In the world of cryptocurrencies, Bitcoin reigns supreme. It’s the first thing that pops into people’s minds when talking about crypto, even though it’s just one of the thousand digital assets in the world. This is because Bitcoin is the first crypto ever made.
Although primarily created as an alternative payment option to fiat, Bitcoin now serves many purposes, such as an investment tool. Dive into the details below and discover everything about the king of cryptos, Bitcoin, here at Crypto in Afrika.
Bitcoin’s origin and history
Bitcoin is the first crypto ever created and was conceptualised by a person or group named Satoshi Nakamoto in 2009. It came after the 2008 Global Financial Crisis, which saw markets drop and banks fail. As a result, a decentralised way to exchange currency outside financial institutions was made.
Enter the blockchain—the backbone of the cryptocurrency. The Bitcoin blockchain launched in January 2009 when the genesis block for the first-ever mined crypto was created. Back then, Bitcoin didn’t even have a value, and only a few people knew about its existence.
In 2010, a year after Bitcoin’s inception, Laszlo Hanyecz made the first-ever Bitcoin transaction. A software architect, Hanyecz, offered to pay 10,000 BTC to someone who would buy him a box of pizza. Someone accepted his offer and bought him two boxes. This marked the event wherein Bitcoin was used in exchange for a real-world product and is now celebrated as Bitcoin Pizza Day.
Why did Bitcoin become popular?
Before cryptocurrencies, the only way to transact was through banks which controlled fees, networks and security. This was a working system until the 2008 Global Financial Crisis, which showed how this centralisation could be a problem.
Thus, Bitcoin’s decentralised system became a groundbreaking moment both for the world of finance and technology. Check out the unique features that made it notable against fiat currencies:
Bitcoin operates as a decentralised digital currency, meaning transactions can be carried out without the need for government authorities and a centralised financial system. This removes the need for a middleman, substantially reducing fees and transaction time.
Online trading and transactions
People nowadays use cryptos for trading. They’re constantly looking at market price movement to find opportunities to gain from it. Traders can make a lot of money by profiting from the price fluctuations in the market.
When you use Bitcoin, rest assured that all your contact information and personal details are safe and secure. That’s because the blockchain doesn’t store personal information, only wallet addresses. Moreover, Bitcoin uses cryptography to ensure the most advanced and sophisticated data protection features.
Why is Bitcoin expensive?
Due to this currency’s demand and limited supply, Bitcoin’s price has grown over the years. It sells at $24,578.81, and experts believe it will increase in the following years because of the halving event. This is an event where the reward for mining Bitcoin is cut in half. Historically, halving has been viewed as positively affecting BTC’s price.
What determines the price of Bitcoin?
The following factors influence Bitcoin’s price:
- Supply and demand for Bitcoin – Like mentioned earlier, Bitcoin’s supply is limited, and thus, demand will largely dictate its price.
- The cost of producing Bitcoin through mining – As time passes, mining Bitcoin will become more difficult due to the algorithm’s shifting difficulty level. In turn, it becomes more expensive, increasing Bitcoin’s asking price.
- Other cryptos – Other tokens raise the profile of crypto. With more interest in cryptocurrency, many investors still look to the oldest and highest-valued crypto to invest in, Bitcoin. This way, Bitcoin can benefit from the publicity created by trends from other tokens.
Where can you use Bitcoin?
Most people unfamiliar with crypto, especially Bitcoin, believe it can only be used for trading and investing. But crypto can be used in different ways, such as alternative payment methods for services, personal goods and online casinos.
As alternative payment methods
You can buy personal products, apps and services with Bitcoin as an alternative payment method. It is a faster and more efficient mode of payment because of the lack of third-party intermediaries, unlike other payment options that take days to complete. Nowadays, many physical and online businesses already accept Bitcoin as payment.
As a betting payment option
Bitcoin casinos make anonymous and fast online betting possible. Now, punters can deposit funds into their casino accounts without involving their banks and affecting their credit scores.
For investing and trading
Crypto users usually use Bitcoin for trading and investing. The high liquidity of Bitcoin makes it the best investment option if you are looking for a short-term profit. But Bitcoin can also be a long-term investment because of its high demand. Moreover, Bitcoin is immune to inflation due to its fixed supply of 21 million.
How to buy and sell Bitcoin
If you want to buy and sell Bitcoin, make sure you have an account at a crypto exchange, where traders and buyers exchange any fiat currency for crypto. If you are a beginner, opt for trusted crypto exchange sites, apps and P2P networks.
