Bitcoin

Since its launch in 2009, Bitcoin has become a word synonymous with cryptocurrencies. As the first and largest digital currency, Bitcoin has transformed the way we interact online and has paved the way for a future cashless society. Early adopters of Bitcoin were drawn to the decentralised nature of the digital currency, with many eager to move away from the central authority of banks.

But despite the popularity of Bitcoin in the zeitgeist of cryptocurrencies, there is still a wider lack of understanding about where to use Bitcoin. You may have begun researching cryptocurrencies and started to ask yourself ‘what can Bitcoin be used for?’ and “How can I use Bitcoin?”. Once you’ve decided to purchase Bitcoin, you can begin to benefit from the many uses of cryptocurrency and how it can effectively change the way you manage your funds.

Why use BTC (Bitcoin) for your online payments? These days an increasing number of retailers and vendors are adopting cryptocurrencies as an accepted form of payment. If you’re unsure how to use Bitcoin to buy things there’s a very simple and safe process to follow that will revolutionise the way you purchase goods online.

Firstly you’ll need to set up a wallet via a designated marketplace — effectively, this will be your account that keeps track of your Bitcoins in a secure digital location. At 

 you’ll be able to create an account, deposit money to your wallet, purchase Bitcoins and start using Bitcoin to safely spend online. If the merchant you wish to purchase from accepts Bitcoin, all you need to do is copy their Bitcoin address to the designated field in your wallet, include the price and hit send. The transaction should then be securely completed within a matter of seconds.

The number of merchants accepting cryptocurrency is trending upwards, with plenty of retailers and businesses listening to customers requesting more diversity when it comes to payment options.

One of the many perks of Bitcoin is the ability to safely and quickly transfer funds anywhere in the world. Gone are the days of international money transfers chewing up costly fees, being unprotected and taking far too much time to hit the other account. As the Bitcoin founder Satoshi Nakamoto once noted, this form of digital currency is intended to act as a “peer-to-peer digital cash system”, thus alleviating many of the issues users once faced when transferring money to another party.

Traditionally these kinds of remittances will include clunky processes using electronic payment systems, wire transfers or physical mail — but with Bitcoin, you’ll be able to control your finances and transfer with ease without getting caught up in unnecessary fees and time delays. Through your BTC Market account, you’ll be able to spend as much money as you want, anywhere in the world, whenever it suits you. It’s the new flexible, cost-effective and reliable way to get your funds exactly where you want them.

Much like the stock market, there is an emerging trend in the world of crypto to make profits from day trading. So why use Bitcoin to trade? Jumping into the trading exchange of cryptocurrencies is not for the faint-hearted and requires a considerable amount of research and understanding to bolster the bold trades needed to turn a profit. There’s no denying that Bitcoin is highly volatile but if you can take your insights and create an effective trading strategy, you’ll be able to observe the crypto market and act quickly.

 and sell digital assets securely using market orders which will complete the transaction immediately at the best available 

. The use of Bitcoin in day trading is not without its complexities but can pay great dividends when approached with a keen eye for detail.

Whether you’re looking to create a self-managed

 or you’re interested in understanding how you can use Bitcoin to benefit your long-term financial goals, investing with cryptocurrencies could be a great way to finance your future.

At this stage it is widely understood that the number of Bitcoins available will cap at 21 million — so while the market may be volatile, if you purchase now then in a few years the assets may be more valuable as the demand will grow while scarcity increases.

Through your BTC Market account, we will help you manage your portfolio, where you’ll be able to purchase Bitcoin and build depth across 21 markets with ease.

What are the advantages of using Bitcoin?

If you’re still wondering ‘what is the use of bitcoin?’ and how it can benefit not only your day-to-day transactions but your long-term finances, let’s take a look at some of the advantages of using Bitcoin.

One of the driving forces behind Bitcoin’s creation was a real yearning to move away from a centralised system of banking and shift towards an entire network being responsible for the accuracy and validity of the currency — also known as decentralisation. Someone who uses Bitcoin can feel safe knowing all transactions are recorded via a ledger called a Blockchain — this is the main defence against fraud and hacking, which are often the main downfalls of traditional banking. Another issue people take umbrage with when it comes to how banks govern is their collective ability to manipulate the value of a currency. Bitcoin’s algorithm ensures that the value of the supply is tightly controlled within its ecosystem.

