Bitcoin (BTC) is known as a representative cryptocurrency (crypto-asset).
As of November 2020, the price of Bitcoin has risen to about 1.9 million yen. The cryptocurrency boom in 2017 is approaching 2 million yen.
As prices and profiles increase, bitcoin is increasingly available among people who have never been related to cryptocurrencies before. However, some of you may think, "I'm interested, but it seems to be somehow difficult..."
Therefore, in this article, I will explain the mechanism features of Bitcoin so that even beginners can understand it.
If you want to know how to buy Bitcoinimmediately, please see "How tobuy and buy bitcoin that can be easily purchased and how to open an account".
Bitcoin is the world's first blockchain-based digital currency. A major feature of this is that there is no central bank or other manager in fiat currency.
Currently, bitcoin has the largest circulation among cryptocurrencies in circulation, so many people seem to think that "Bitcoin = cryptocurrency". However, Bitcoin and cryptocurrency are not synonymous.
Just as japanese yen, U.S. dollar, and euro exist in the "currency" circle, Bitcoin is just one of many cryptocurrencies.
Bitcoin (BTC) started with a single paper
Bitcoin began in October 2008 whena paper was posted online with a person calling himself Satoshi Nakamoto. It was written about a decentralized cryptocurrency that would not go through a state or a bank.
In January 2009, three months after the post, open source software based on Nakamoto's paper was created and published. This is the first form of Bitcoin that continues to this day.
However, bitcoin, which is very novel, such as the idea of "cryptocurrency" that is completely different from conventional currencies, blockchain technology, and a financial system without ordinary administrators, has not yet been widely accepted.
However, in February 2010, the first bitcoin exchange opened and trading began immediately.
Bitcoin (BTC) is also different from electronic money
Bitcoin, a cryptocurrency, is also different from electronic money. Both are the same in terms of "recording currency values as digital data."
However, e-money, like various prepaid cards, digitizes the currency issued by thestate. For example, Suica and PASMO, which can be used on trains and buses, are IC cards that make Japanese yen electronic money.
Bitcoin and other cryptocurrencies havenothing to do with currencies issued and guaranteed by countries or central banks.There are six specific differences between cryptocurrency and electronic money:
What are the unique mechanisms and characteristics of Bitcoin (BTC)?
Bitcoin, the world's first cryptocurrency to be traded, is characterized by the highest circulation. In addition, we will explain the system such as "absence of management organization" and "upper limit of the number of issues", which are characteristic functions unique to Bitcoin, in an easy-to-understand manner for beginners.
Central bank does not exist
Bitcoin, like the Japanese yen and the U.S. dollar, is not issued as a currency by a state or central bank and guarantees its value.
There is a core group of developers and collaborators, but no central bank can see market trends and adjust circulation or intervene in trading. For example, in Japan, there is no management organization equivalent to the Bank of Japan and the Federal Reserve (Fed) in the United States.
Bitcoin's goal is to create a currency thatis away from the authority of the state and is not centrally managed, and it can be said that it is a major feature common to subsequent cryptocurrencies.
The fact that there is no central bank also means that the transaction information is not in one place.
Banks manage currency and transaction information at the head office's large safe and tightly controlled main servers. However, bitcoin has built a P2P network where devices that download programs and participatein transactions connect to each otherindividually.
In a traditional client server system, if the server goes down due to a failure, the entire system will be stopped. In that regard, if the P2P networks are distributed and communicated between clients, the entire system will not go down even if some terminals are stopped.
Bitcoin transaction information is recorded and shared by a vast number of PCs, smartphones, tablets, and other devices scattered around the world, ensuring the integrity and security of information. Bitcoin's value is maintained not by the authority of the state, but by the trust of users around the world who trade according to a pre-set program.
There is a limit to the number of copies issued
Since its birth, Bitcoinhas been issued at 21 million.This is a bitcoin specification and is pre-programmed, so it will not be published any further.
Currently, many issued cryptocurrencies have a final issuance cap. However, the quantity varies, and the basis of the numbers is also different.
