiment plays a crucial role in price volatility. Positive news can increase demand, while negative news can lead to declines in value.

• Technology and Security: Technological advancements in Bitcoin, such as the Taproot upgrade, improve functionality and security, attracting more users and investors, which can increase its value.

• Mining Activity: High mining costs may lead some miners to exit the market, reducing supply and potentially raising BTC prices.

• Competition from Other Cryptocurrencies: The emergence of alternative cryptocurrencies can negatively impact Bitcoin's price if they draw interest and investment away from it.

The value of Bitcoin (BTC) is influenced by a diverse array of factors that interact in complex ways. These elements play a crucial role in determining Bitcoin's current market price and can also provide valuable insights into its potential future growth and development.