Bitcoin allows users the ability to have total control and autonomy over their money, making it an incredibly flexible way to manage funds. For example, if you need to get money to a second party overseas as a matter of emergency, you have the functionality to transfer funds securely within seconds. You can also be assured that the peer-to-peer interactions will be completely transparent via the Bitcoin Blockchain which adds another level of security to your transfers.

What are the disadvantages of using Bitcoin?

With any platform, some pros and cons need to be considered especially when it comes to your finances. So why use Bitcoin if there are downsides? It’s important to understand both the advantages and disadvantages of using Bitcoin before you invest. Once you’ve reviewed the variables you might find the advantages of investing in Bitcoin outweighs the disadvantages.

Given the limited number of Bitcoins available, the demand for stock makes it a volatile currency. For example, you’ll find the value of Bitcoin can increase and decrease quite rapidly throughout the day. For those wanting a safe bet when it comes to their investments this kind of volatility may not necessarily be appealing. Crypto commentators suggest that over time this kind of volatility will ease as the market evens out.

When you look at the impressive uptake of Bitcoin by the public, it’s hard to believe it was only launched in 2009. As with any emerging technology, it’s understandable that there have been some teething issues. Many of these have contributed to why the wider community has been reluctant to adopt Bitcoin. Despite tech and functionality issues constantly being developed and improved, there is still a way to go in changing the public perception of digital security. And whilst plenty of merchants and vendors have set up Bitcoin as accepted forms of payment, there will still be instances where this isn’t available and therefore users will need to select another way to purchase goods. Managing your funds across multiple digital platforms may seem annoying now but hopefully, we are moving towards a future where Bitcoin is widely accepted across the world.

 and learning more about our features, feel free to reach out. You can also learn more by visiting 

Why Use Bitcoin?

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The days of cryptocurrency — and Bitcoin especially — as a futuristic and difficult-to-understand leading-edge technology are over. Bitcoin celebrated its 12th birthday in 2021, and the currency has been publicly traded for the vast majority of that time. In other words, plenty of investors are now reaping Bitcoin's benefits.

In fact, the days of Bitcoin as solely a vehicle for speculative investment are over, too. While many investors have earned serious returns from Bitcoin over the years, and the currency continues to be a source of revenue for large numbers of people across the world, this was never the primary intention of BTC's creators.

Instead, Satoshi Nakamoto — the mysterious creator, or group of creators, who gave us Bitcoin — envisaged the currency and the network as an 

. This was designed to be something that would revolutionise payments in the digital era, not simply drive the wealth of those who want to keep hold of the currency.

Happily, for Bitcoin's originators, a shift is taking place. As increasing numbers of payment providers and vendors begin to support the currency, and as more and more individuals opt to use Bitcoin in their transactions, BTC is becoming a genuine alternative payment network. In other words, the reasons to use 

But why use cryptocurrency to make purchases and payments? What are the Bitcoin pros and cons that are influencing the cryptocurrency's usage? Let's take a look in more detail.

Let's start by taking a look at some of the key advantages of blockchain and 

. This will give you some idea of how BTC offers a whole new way to pay for goods, transfer funds and complete transactions in the digital marketplace. These are the 

 that are changing the way we approach payments, wealth and money in the 21st century.

Bitcoin is based upon the original blockchain structure. Whenever a transaction is initiated, randomly selected nodes within the network automatically perform complex calculations in a process known as "mining." Once mining is complete, the transaction data is written into the blockchain and becomes part of the chain's very fabric.

This means there is no manual input beyond the peer-to-peer communication between the sender of the funds and the recipient. The mining process completes the transaction automatically, with no need for third-party supervision or assessment, which translates to a smooth, efficient and reliable experience for 

When you pay for something using Bitcoin or accept Bitcoin as payment, you are kept informed every step of the way. The transaction is initiated via the Bitcoin wallet or via another wallet that supports the currency. You will be able to see immediately when the funds have left the wallet, as well as when they are received.

