Bitcoin

By definition, Bitcoin is the first cryptocurrency in history and also the first application of blockchain technology. Bitcoin is the name of the blockchain and its coin; which can also be referred to by the acronym BTC. The history of Bitcoin began in 2008 when Satoshi Nakamoto published a document online in which he explained that he had created a payment system that was independent of banks, unbound by geographical and political limits, and resistant to inflation. Nakamoto’s identity is unknown, it is not even known whether the creator of Bitcoin is an individual or a group of people, but his creation has revolutionised the global economic and technological system. Bitcoin, in a nutshell, is a peer-to-peer, i.e. without intermediaries, and decentralised electronic payment system. 

Bitcoin’s origins can be traced back to at least two elements. Although Nakamoto was its creator, the ideas and concepts behind Bitcoin were shared by many even earlier, mainly by representatives of the cypherpunks, a group of digital privacy activists. Bitcoin’s basic technology is cryptography, which makes transactions pseudo-anonymous: the identity of the contracting parties is replaced by alphanumeric strings. 

Moreover, the history of Bitcoin is closely linked to the historical period in which it was conceived. The year 2008 was the height of a worldwide economic crisis that led to a loss of confidence in financial systems: Bitcoin was born as an alternative economic system, wanting to be the starting point for building different monetary policies. 

At the moment Bitcoin is mainly traded, however in order to be used as a currency for everyday transactions, Bitcoin’s blockchain relies on a decentralised and parallel network of nodes called the Lightning Network. This system allows a large amount of transactions to be processed in a limited time frame. Some think that Bitcoin has the potential to be considered as a safe haven asset, and therefore attribute it the name of “digital gold”.

From a technical point of view, the blockchain on which BTC is based uses a Proof-of-Work consensus mechanism. Thus, the blocks that make up the shared transaction register are created and validated through mining. A Bitcoin, like all cryptocurrencies, is fungible, hence divisible into smaller units. In the case of BTC, these cryptocurrency parts are called ‘satoshi’: 1 satoshi corresponds to 0.00000001 Bitcoin. According to Nakamoto’s protocol, there are only 21 million Bitcoins, some of which have yet to be mined. Bitcoin’s scarcity counteracts its inflation: as a scarce asset, the value of BTC depends on the law of supply and demand. 

Correlated words

Cashback

Cashback involves a partial reimbursement of funds spent in a transaction.

Web3

Third historical phase of the web, during which the economic and technological system of the internet changes, thanks to the tools offered by blockchain.

Wallet address

The string of characters that identifies a cryptocurrency wallet.

Stablecoin

Cryptocurrencies pegged to the price of a stable asset such as a fiat currency or precious metal.

Custody

Managing one's wallet by knowing its private key

White Paper

Technical and informative document used by cryptocurrency projects to present their technological proposal.

Wallet

Software that allows you to send, receive and store your cryptocurrencies.

Virtual Currency

Term used in legislation to define cryptocurrencies.

Fiat Currency

Legal tender, i.e. the official currency adopted by a government.

Token

Digital unit of value based on a third-party protocol.

Satoshi Nakamoto

The pseudonym used by the creator or group of developers of Bitcoin.

Open-source

Open-source software is public and available for anyone to reuse.

KYC

Identity verification procedure required by European regulations for exchanges.

Hard Fork

A division of the blockchain due to the incompatibility of the new version of the protocol with the previous one.

Hot Wallet

A cryptocurrency wallet connected to the internet.

Halving

The halving of the reward given to miners for each validation, every 4 years.

FinTech

A sector that combines finance and technology, where companies develop technologically innovative financial services.

Cryptography

The branch of computer science that studies secure communication methods.

Cryptocurrency

Virtual currency based on cryptography and blockchain.

Coin

A cryptocurrency that is natively based on its blockchain

Public Key

Cryptographic code that identifies a wallet on the blockchain.

Private Key

Cryptographic code that gives access to a wallet.

API

Tools that simplify the development of apps and web services.

Altcoin

Cryptocurrencies that followed Bitcoin as alternative solutions.

AML

Anti-money laundering regulations prevent illegal activities on centralised exchanges.

Algorithm

The procedure applied to solve a problem.

Exchange

Services facilitating the purchase and sale of digital assets based on daily market prices.

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