In real fiat currencies, central bank economic policies can increase or decrease the amount of currency in circulation, thereby inducing economic trends. On the other hand, if you distribute more currencies than necessary, the value of the currency will decrease and cause inflation.
In the case of Bitcoin, there is no central organization to manage, so if you issue it in a way, you will eventually get too much bitcoin on the market and reduce its value. Partly because of such concerns, the upper limit of the number of issues has been decided in advance.
This pre-set issuance limit can be said to lead to predictions of future price increases in Bitcoin and speculative trends.
Send money to the world in real time
As long as you have an Internet connection, you can send bitcoins 24 hours a day, 365 days a year, wherever they are.
In addition, compared to overseas remittances through conventional banks, it takes overwhelmingly faster to deposit money, which is a unique feature of Bitcoin.It is possible to complete overseas remittances that had been in place for several days in a fraction of the time.
The reason why it is possible to send money overseas so quickly is thatcryptocurrenciessuch as Bitcoin use a special technology called blockchain.
What are the three benefits of Bitcoin (BTC)?
Bitcoin is attracting a lot of attention from all over the world as a new type of financial instrument along with stocks and foreign exchange.
Bitcoin has a variety of advantages that are different from cash and credit cards.
So I will explain the three advantages of Bitcoin in an easy-to-understand manner for beginners.
1. Send money directly between individuals
The first is that you can send money directly between individuals. Even if cryptocurrency can be "directly transferred", it may not be too much of a pin. But this is a huge benefit.
It is common to use bank transfers when buying and selling on the Internet or sending money to children living apart. However, there may be a time lag between remittance and deposit when transferring money through a bank.
In addition, it is not uncommon to send a check to another bank, for example, to take a long time for a credit check, or to take several days when it comes to overseas remittances.
However, with Bitcoin, you can complete overseas remittances surprisingly quickly. The speed is theoretically 10 minutes, usually at least 40 minutes long, and itis possible to send money no matter where the other partyis.
2. Low commissions
The advantage of Bitcoin is that the fees for overseas remittances are cheaper.Of course, this is not limited to Bitcoin, but for the entire cryptocurrency.
How much is the difference between bitcoin transfers and overseas remittances through traditional banks? I summarized each fee and the time it takes to send money in a list.
| Bitcoin | Bank | |
|---|---|---|
| Total amount | 100,000 yen (0.062 BTC*) | 100,000 yen |
| Remittance fee | 0.001BTC* (1,614 yen) | 3,000-8,000 yen |
| Time | 10-40 minutes | 5-10 days |
Calculated at "1BTC = 1,614,000 yen" as of November 11, 2020
(*) 0.001 BTC is coin check cryptocurrency / remittance fee
As you can see from the table, bitcoin is still better than banks in both fees and time when it comes to overseas remittances. The speedy transfer of money at a low fee is a major feature of bitcoin and other cryptocurrencies.
3. Available without currency exchange around the world
Finally, there are points that can be used all over the world without currency exchange.
When you go on a trip abroad, it is inconvenient if you do not prepare the currency of the destination in cash. In most cases, you will need to change your local currency or traveler's cheque at a Japanese bank in advance, or exchange money at your local airport. However, the fee for this exchange is surprisingly expensive.
For example,in the case of U.S. dollars, the fee at domestic banks is often about 3 yen per dollar. If you exchange $1,000, the fee alone will cost about 3,000 yen.When you go on a trip abroad, or when you come back from a trip and exchange the local currency into Japanese yen, both will be charged a firm fee.
However, if you pay with Bitcoin, you don't need a fee for currency exchange, you can only pay a settlement fee.
In both traveling restaurants and shops, if you are a store that accepts Bitcoin payments, it will display a QR code for payment with a tablet etc. Just read and send the code in your smartphone app, and you can pay as if you were paying with cash out of your wallet.
The number of stores that can pay for Bitcoin is increasing year by year. Bitcoin payments are more beneficial than credit cards, which also have to pay a few percent commission, and are one of the most popular factors.