The wallet interface allows you to check on the status of the payment, see when the block has been mined and keep track of the entire process. All of this data is delivered in real-time, so neither party is ever left in the dark. This is a welcome change from the familiar uncertainty of money leaving a traditional bank account and entering the limbo period of “pending transaction”.

There are no additional fees associated with 

. When we make a payment with a credit or debit card or send money via a bank transfer, it is common to encounter nasty surprises. Perhaps the sender or recipient's bank has applied an additional charge to the transaction, or the payment provider has fees of their own.

This is not the case with Bitcoin. When users make a 

, the full amount is transferred between the two parties with no extra charges for standard transactions.

We've already touched upon digital wallets as one of the key benefits of Bitcoin, but there is more to mention here. The modern world is a digitally focused one, and we expect to be able to use mobile technology and applications to conduct business and other aspects of our daily life.

The digital wallets used in Bitcoin transactions are highly convenient and can be used on the go. Download the wallet to your smartphone and eliminate the need for a physical wallet or cash. As long as you have an internet connection and available funds, you will be able to make a payment.

We have discussed pros up to now, but one of the cons of cryptocurrency used to be a lack of widespread adoption. Bitcoin was once considered unreliable as a payment method because most vendors and payment providers did not support it.

This is no longer the case. There is now a large number of vendors and providers who 

 and a wide range of individuals happy to accept Bitcoin as a form of payment. What's more, this number is increasing all the time, making Bitcoin more and more viable as a payment option.

Data protection and privacy are hot topics these days as public anxiety increases about the ways in which our information is used online. This makes privacy a key cryptocurrency benefit and a great reason to use Bitcoin for transactions.

You do not need to use your real name or any identifiable information when you engage in a transaction. Your personal data is not saved, and you can conduct transactions under a pseudonym. As a result, 

 to those seeking to protect their personal data online.

There are many advantages of blockchain, but perhaps the biggest is the fact that it is immutable. When a new block is mined and added to the chain, the entire blockchain ledger is updated and shared across all network nodes. This means there is a clear consensus regarding the status of a transaction, and no one can question the validity of the payment made.

Payment can only be reversed if the recipient decides to 

 back to the original sender. With no possibility of a transaction being cancelled or queried, product vendors are protected from fraudulent users.

As with any other form of payment, Bitcoin has its own quirks, pros and cons. It’s important to be aware of them both as a spender and an investor alike.

. This can be a problem, particularly when you want to buy something with a specific dollar amount. Let's say you buy something worth $50 — in a week, or even just a few days, you could find that the BTC you parted with is worth far more than $50. Traditional currencies don’t tend to have this issue as a central authority regulates them.

All of that said, if you receive Bitcoin as a payment from someone else, you may find yourself on the winning end of the deal.

It may take a while to complete your transaction, sometimes up to a few hours. You can pay more to have your transaction completed sooner, but this goes against the idea of Bitcoin as a fee-less payment system.

In some cases, it may be difficult to receive a refund on your transaction. Many vendors will not offer dollar refunds for BTC transactions and will instead offer store credit.

Start building wealth and making payments with BTC Markets

 makes it easy for people just like you to buy and sell Bitcoin on the open market. You can also use your digital wallet to complete payments and transactions using this innovative, trailblazing cryptocurrency. Set up your 

 today via our easy-to-use website or reach out to our team to learn more.

Advantages Of Paying With Bitcoin

Reserve Bank of Australia (RBA) statistics highlight the decline. In 2007, almost 75 per cent of payments were made with cash. In 2019, that figure was just 27 per cent. Further RBA data shows exponential growth of cashless payments since 2007.

Australia could become cashless in the future. Central banks govern a nation’s momentary system. Therefore, it is central banks that could innovate to create a comprehensive cashless system.

Stablecoins are an option to explore. They’re cryptocurrencies designed to maintain price stability, by pegging their value to an external reference asset. Reference assets could be fiat currencies like the US Dollar.

Tether is one example of a stablecoin. Valued at AU$21.6 billion, it’s the largest stablecoin by market capitalisation. Its price is pegged to the US Dollar. One Tether must always equal one US Dollar.

Stablecoins are borderless. They have no governing body. However, central banks have an opportunity to innovate to keep pace with the changes in digital finance.