Cryptocurrency exchanges work similarly to brokers, letting you buy and sell crypto like Bitcoin, Ethereum and Tether. Here, you can place buy or sell orders and learn how to trade cryptocurrency in Africa with fellow traders who have posted similar orders. With low fees and strong security features, crypto exchanges make buying and selling currencies easy.
When deciding if or which to choose, it’s important to look at the currencies supported, pricing, fees, withdrawal options and security. Try some of these top 10 best crypto trading platforms in South Africa trusted by hundreds of crypto users: Coinbase, Kraken, Binance, KuCoin and Gemini.
Apps and websites
Aside from crypto exchanges, some financial sites such as PayPal, CashApp, and Venmo allow you to buy and sell crypto. However, there is a disadvantage when buying from a website. For example, in Paypal, an investor cannot transfer the cryptocurrency out of the payment processor’s platform to an external crypto wallet or personal wallet. Most exchanges and online traders do not support payment processors.
A peer-to-peer exchange (P2P) service provides a more direct connection between users. LocalBitcoins is an example of such an exchange. Users can buy and sell Bitcoin by creating an account and requesting payment methods and price information.
Although P2P exchanges do not provide the same level of anonymity as decentralised exchanges, they give users a chance to compare prices. Numerous exchanges also offer rating systems, allowing users to assess potential trading partners before purchasing.
You can send and receive cryptocurrencies like Bitcoin using crypto wallets. These keep your private keys or the passwords that grant access to your cryptos safe and easily accessible. You can’t access your money if you lose your private keys. Because of this, it’s crucial to protect your hardware wallet or use a reputable software wallet provider like Coinbase.
There are many types of wallets, from hardware wallets like Ledger, which look like a flash drive stick, to mobile apps like Coinbase Wallet.
What does the future hold for Bitcoin?
Bitcoin’s past performance and history
When Bitcoin was first created in 2009, it had no value. Since then, Bitcoin has become the best-performing digital asset in the past ten years. From 2011 to 2021, the average annual return was 230%. This is ten times higher than Ethereum, the second-best performing crypto.
To learn more about BTC’s past performance, continue reading below:
Bitcoin’s all-time highest price
In November 2021, Bitcoin’s price exceeded 65,000 USD, marking a new record high. This price increase was largely due to American financial institutions launching Bitcoin exchange-traded funds (ETFs), making Bitcoin available to institutional investors. Moreover, Tesla’s purchase of 1.5 billion US dollars worth of digital assets and Coinbase’s initial public offering (IPO) sparked widespread interest in Bitcoin. All these drove Bitcoin’s and other cryptos’ prices upward.
Bitcoin crash 2022
In 2022, there were numerous crises, bankruptcies and market turbulence in the global market. Crypto experts saw Bitcoin and others as a hedge against historically high inflation and devaluation of fiat currencies, similar to holding gold and silver as a hedge against inflation. However, Bitcoin fell in value in the second quarter of 2022.
Bitcoin dominated around 40% of the crypto market, and its decline has significantly impacted other digital currencies and tokens. After reaching a high of $46,224 in 2021, Bitcoin plunged dramatically by 64% in 2022 to around $16,630. Bitcoin, the biggest crypto in the world by market capitalisation, reached a peak in March 2022 of almost $48,163, but it has since fallen by 65.5%.
Will Bitcoin regain its value?
According to CryptoPredictions.com, crypto experts predict that BTC’s maximum price in the next four years to be the following:
|Year||Highest Price Prediction|
They made these predictions according to the recent sudden increase of BTC by 8.66%. BTC’s sudden growth means it remains the most promising cryptocurrency today.
Meanwhile, PricePrediction predicts that Bitcoin will be worth $394,710.77 in 2030, up from a conservative $18,029.65 in 2022, $27,235.14 in 2023 and $59,773.26 in 2025.
The future of crypto in the hands of Bitcoin
People perceive crypto as a speculative investment and a store of wealth. However, even if Bitcoin has a tremendous drop, it still attracts traders and buyers from traders around the world, even in Africa.
That’s why you can still profit during a crypto bear market in South Africa and other countries on the continent. You only need to know how to work around the market, knowing that the king of crypto dominates around 40% of the crypto market in Nigeria and all over the globe.
What should beginners know about Bitcoins?
Bitcoin is a type of digital currency that aims to eliminate dependence on central authorities like banks or governments.
How to invest in Bitcoin and make money?
You can invest in Bitcoin by using crypto exchanges like Coinbase and Binance.
What is Bitcoin, and how does it work?
Bitcoin is a virtual or digital currency that runs on a blockchain and is protected by cryptography. It’s like an online version of cash.