What are the three disadvantages of Bitcoin (BTC)?
While the world expects bitcoin to be a possibility, there are also disadvantages. So I will explain the shortcomings of Bitcoin in an easy-to-understand manner for beginners.
1. Price fluctuations are intense
The first is that price fluctuations are intense. Bitcoin is volatile in price and can be turbulent even during the day.
This is a disadvantage for those who want to invest in more price-stable financial assets. On the other hand, there are people who see the intense price fluctuations as an opportunity to make money.
2. Difficult to settle immediately
The second is that it is difficult to make immediate payments. In Bitcoin, when a transaction such as a remittance is made, it verifies that there is no mistake in the content, and when it is confirmed that there is no fraud or mistake, the transaction is confirmed. Therefore, even if you send money, it does not immediately deposit money to the other party, and there is an aspect that it is difficult to settle immediately.
However, for payment at stores such as shopping and gourmet, it is possible to make immediate payments by using the "wallet" specified by the store. However, please note that using a wallet other than the specified one may take a long time to send money, or in some cases, bitcoin payment may be disabled.
3. Fewer payment services
Third, there are few bitcoin payment services.
If your physical store supports Bitcoin payments, you can send money from your wallet and make payments on the spot, but that's not the case with online shopping. Like credit cards, you need a payment service that stands between you and the store to broker payments.
If there is a system that instantly converts bitcoins transferred from users into Japanese yen and transfers them together on a monthly transfer, the benefits should be significant for both stores and users.
If there is a system, the benefits should be large for both the store side and the user side.
Currently, there are several companies that offer bitcoin payment services, and more and more e-commerce sites are deploying them. However, not enough companies are still in the market, and the increase in the number of entrants is one of the challenges for Bitcoin in the future.
History and Future Prospects of Bitcoin (BTC) Price Trends
Bitcoin, which was born in January 2009, has not yet been recognized for its currency value.
Bitcoin was first priced at 1BTC = about 0.07 yen, which was offered by a site called "New Liberty Standard" inOctober 2009.By the way, this price was calculated from the electricity cost for bitcoin mining.
The following year, in May 2010, a programmer living in Florida bought two pizzas for 10,000 BTC. The value of Bitcoin at this time is1 BTC = about 0.2 yen. This is said to be the first payment using Bitcoin.
Since then, Bitcoin has grown at an incredible speed through twists and turns, and in December 2017, it exceeded its record high of1 BTC = 2million yen.
It surprised so many that it went up in value by about 2 million times in about nine years. Around this time,Bitcoin has attracted attention from investors around the world as a financial instrument with a high return on investment.
Bitcoin (BTC) Price Trends in 2021
Source:CoinMarketCap
| Years | Events | Price of 1BTC |
|---|---|---|
| March 2020 | WHO Announces Covid-19 | Approximately 520,000 yen |
| May 2020 | Third half-life | Approximately 1,000,000 yen |
| October 2020 | PayPal enters crypto assets market | Approximately 1.4 million yen |
How has the price of Bitcoin fluctuated since 2020? Here's a look at price trends from January to November 2020.
The downtrend in the crypto-asset market, which continued until the end of 2019, has changed sharply in 2020 and entered an uptrend. The price, which was about 750,000 yen in January, soared to about 1 million yen in early February.
However, the price of Bitcoin plummeted to the 500,000 yen level in mid-March. In just about a month, it fell to about half the price.
It seemed that the impact of corona would continue for a while after that, but the price of Bitcoin rose again due to the effects of large-scale monetary easing measures by governments. On May 12,the company will reach its third half-lifeand recover to 1 BTC = about 1 million yen.
Since then, the market has continued to firm due to the popularity of Decentralized Finance(DeFi).In October 2020, PayPal, a majorU.S. online payment service company,announced that it would start handling Bitcoin, Ethereum, Bitcoin Cash and Litecoin, soaring to the 1.4 million yen level.
Since then, the market has continued to risemoderately, rising to 1 BTC = about 5.71 million yen as of 2021.
