Wednesday, October 5, 2022

Bitcoin explained as value rises above $40,000

Bitcoin is within a whisker of rising through its 100-day moving average.

• July 28, 2021
Bitcoin
A bitcoin used to illustrate the story

Popular crypto Bitcoin broke above $40,000 on Wednesday and headed for another attempt at breaking from its months-long range as short-sellers bailed out and traders drew confidence from recent positive comments about the cryptocurrency by high-profile investors.

The crypto’s value ballooned on Monday after Amazon announced that it was hiring a “digital currency and blockchain product lead.”

Bitcoin was last up 1.7 per cent at $40,149 while rival cryptocurrency ether rose one per cent to $2,328 midweek.

Bitcoin is now within a whisker of rising through its 100-day moving average.

As a decentralised digital currency, Bitcoin, without a central bank or single administrator, can be sent from user to user on the peer-to-peer Bitcoin network without the need for intermediaries.

Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.

The cryptocurrency was invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto.

The currency came into use in 2009 when its implementation was released as open-source software.

Bitcoins are created as a reward for a process known as mining.

They can be exchanged for other currencies, products, and services, but the real-world value of the coins is extremely volatile.

Research produced by the University of Cambridge estimated that in 2017, there were 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.

Users choose to participate in the digital currency for a number of reasons: ideologies such as commitment to anarchism, decentralisation, and libertarianism, convenience, using the currency as an investment, and pseudonymity of transactions.

Increased use has led to a desire among governments for regulation in order to tax, facilitate legal use in trade, and for other reasons (such as investigations for money laundering and price manipulation).

Bitcoin has been criticised for its use in illegal transactions, a large amount of electricity (and thus carbon footprint) used by mining, price volatility, and thefts from exchanges.

Some economists and commentators have characterised it as a speculative bubble at various times. Bitcoin has also been used as an investment, although several regulatory agencies have issued investor alerts about it. 

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