Central bank digital currencies (CBDC) are a potential solution.

Central bank digital currency could be Australia’s monetary future

Scalability is a crucial consideration for any currency. Whether it’s a government ensuring that there’s enough paper currency in circulation to meet day-to-day needs, banks having reserves on hands for transactions or payment programs having the tech capacity to handle multiple transactions going on at different times, it’s a critical part of what makes a currency viable.

Cryptocurrency is no exception to this rule. For all of the innovative tech it’s helped bring to market, 

 was not designed with its current level of popularity in mind. The original 

 was released in 2008 and obviously couldn’t anticipate all the eventualities that might occur. Though its Blockchain has been a highly effective piece of anti-fraud technology, it’s also one of the things that has kept it as an investor and trading currency rather than one used for day-to-day transactions.

Why? In the simplest terms, the Blockchain is overstuffed and bloated. It takes time for miners to verify transactions against the huge amount of data stored within. Only about seven transactions can take place per second — in contrast to the 45,000 or thereabouts that Visa can handle in the same period — meaning that buyers and sellers can potentially find themselves waiting hours for a transaction to finalise. Most of the time, it doesn’t take this long, of course — but even when you’re looking at transaction times of a minimum of 10 minutes or so, it’s easy to see why it becomes an impractical choice for basic purchases.

The easiest workaround at this point has tended to be providing a bigger Bitcoin network fee to encourage miners to prioritise the transaction. But this isn’t really an issue with other forms of payment, so it’s understandable that newer adopters will expect the convenience of fast payment without high cost.

It’s a problem that’s only going to get worse, too; as more Bitcoins are put into circulation, more transactions take place, and the Blockchain continues to grow. A variety of suggestions have been made around solving it; forking (i.e splitting) the Blockchain has been proposed, to allow it to continue on a more technologically sophisticated network. Rallying enough of the community to do this seems unlikely, though. Bitcoin’s decentralised nature is one of the things that’s made it so popular, and building the appropriate level of consensus is probably too difficult at this point. But there are alternative, more viable solutions being proposed — and that’s where the Bitcoin Lightning Network comes into action.

But what is the Bitcoin Lightning Network, you might be wondering?

In concept, the Bitcoin Lightning Network is essentially an overlay on the existing Blockchain. It’s aimed at enabling smaller-scale, urgent transactions to be carried out more swiftly than might otherwise be possible on the regular Blockchain. After a preset time, the distilled information is uploaded to the main Blockchain, ensuring that everyone’s transactions are protected and that the Blockchain remains intact. So the BTC Lightning Network is something of a small-scale “lightning blockchain” unto itself.

Importantly, the Lightning Network isn’t geared for large-scale transactions to take place; rather, it’s intended more for day-to-day purchases like buying a beer or doing the shopping, for example. In practical terms, it’s a collection of Bitcoin users forming a temporary network to enable a series of transactions among themselves. Each user acts as a “node” within the network — sort of akin to a private server created for a LAN party or large-scale file transfers. Bitcoin lightning transactions can then take place within this network, with people utilising dedicated Lightning Network wallets.

This approach presents a number of advantages to Bitcoin users:

Separate from the unwieldy main Blockchain, only a fraction of the processing power and time is required to carry out a small-scale transaction. This is ideal for businesses and individual customers who are looking to carry out small-scale transactions. Sales could then be uploaded to the main Blockchain at the end of the day, rather than making customers wait needlessly on the spot.

By opting to pay with Lightning Network coin, it’s possible to subdivide the currency into far smaller units and make a variety of easier and more mundane transactions than is ordinarily required by using conventional Bitcoin wallets. It’s possible for it to serve as more of an everyday currency.

Buying with Lightning Network coins adds an additional layer of privacy; as the transactions are uploaded en masse rather than individually, the specifics are not recorded in the same fashion.

It’s not readily available to the public yet, but it’s not entirely in the realm of theory, either. At least three separate companies are working on the concept, with plans in the works since at least 2013. Trials have also been ongoing with select customers for many years, testing the concept’s viability. Twitter CEO Jack Dorsey has been a proponent of the concept — which is either a glowing endorsement or a damning indictment, depending on how you feel about the man — and it’s garnered a certain amount of support within the crypto community as a prospective solution to a complex problem.

