While more and more fiat currency is released into the market making our salaries and savings worth less and less as days go by, the Bitcoin protocol makes bitcoin deflationary. In other words, in the long term Bitcoin protocol is designed for making bitcoin (the token) worth more as the days go by. There are many reasons why bitcoin is such an interesting topic. Here we bring you 8 bitcoin facts you didn’t know Part 2. If you missed Part 1 you can read it here. Let’s start!
N°1 Bitcoin does not belong to any central authority
Bitcoin protocol does not belong to a company, institution, or state, it is not a trademark, and it is not an NGO.
Why is it important? It helps you to perceive the power of an uncensored protocol that is not manipulated by a certain organization or group of power. Bitcoin belongs to the community.
Furthermore, knowing that there is no entity in charge of controlling Bitcoin is important to avoid a lot of SCAMS that used the name Bitcoin in order to make people believe they are behind the cryptocurrency.
N°2 Blockchain is the only technology behind Bitcoin
Even though this statement is true, it is not accurate. Behind the Bitcoin protocol there are 4 main technologies combined in a way never seen before, these are: the P2P network, cryptography, proof of work (consensus mechanism), and blockchain.
Why is this important? This adds more understanding of how bitcoin works. By getting to know each of the technologies behind, you can identify the different characteristics that each technology contributes to the protocol. Based on this, you can compare bitcoin with other technologies.
N°3 Where are my bitcoin stored?
Bitcoin is always on the bitcoin blockchain. To “store bitcoin” you need a cryptocurrency wallet. The phrase “store bitcoin” helps many people to understand the process of holding bitcoin, but the truth is you don't ever "store bitcoin". What your wallet stores is a private key that allows you to send/spend the bitcoin in your address.
Why is it important? Knowing that your bitcoin is always on the bitcoin blockchain and that the wallet is just a mechanism to communicate with the bitcoin blockchain is key to understanding how transactions work. In general, learning how bitcoin works helps you to identify different types of scams out there.
N°4 Bitcoin doesn't have a static price
A notebook or an apple has a static price (generally). Bitcoin has an "exchange rate" because bitcoin is money and money and its value is determined by supply and demand and quoted in relation to other currencies (like the USD). For simplicity, bitcoin is generally to be priced in US dollars or in a user’s local currency.
Why is it important? When buying and selling bitcoin it is important to understand that the exchange rate changes every many times during the day because it is determined by supply and demand.
N°5 Bitcoin does not have a one SINGLE exchange rate
Depending on the Exchange, the geographical location, the type of currency with which you want to buy it, or the exchange you are trading on, the price can vary. An example in Latin America is Colombia, where it is one of the places where bitcoin has a lower exchange rate compared to the countries of the region.
Why is it important? It is important to understand the dynamics of the exchange rate of bitcoin to another currency. There are some websites such as CoinMarketCap that give you a good sense of the exchange rate of bitcoin to the dollar by aggregating data from many exchanges. In addition to that, it is important to understand that those exchange rates are just for reference. Most of the time you will be buying and selling bitcoin slightly over or under the market price depending on a variety of factors such as your location, local currency, payment method, exchange platform, and more.
N°6 "Last week 1 million people bought bitcoin and joined the movement"
Although we are excited whenever the volume increases, it is not possible to know exactly how many people own bitcoin. This is because the number of bitcoin addresses does not necessarily represent the same number of people holding bitcoin.
Why is it important? It helps us understand that a single person can have an unlimited number of bitcoin addresses. In addition, a huge number of people can share just a few addresses (for example the addresses holding users funds on centralized exchanges). Many news sources are not accurate with the information they provide, and we really have no idea how many people are using bitcoin.
N°7 You can see, but can’t modify
Everyone can see the balances and transaction history of every bitcoin wallet address, but you cannot move, transact, steal, or block the contents in anyone’s but your own.
Why is it important? You should know that the Bitcoin protocol is very transparent in terms of addresses, balances, and transactions, but can be private in terms of individuals if used correctly.
N°8 Bitcoin security, too hard to mess with
The length of the private key is 256 bits which is equivalent to 77 digits.
Why is it important? It is key to know that the only way for someone to try and guess your private key is through brute force (guessing every possible combination). And there are more combinations than atoms in the entire universe! As long as you store your private key properly you can rest assured that your bitcoin is safe!
There are many things about the bitcoin protocol and bitcoin that are not well known. These factors are important to know in order to appreciate the benefits of the bitcoin protocol, to avoid scams, to buy and sell bitcoin, and more. We hope that after reading “Bitcoin facts you didn’t know- Part 2” you have gained more knowledge about bitcoin and its interesting facts.
If you missed part one you could always read it here. We would like to mention that all these facts are inspired by Andreas Antoponopoulos who is one of the most renowned people in the bitcoin ecosystem and whose educational content has helped millions of people to understand more about bitcoin in a friendly manner.
Remember these famous phrases from the bitcoin community. “Don’t trust verify” and “Do your own research”. If you have any questions about bitcoin and other cryptocurrencies reach us on our social media channel. Become part of our community! Join us on Telegram: https://t.me/localcoinswap and follow us on twitter: https://twitter.com/LocalCoinSwap_
Until the next article!