How did Bitcoin come about?
It was the dream of many radical liberal scientists to develop a currency that had not been related to any state or central authority for many years.
To summarize the basics of this thought briefly;
-The fact that the guarantor of the transfer of money between two people is a financial institution which is likely to go bust, get hacked and etc. shows that the current monetary system is not really that safe.
- A third party institution is earning money from the money transfer between 2 people.
- Even with a technology such as the Internet, institutions demand exorbitant fees from money transfers around the world completed via one click.
- Very small amounts of money transfers made between two people living in the different parts of the world cannot be completed due to transaction fees.
In 2008, an article published by a person or group of people nicknamed Satoshi Nakamoto became the birth of bitcoin. In this article, Nakamoto came up with a solution to all of the above problems.
Instead of a reliable 3rd party mediating in the money transfer between two people, he proposed a cryptographic blockchain technology that registers this transfer. In his article, he tells us how this system is more secure from the existing system.
With his blockchain technology;
- The money transfer between two people will not be stored in a single place, but will be stored in all computers / processors included in the network.
- No fees will be charged for the money transfer between two people. (This is a dream for now, but at least the fees are low.)
- The names will not appear in the money transfer between two people, yet an address containing numbers and letters will show up just as follows.
Sample bitcoin address: 1F1tAaz5x1HUXrCNLbtMDqcw6o5GNn4xqX
Like every invention, bitcoin was created by those who opposed the system. The fate of Bitcoin will also end with its inclusion into the system like every invention. Indeed, the system approves Bitcoin's every major surge. The bitcoin will be even more valued as the parts in the system approve incrementally.
For example, many banks have begun to use the infrastructure of Ripple, which was created using the blockchain technology behind Bitcoin, at the moment.
What is the Bitcoin's revolutionary difference from the current financial system?
The current financial system operates as mentioned above.
People's identities are open to a reliable third party / financial institution. And a reliable third party is needed when one person send money to another person. There is a need for the party. And the information of these transactions isn't disclosed to the public.
In the system proposed by Nakamoto, people's identities are hidden. And the information of transfers between two people is disclosed to the public. But only the information of the money transfer between 2 addresses can be seen. Not the names of the people who own these wallets / addresses and etc. Furthermore, since your bitcoin wallet generates a new address for each money transfer, the transfer history of a bitcoin wallet cannot be displayed.
How will bitcoin be produced?
Just as the gold is dug up from underground by gold miners, bitcoin is created by processors that decipher algorithms. (This process is called "mining".) This algorithm was very easy at the beginning but has become tougher day by day. For example, in the beginning you could produce bitcoin with a weak computer, but now you need very powerful systems and processors to produce bitcoin. And by the year 2140, only 21 million bitcoins will have been produced. Any state or authority cannot interfere with the system trying to produce millions of bitcoins.
Silkroad?
As Bitcoin started out anonymously, one of the first people to discover Bitcoin was the founder of Silkroad, illegal commercial website, namely Ross Ulbricht. Ross established the Silkroad website, where he brings together the buyers and sellers of illegal products such as all kinds of weapons, drugs and etc, in 2011. Bitcoin's anonymity made Silkroad the most popular illegal website. The trade was totally plied through bitcoin. So maybe the bitcoin couldn't reach the place it deserves quickly and remained as an underground invention.
With the capture of Ross Ulbricht and the closure of the Silkroad website in 2013, the FBI seized millions of bitcoins. Bitcoin made the headline for the first time with this news.
With the capture of Ross and the closure of Silkroad, BitCoin made its first major surge. In fact, two different statements made in the same week caused this surge. U.S. Attorney General and China stated that bitcoin could be the currency of the future.
Blockchain technology?
Bitcoin is actually just a product of the blockchain technology invented here. This technology will impact our future. For example, you all have heard of the lawsuits on lost deeds. Think about buying a plot from Ahmet Uncle in your village. The guarantor of the document showing that you are the owner of this plot is the land office. Then what happens if something goes awry with registry records? This was happening and is happening still. In a way, blockchain actually brings a solution to this. Satoshi Nakamoto says, "Let's not trust a third party in any transaction made between two people. Let's look at the encrypted evidence in blockchain technology. "
How would this transaction be if the title deeds were stored in blockchain technology?
When you buy a plot from someone, the transaction made between these 2 people is added to the chain with a date. When a chain is added, all past transactions up to now are checked to see if this is a recurring transaction. This process is added to the chain as encrypted after it is acknowledged by the processors in the system. This verification issue is the basis of blockchain's reliability. The confirmed transactions are then added to the chain to extend it. Someone who wants to hack the system has to create a longer chain than the longest honest chain available. This means that hacker has to spend more than s/he can get from the system.
Ethereum?
A 20-year-old Russian software developer created the Ethereum network, thinking that blockchain technology could be used for everything, not just for money transfer. Ethereum was also the first product of this network and the currency.
Ethereum's open source code, as I mentioned above, helps to develop applications in every possible way, from land registry records to general elections and from company contracts to public offerings.
Although Ethereum is thought to have become very valuable due to this idea, the real issue is different. The Russians work to not lag behind Americans in all subjects. (For example, Yandex.)
Putin came together with the founder of Ethereum this year and stated at the end of the meeting that he backs Ethereum and will always support it. Ethereum boomed like that. At $ 20 in March, Ethereum reached $ 250 in May.
Would Bitcoin be used for shopping in the future?
My personal opinion is that Bitcoin will not be used for everyday shopping in the future. Because it will be incredibly valuable, you know why?
- Because it can be produced in limited quantity. By 2140, 21 million bitcoins will have been produced in total.
- We can say that blockchain technology is the next great invention after the internet. This technology will radically transform current business models. Therefore, the first product of this technology, the Bitcoin, will be highly valued. (Roughly, you can think of Bitcoin as a kind of stock of this technology)
In short, I think Bitcoin is the second precious metal that humanity has ever discovered after gold. Just as we cannot go to the grocery store and buy a gum with gold, so wouldn't we buy it with bitcoin. But just as gold is valid and valuable all over the world, so will bitcoin be.
Alt coins?
Through the way Bitcoin has opened, hundreds of digital currencies go forward by transforming themselves a bit. In common parlance, all digital money is called alt coins except Bitcoin.
If you want to see these coins, you can visit the website below.
On this website, you can see the values and volumes of different digital currencies.
Here, coins which have stars in "Circulating Supply" section are the coins that everyone cannot produce. For example, everybody can produce Bitcoin. But these are the coins that a company produces in specific amounts. We can think of these coins more like stocks. If the business model offered by that company is true, the value of the coin is increasing very fast. If you are going to invest in those currencies, check out the coins' website, see if it is promising something different. Read the news about these coins. There are incredible gains in these currencies right now.