This isn’t to say it entirely solves all of the issues, though. The Lightning Network status and its participants must all remain online until a previously agreed-upon time, in order to ensure that the transactions are viable before they’re uploaded to the main Blockchain. Naturally, this involves considerable trust and tech stability.

Tied to this is the risk of fraud, which remains a prime concern. As convoluted as the Blockchain is, it’s still near-impossible to hack, which lends it considerable integrity. Moving transactions outside of that protected space naturally opens other transactions up to greater vulnerability and risk.

Additionally, price fluctuations are potentially problematic. As Bitcoin can fluctuate on a near-daily basis, it can mean that the buyer or seller alike can find themselves out of pocket once the transaction is uploaded to the Blockchain and the transaction is finally resolved.

Of course, none of these problems are insurmountable. The Bitcoin community is full of creative thinkers and keen tech enthusiasts, and solutions will likely emerge sooner than expected. As with any new or experimental technology, there are roadblocks to be expected; but this “Lightning Coin” approach to Bitcoin may still yield impressive results in the near future. At BTC Markets, we look forward to seeing how the technology and conversation continue to evolve.

Learn more about Lightning Bitcoin with BTC Markets

The team here at BTC Markets is here to help you get to grips with the world of Blockchain, Bitcoin, cryptocurrency and much more. So if you have more questions about “What is the Lightning Network?” or “How can I start investing?” or want to keep up to date with Lightning Network news, BTC Markets is here for you.

 on the world of cryptocurrency and how it can benefit you as an investor. We’re also here to assist with questions around 

, as well as helping you get started with 

. With options like short-term investments, 

, we can talk you through the best options for your financial goals with options like short-term investments, staking and self-managed super funds. So get in touch with us today and discover how you can 

 — we look forward to getting you set up!

What Is The Bitcoin Lightning Network?

When Bitcoin launched in early 2009, it was seen as a bit of a novelty in the tech world. A currency allowing anonymous transactions that had its value dictated entirely by the market? Coming on the heels of the GFC — and the attendant bank bailouts, which did little to alleviate the financial issues affecting everyday people in the process — it was easy to see the appeal that it offered to prospective buyers. Yet it was initially confined to a relatively small corner of the internet, largely attracting an audience of colourful characters who worked within related fields.

Of course, it wasn’t long until a wider audience picked up on the trend. And in 2021, Bitcoin and other cryptocurrencies are no longer the domain of tech-obsessed eccentrics — they've moved into the limelight, offering opportunities for those seeking a new frontier of investment.

Cryptocurrency — at least as we would recognise it today — was born with 

. Though the initial Bitcoins released to the public were sold for mere fractions of pennies, plenty of enthusiasts were soon hailing it as a replacement for traditional currency. Some went so far as to suggest it would radically overhaul the current financial system and bring greater equity to building wealth.

Not to say that this enthusiasm was universal. Sceptics were eager to paint it as a future Betamax — interesting technology that would never catch on with the general public. The risk of hacks, the inherent volatility in an unregulated currency and the absence of any physical product were all cited as significant problems.

A little over a decade on, both the early enthusiasts and the sceptics alike appear to have been slightly off the mark. While it’s unlikely to replace traditional currencies any time soon, Bitcoin is now daily front-page news. The market is watched closely by financial and tech experts alike; irrespective of how you feel about it as a phenomenon, it’s clear that it’s set a precedent.

Importantly, the presence of other large-scale cryptocurrencies has also suggested that it represents a potentially lucrative investment opportunity and an effective way to generate additional income within your portfolio. But for those who came in late, it’s entirely natural to be wondering “What is bitcoin all about?” or “How does cryptocurrency work?” At 

, we specialise in providing a variety of cryptocurrency-related services, including 

. That’s why we’ve put together this guide on what bitcoin is and how it works — so that if you’re new to the world of understanding bitcoin and cryptocurrency, you can easily get up to speed.

I want to know the Bitcoin basics — for example, what is bitcoin?

