Bitcoins – how to find yourself in them and how to find them?
Last year there was a lot of talk about the revolution brought by the cryptocurrency market. Until 2017, most people treated virtual currencies as a curiosity, a closer unknown and misunderstood novelty of the fintech market, which in time became fashionable. In Silicon Valley or Zug in Switzerland, paying for coffee with Bitcoin was just cool. But when the price of Bitcoin rose from $750 to $18,000 in 2017. In the future, the number of customers who will be able to use the 5G network will increase, and the number of customers who will be able to use the 5G network will increase.
As is usually the case – most jumped in at the very end of the climb and thus only provided the strength to go down. It was then that the world began to discuss the security of the crypto market..
First, however, a bit about pricing
The greatest analysts of the financial industry, IT industry, and even sociologists are thinking about the valuation of BTC. Because while in the case of traditional currencies – by blockchain fans called FIAT – their valuation depends on the economy of a country (plus possible reserves in gold), in the case of virtual currencies their valuation is determined by investor sentiment. Although here it is more appropriate to say users and access to technology, with emphasis on the latter.
According to the latest We Are Social report, currently the population of our planet is 7.676 billion people, of which 5.112 billion are mobile device users, and 4.388 billion regularly use the Internet. By contrast, less than 2.5 billion people have access to a bank account. What does this mean in practice? Only and so much that the vast majority of humanity does not have the ability to accumulate, or even store capital, let alone transfer and invest it. And this is where the fintech market comes to the rescue, wanting to fill this hole. Among other things, this is where we should see the reasons for the rise in value of cryptocurrencies, but also of applications like Revolut.
According to the original assumptions of the creator of Bitcoin Satoshi Nakamoto or a group of creators (to this day it has not been determined who exactly it is) the availability of this currency from the very beginning was limited to 21 million units. This is the fundamental difference between Bitcoin and traditional currencies. This means that Bitcoin cannot be artificially printed or its circulation and availability regulated by interest rates. It is up to the users to decide for themselves and so far in this respect they are very resistant to any form of pressure and control. Bitcoin acquisition is done by performing mathematical processes called „digging” that ensure the proper functioning of the cryptocurrency network, primarily by validating transactions. Currently, more than 17 million Bitcoins have been dug up, which is more than 80% of all that were ever to exist.
Some users of the network treat virtual currencies as a tool to store value. The vast majority use this market to efficiently transfer capital. Due to high volatility investors and speculators are only a part of this market. This situation may change when investment banks decide to fully enter the cryptocurrency market. However, so far their involvement is very cautious, due to investment risk policies and legal issues.
However, blockchain technology itself is extremely useful to financial institutions – it serves them m.In. to authenticate transactions, encryption.
Bitcoin worth as much as plastic?
One can assume, as investment icon Warren Buffet says, that Bitcoin has only the power to carry value, like a blank check or credit card. Cryptocurrency in itself does not have much value. Only what it “carries” has value. And here we come to a very important conclusion regarding its valuation, namely that its price for a network user is irrelevant.
In a model where the majority of users use this tool to transfer capital, they purchase the virtual currency at the time of the transaction and the beneficiary converts the virtual currency to FIAT currency when they receive it. From the point of view of the parties to this transaction, it is irrelevant whether they were transferring a fraction or an entire Bitcoin at the time of the transfer. From their point of view it is important that the network is efficient, secure, commissions are low, and volatility is at an acceptable level.
What conclusion can be drawn from this? Theoretically in the long run with limited supply, the value of Bitcoin should steadily increase. Of course there are many obstacles and twists along the way (legislation, network performance ect.), but above all there must be a belief that the cryptocurrency is a carrier of value.
Well now back to the topic of security. The security of the Bitcoin network rests on several pillars, the most important of which is a huge and incalculable by today’s computers combination of a wallet with an appropriate private key. In other words, on a given wallet we keep the units we have accumulated, but only knowing the right key, we can move them to another address. The number of bitcoin addresses that can be generated (RIPEMD-160) is 2^160 or 1.462×10^48, or more figuratively this is a number comparable to the number of atoms that make up the Earth.
Finding lost bitcoins
There are a lot of lost units in the bitcoin network. Zombie Coins), Mainly in the early stages of the network’s development, i.e. in the first year before the difficulty of digging was regulated. The first Bitcoin price set in October 2009 was $0.11 and was based on the value of electricity needed to dig one unit. Additionally, a large number of users received Bitcoins as part of promotional campaigns and attempts to popularize the network.
Until the launch of the first bitcoin exchange in February 2010 nobody paid much attention to the safety of digging, as bitcoins were practically worthless. Most users treated the project as a kind of curiosity. They dug out of sheer curiosity, and later either forgot about the fact or gave up in disappointment. The units dug out by them, often landed on the trash heap together with old disks, system replacement, or simple C drive formatting: (yes… in those days disks were formatted). It is also unclear what happened to the bitcoins belonging to the system’s creator Satoshi Nakamoto and another of the bitcoin network’s pioneers Hall Finney, who died in 2014.
This is when an attempt was made to estimate all Zombie Coins. It was estimated that 30% of all Bitcoins dug up at the time, were irretrievably lost. Mainly through user carelessness or by deliberately “burning” them, i.e. sending them to random addresses for which there are no keys. The most famous example of such action is sending 2124 Bitcoins to sample addresses by the creators of the currency XCP, who in this way wanted to give value to their own currency. Such activities are called proof-of-burn.
Users were reminded of lost or burned Bitcoins in 2017, when the price soared to 18 thousand. The first time you create a profile, you will be able to find out how much money you are willing to pay per unit, and an anonymous user’s. He described his experience in creating private keys consisting of popular phrases and strings of words. He noted that people have long been creating keys based on easy to remember numbers.
Bitcoin lottery or educational application
What it means? Recently, while browsing the contents of the App Store after the change of policy on digging, I fell into the hands of BTC Harvester application. According to the description of the owner, the application is aimed at an educational function and serves to present the data contained in the blockchain network. Well, the users of the application have the ability to view the private keys and link them to the public addresses of the blockchain network. What is interesting, this data is publicly available, and if the user finds a key that fits the lock, he can see the history of transactions.
But the most interesting thing is that it is a simple way to search the web for lost bitcoins. The creators of the application claim that the probability of finding a pair where Zombie Coins will be stored is several hundred times less than hitting a six in the lottery, but unlike the lottery, it does not cost anything to try..
Good luck and I hope that by the way I managed to explain a little bit what the Bitcoin phenomenon is about. In the next article I will write a little more about how blockchain works and how to use it.