The Bitcoin is the cryptocurrency most valuable in the world at the moment, but its price has dropped considerably lately. This article explains in detail what bitcoins are, how the cryptocurrency system works and why prices for this particular one have been falling. Keep reading to know more!
What is Bitcoin?
Bitcoin was invented by the mysterious Satoshi Nakamoto in 2009. This cryptocurrency uses a network of computers around the world to track every transaction. In essence, the technology blockchain of cryptocurrency is a permanent public ledger that allows both new and old transactions to be recorded without the need for any third party (such as a bank, for example). By using cryptocurrency, users can buy goods and services, create other digital currencies and transfer funds around the world.
What value do cryptocurrencies have?
Some are worth relatively small amounts, while others are worth thousands of dollars. The bitcoin system Bitcoin is a virtual currency that runs on a decentralized system. At one end, there is a person or group of people (called ” miner “) that has computers that will help the decryption process. This person works together with others in the Bitcoin community to produce additional bitcoins that are released into circulation, through computer processes. The process of creating the next bitcoin in circulation is named mining and requires large amounts of computing power. At the other end of the system, there is a bitcoin “wallet”, which is used to store and transfer these coins. This wallet is also called “wallet service provider” (WSP), and these are usually large companies that use their own computers to mine bitcoins.
Why is Bitcoin price going down?
The first reason is that the chinese government announced that it will ban all cryptocurrency trading in China. This means that China is deciding to protect its citizens from potentially losing money by investing in cryptocurrencies, even if it means not profiting from them. The second reason for the bitcoin price decline is due to a possible split, called BitcoinCash . A split occurs when a coin is split into two coins with similar values because some people disagree with how the original coin should work or want to make some changes to it, and they split up to create their own version of a cryptocurrency.
And what does Elon Musk paint in all this?
Musk announced in February that its electric vehicle company, Tesla, had invested $1.5 billion in the bitcoin cryptocurrency, causing the value of this currency to skyrocket, and they will enter new investors . Then in March, this company began accepting Bitcoin as a payment method for all transactions on its website, which further increased its price. Elon Musk also promoted the purchase of digital currencies, such as the Dogecoin , whose value also increased in a few days. We explain it further here: Is Dogecoin a good investment in 2022 However, Tesla changed course and announced that it would stop accepting Bitcoin due to the possible environmental damage that could cause cryptocurrency mining. This announcement set the tone for the great recession in most cryptocurrencies that we are experiencing today.
How does cryptocurrency affect the environment?
Multiple studies have explained that the Bitcoin network generates a number of carbon dioxide similar to a big Western city or a whole country like Argentina . But a Cambridge University study last year estimated that, on average, 39% of crypto mining was powered by renewable energy mainly hydroelectric. If your curiosity has been piqued and you want to know more about the trending currency, we advise you to first try a simulator. You can open a DEMO account on a platform that trades with bitcoins.