So, what are Bitcoins? In the simplest possible terms, they’re a form of digital money. You can use them to buy things or accept them as payment, just like any other form of currency. What is the purpose of Bitcoin then? After all, we already have money, not to mention a wide variety of ways to purchase items in-person and online.

Well, one of the big drivers behind the initial interest in Bitcoin was to do with its potential for privacy. Digital transactions tend to leave a pretty big (figurative) paper trail, which can potentially be traced back to the purchaser. Bitcoin, by contrast, doesn’t do this. While all transactions carried out with Bitcoin are publicly recorded on the Blockchain (more on that in a moment), the identities of those participating are not. To further obscure their identities, most Bitcoin users will automatically update their ISP after each transaction, to further reduce its traceability.

While these privacy considerations have grown less important since Bitcoin has become a more mainstream hit, there are still other appealing features for many investors. Bitcoin is unregulated by a central authority, such as a government or bank; its worth is purely what the market dictates at a given moment. This is attractive to many investors as it doesn’t cap the earning potential of investing in it, while also being appealing to people of certain ideological bents — people concerned about the influence banks have on public policy, small government advocates, Libertarianism and Anarcho-capitalists, to name a few.

Additionally, there are only a certain number of Bitcoins that will ever be produced — around 21 million. That might sound like a lot, but if you factor in the fact that many have already been bought up and the clock is ticking on future releases, it becomes a simple case of supply and demand. So while it’s not a traditional “collectible” in the same sense as, say, baseball cards, art or luxury cars, there is a desire among many investors to secure their own little piece of history along the way.

This is by no means a definitive list of the reasons that people purchase Bitcoin; for some people, it’s as simple as seeing a prospect to make money, without necessarily having much interest in the philosophical or technology that underpins the process. But at BTC markets, we’re staunch believers that having an understanding of the underpinnings of investment is a critical part of the process and helps you make more informed decisions.

Blockchain, peer-to-peer tech and Bitcoin mining

So if Bitcoin doesn’t have a physical presence and is purely digital, how can you be assured that you actually own some of it — or can spend it safely? How does Bitcoin work?

Everyone with Bitcoin has a digital wallet, access to which is via a special code known only to you. It’s not radically different to a payment system like PayPal or other forms of online banking; when you make a purchase, you input your code and confirm accordingly. But the secret of how Bitcoin works and is able to keep track of all of these transactions lies in the attendant Blockchain. Essentially a large-scale collection of data, Blockchain lodges every transaction with Bitcoin form that takes place in digital form. The Bitcoin or Bitcoins used are recorded, though not the details of the wallets involved, the purchased items or exchanged goods. All transactions that have taken place are viewable to the public and are updated in real-time to maintain integrity.

While theoretically not impossible to hack or edit, it would be extremely difficult for any bad actor (or even a substantial collective of bad actors for that matter) to garner enough computing power to be able to modify the Blockchain. This has helped ensure the integrity of the Blockchain for more than a decade. In fact, since being introduced as part of Bitcoin, Blockchain technology has actually been adopted for a wide range of other purposes. It’s proven an effective means of signing and lodging contracts, as well as protecting cloud storage backups for business data. Its usage will likely continue to grow in the coming years as it’s adopted across new industries.

There’s no centralised storage point for all this Blockchain data, either; that would be counter to the stated ethos of Bitcoin, while also potentially rendering it more vulnerable to hacking or other data breaches. Rather, it’s maintained via a peer to peer collective of computers — and this is where Bitcoin mining comes in.

Blockchain relies on power from computers all over the world, loosely networked together to both process its data and store transactions as they occur so that there’s a single source of truth. While in theory, this is a simple process for any modern computer, Blockchain artificially increases the difficulty in order to deter fraud, via a technique called “hashing”.

This is quite a resource-intensive process for computers and accordingly, there needs to be an incentive to encourage participation — the internet is rarely altruistic merely for the sake of it — so when these users contribute the processing power of their computers, there’s a chance of being rewarded with Bitcoins. Thus, Bitcoin mining was born.

