Bitcoin Price Prediction, will BTC’s price hit $34520.62?

Bitcoin (BTC): An overview

Source: Bitcoin.org

The rationale behind Bitcoin (BTC) sprung from the need for an electronic payment system based on cryptographic proof instead of trust. This transition would allow any two willing parties to transact directly with each other without the need for a trusted third party.

Unlike traditional currencies, BTC is neither issued by a central bank nor backed by any government. Thus making the king coin independent and away from plausible manipulations from the authorities.

In essence, it's a virtual currency developed to act as money and a form of payment outside the control of any one person, group, or entity.  

How does Bitcoin work?

Source: Bitcoin.org

At its core, Bitcoin uses a decentralized ledger called a blockchain to record all transactions. Let's break down how it works:

Blockchain

A blockchain is basically a chain of blocks, where each block contains or holds a list of transactions. Once a block is added to the blockchain, it's nearly impossible to change. This ensures that once a transaction is confirmed, it can't easily be reversed or altered.

Bitcoin uses the SHA-256 hashing algorithm to encrypt the data stored in the blocks on the blockchain. Simply put, transaction data stored in a block is encrypted into a 256-bit hexadecimal number. That number contains all of the transaction data and information linked to the blocks before that block.

Consensus algorithm (Proof-of-Work)

For transactions to be added to the blockchain, they need to be confirmed by the network. This is done by miners through a process called mining.

PoW requires participants, called miners, to solve intricate mathematical challenges to confirm and log transactions on the blockchain. These problems require significant computational power to solve but are easy for others to verify.

When a miner successfully solves the problem, they present the solution to the rest of the network. If accepted, a new block is added to the blockchain. 

PoW ensures security and prevents double-spending by making it computationally costly to attack the network. Over time, the difficulty of these problems adjusts, ensuring consistent block generation times.

Supply and block rewards

To incentivize mining, miners receive a reward in the form of newly generated ("minted") bitcoins whenever they successfully append a block to the blockchain. This compensation is known as the block reward. When Bitcoin was introduced in the year 2009, the reward was set at 50 BTC.

However, Bitcoin has a fixed supply cap of 21 million coins. To ensure that these coins aren't all minted too quickly, the block reward is periodically reduced. As of September 2023, 19.49 million Bitcoins are in circulation.

Halving cycle

The mechanism that reduces the block reward is called "halving." Every 210,000 blocks, or roughly every four years, the block reward is cut in half.

• 1st halving (2012): 50 BTC -> 25 BTC
• 2nd halving (2016): 25 BTC -> 12.5 BTC
• 3rd halving (2020): 12.5 BTC -> 6.25 BTC

... and so on, until the block reward approaches zero. The next halving is expected to happen between March and May 2024, around block 840,000.

Once all 21 million bitcoins have been mined (expected around the year 2140), miners will no longer receive block rewards and will only earn from transaction fees.

The halving events are significant because they reduce the rate at which new BTCs are introduced into the economy. This built-in scarcity mechanism is one of the reasons why many people consider Bitcoin to be a store of value, similar to gold.

Divisibility

Bitcoin's divisibility is one of its key features, enabling its use in microtransactions and ensuring its usability even if its value rises dramatically. A single Bitcoin can be subdivided into 100,000,000 smaller units, referred to as "satoshis," named after its creator, Satoshi Nakamoto.

Here's a breakdown of Bitcoin's divisibility:

• 1 Bitcoin (BTC) = 100,000,000 satoshis
• 1 mBTC (milliBitcoin) = 100,000 satoshis = 0.001 BTC
• 1 μBTC (microBitcoin or "bit") = 100 satoshis = 0.000001 BTC
• 1 satoshi = 0.00000001 BTC

Bitcoin's journey

Source: Bitcoin.org

Bitcoin's journey is a fascinating tale of technological innovation, financial disruption, and societal evolution. Since its inception, it has experienced meteoric rises, notable declines, regulatory challenges, and significant technological developments. 

It has become the most well-known cryptocurrency in the world. Even so, the coin's characteristics had set the foundation for the development of many other cryptos. Today, BTC's benefits are well-regarded in some countries, so much so that they've declared it as the official currency.

Here's a brief overview of Bitcoin's journey:

2008: The story begins with the release of a whitepaper named "Bitcoin: A Peer-to-Peer Electronic Cash System" by an entity or individuals going by the alias Satoshi Nakamoto. This paper introduced the concept of a decentralized digital currency that doesn't require a central authority or intermediaries.

2009: On January 3, Satoshi Nakamoto mined the inaugural block of the Bitcoin blockchain, termed the "genesis block." By January 12, the first-ever Bitcoin transaction occurred when Satoshi transferred 10 BTC to Hal Finney.

2010: The first recorded purchase using Bitcoin was made by Laszlo Hanyecz, who bought two pizzas for 10,000 BTC. This event is commemorated annually as "Bitcoin Pizza Day." Later this year, Bitcoin exchanges started to emerge.

2011: As Bitcoin's popularity grew, the first alternative cryptocurrencies (often termed "altcoins") began to emerge, with Litecoin (LTC) being one of the most notable.

2013: Bitcoin surpassed the $1,000 mark for the first time. However, this was also a period of volatility, partly because of regulatory concerns and high-profile incidents like the Mt. Gox exchange hack.

2014: Formerly the world's leading Bitcoin exchange, Mt. Gox, declared bankruptcy following multiple security breaches and purported misappropriation of funds. This event caused a significant drop in Bitcoin's price.

2017: Bitcoin began the year under $1,000 and finished around $20,000, drawing significant mainstream attention. This year also saw the rise of Initial Coin Offerings (ICOs) as a fundraising mechanism. By the end of the year, the CME Group and the CBOE started offering Bitcoin futures.

2018: After the exhilarating highs of 2017, Bitcoin faced a stark downturn, ushering in the "crypto winter" of 2018-2019. During this phase, BTC's value dipped by approximately 84%. 

This decline, shaped by regulatory challenges and shifts in market sentiment, wiped out substantial gains. It sowed widespread skepticism, testing the previously buoyant optimism about the future of cryptocurrencies.

2020: Companies like MicroStrategy began investing significant portions of their treasuries in Bitcoin. The currency again began to garner attention and regained its 2017 highs by December.

2021: Bitcoin reached new all-time highs in 2021, crossing $60,000. However, with increased attention came increased regulatory scrutiny.

2022: In 2022, the cryptocurrency market faced another pronounced bear market, marked by steep declines in Bitcoin's value from its record highs. This downturn was precipitated by growing environmental apprehensions about Bitcoin's energy use, notably amplified by influencers like Elon Musk.