The simpler explanation runs something like this:

Provide your computing power to solve algorithms that help back up the Blockchain data

Be rewarded with bitcoins for your efforts

The more computing power you can provide, the more bitcoins you’ll be provided with as a reward

People who lend their computing power to the process unsurprisingly known as “miners”. As you might expect, this has created all manner of professional miners, looking to make their fortune with their spare PC hardware. But it’s not so simple — the rate of reward for contributing shifts over time. As more bitcoins are released into the marketplace, more transactions take place and the amount of processing power continues to increase, Bitcoin undergoes “halving” — essentially, the reward that miners receive is halved. At present, this takes place around every 4 years; theoretically, it could speed up or decrease depending on the number of transactions taking place, but it has remained relatively constant for Bitcoin’s lifespan so far.

So as you might expect, most people who invest in Bitcoin are not miners; while discussion continues about its value within the crypto community, it’s certainly not the quickest or most efficient way to get involved. The bulk of investors have either purchased or traded for their Bitcoin.

Bitcoin explained — the history of Bitcoin

Understanding the current state of Bitcoin also requires an understanding of its history; it didn’t emerge out of a vacuum, but rather arrived at a time when tech had caught up to existing ideas.

Though Bitcoin has garnered the lion’s share of the press since it launched, it actually wasn’t the first cryptocurrency. Attempts to create a digital, untraceable currency date back to at least the 1980s; the increasing rise of EFTPOS transactions or electronic bank transfers for large amounts of money also brought attendant privacy concerns. These ideas were further developed during the 1990s, but an effective way of executing them still proved elusive; a combination of insufficient tech and internet speed rendered it an unlikely prospect.

Though not forgotten, the idea of electronic currency stayed relatively dormant for a number of years. It would not be until 2008 when it re-emerged in the popular consciousness, with the publication of a whitepaper by an individual or collective identifying themselves as “Satoshi Nakamoto”. This 

 outlined the key principles behind Blockchain, as well as providing Bitcoin’s definition. But it wasn’t till January 2009 that Bitcoins actually began to see release to the general public, as the first batch began to trickle out.

Many of the early details of Bitcoin’s history still have a shroud of mystery over them. Satoshi Nakamoto has never been definitively identified, despite considerable journalistic energy devoted to the question. It’s speculated that Nakamoto’s true identity (or identities) may be connected to some of the earlier cryptocurrency pioneers due to points raised and referenced in their initial whitepaper, though it’s entirely possible that this is merely the result of Nakamoto expanding on this previous work. A number of claimants have also come forward to identify themselves as the holder of this nom de plume since 2009, though their legitimacy has always been contested.

But whether an individual or group of people, Nakamoto likely has a wide range of reasons for keeping their identity secret. First and foremost, there’s the lure of good storytelling — mystery builds intrigue and this has undoubtedly helped build and maintain interest in Bitcoin over its history. And in addition to its obvious tech potential, it’s hard not to see an element of social commentary mixed in. Given its birth relatively soon after the GFC, it’s also possible that the creation of bitcoin was also a piece of sly political commentary. To some degree, bitcoin highlights the transient nature of currency itself. It only has value because as a collective, we’ve agreed that this is the case — but of course, this can also be applied to any sort of transactional relationship.

Whatever their reasons, Nakamoto appears to have dissociated themselves from the project in 2010 — perhaps not coincidentally, the year when the first known commercial purchase with Bitcoin took place. Their exact reasons for departing are as mysterious as their appearance in the first place — until someone is definitively identified as Nakamoto, it’s something of a D.B. Cooper situation.

Oh, and what was that purchase for? Not gold, stocks or bonds or anything similar. It was for two Papa John’s pizzas at a price of 10,000 Bitcoins and it attracted considerable media attention at the time. Just think how many more pizzas those 10,000 Bitcoins could purchase today!

Subsequently, Bitcoin would initially gain popularity on the dark web; black market websites such as Silk Road used it as a primary form of currency to protect the privacy of those involved in the transaction and the privacy of the vending website itself. This gave Bitcoin something of a seamy reputation at the time, though subsequent years have seen it move away from these origins. As more reputable customers began to get involved, it would rapidly emerge as a legitimate investment opportunity.

So what seemingly began as a mix of tech experiment and social commentary has grown into a substantial investment opportunity — and industry — within the last few years. Perhaps unsurprisingly, competing cryptocurrencies have launched in its wake. While some have been markedly successful, few have captured the public’s imagination in quite the same way.

From an investor standpoint, Bitcoin and other cryptocurrencies represent a number of advantages. It’s not beleaguered with the legacy issues that pervade some of the more traditional forms of investment, while also presenting a genuinely new product to the market. Some of the other main advantages include:

Cryptocurrency represents an alternative way to park your savings and potentially earn a much larger return in the process. While shares and high-interest accounts can both be effective ways to park your savings, neither dividends nor interest rates are likely to offer the same level of returns that cryptocurrencies can under the right circumstances.

Bitcoin and other cryptocurrencies have attracted worldwide interest; it’s not solely constrained to one country. This naturally means there’s a wider range of interest in the field, and a bigger market to stimulate interest.

You’re in control. If you like to take a direct hand in your investment portfolio, cryptocurrency can be an excellent option, letting you move with the market without needing to burden yourself with onerous paperwork.


Any investment inherently contains risk and you should be sure never to invest more than you can afford to lose. Bitcoin is an interesting mix of factors; it contains some of the risks that you would find in any investment, as well as a number of new factors due to its comparative youth. Unlike gold, for example, we don’t have an extensive history of how it performs over time.

Perhaps the most obvious risk associated with Bitcoin (or any other form of cryptocurrency, for that matter) is the potential for wildly fluctuating values. Almost everyone associated with cryptocurrency has a story about the time they “bought too late” or “sold too early” and missed out on a huge amount of money as a result. Sometimes these stories are even true!

Bitcoin is relatively new territory as an investment and that brings an attendant level of risk. Keen observers will have noticed the influence that social media can exercise over cryptocurrency prices — though to be fair this is hardly the only investment that can be affected in this manner.

Theft, while not as common as it was in the early days of cryptocurrency, is also still a risk. Cryptocurrency is more akin to cash than property or shares; once it’s lost, it’s gone. Wallets can be hacked, so make sure that your ISP is regularly changed and that you never give out your code to anyone, to minimise the risk.

The quantity of Bitcoin is also inherently limited, which is a double-edged sword. While these restrictions can obviously increase the potential long-term value of Bitcoin, it’s also reliant on sustained consumer and investor interest beyond the final release of Bitcoin.

So, what is Bitcoin in 2021? While it seems unlikely that cryptocurrency will entirely replace more conventional currency around the world, there’s no question that it has attracted considerable interest both as an investment opportunity and as a potentially viable way of conducting transactions into the future. Though it’s difficult to say what Bitcoin’s meaning will be a decade from now, given its rapid ascent it does seem likely that cryptocurrencies are here to stay for the foreseeable future.

Regulation of some sort also seems likely. What form this will take is difficult to say, as cryptocurrencies aren’t traditionally “owned” by any central authority in a manner similar to banks or governments. However, regulations are starting to pop up around the world (particularly in the USA), though they’re currently inconsistent and will likely continue to evolve as the cryptocurrency market itself evolves.

The results of this will likely be twofold; while the same extreme profits may no longer be possible once cryptocurrencies become more tightly regulated, it’s also likely that there will be fewer instances of outright busts. Despite all the buzz around cryptocurrency, not all have been successful and the need for some greater form of consumer protection will likely develop.

Discover more about Bitcoin with BTC Markets today

Interested in learning more? Make sure you check out our regularly updated 

 to learn more about what’s happening in the world of Bitcoin and other cryptocurrencies. Our 

 also has a variety of great Bitcoin information.

And if you’re looking to get started with Bitcoin investments, at BTC markets we can help you to start investing in 

 or a range of other cryptocurrencies, including 

. We can also talk you through the steps required to utilise Bitcoin and other cryptocurrencies as part of your 

 to get started as soon as possible — we look forward to hearing from you soon.

What Is Bitcoin & How Does It Work?

Caroline Bowler is CEO of BTC Markets, the largest Australian digital asset exchange. 

Over her career, Caroline has worked with a variety of financial institutions. These include investment banks, hedge funds, financial technology companies, and financial advisors. This has extended to blockchain and digital asset companies since 2015. 

Caroline is also a board member with Blockchain Australia, representing digital currency exchanges.