How to play Bitcoin? Analyzing the concept and ecosystem of Bitcoin

What is Bitcoin?

Bitcoin (BTC) is a decentralized digital currency proposed by the mysterious figure Satoshi Nakamoto in 2008 and officially launched in 2009 with open-source code. Unlike traditional currencies, Bitcoin does not have the backing of a central bank or government, but relies on blockchain technology, with nodes across the global network jointly verifying transactions to ensure its security and reliability. The most notable feature of Bitcoin is its limited supply, with a maximum of only 21 million bitcoins. This characteristic gives Bitcoin scarcity, leading some investors to view it as ‘digital gold.’ Additionally, due to its decentralized nature, Bitcoin transactions are not subject to the control of any country or bank, allowing users to freely transfer and trade.

Bitcoin’s price level

The price of Bitcoin has fluctuated immensely since its inception. In the early days, Bitcoin was very inexpensive, at one point trading at a few cents. However, as Bitcoin gained market acceptance, the price began to climb, especially in 2017, 2020, and 2021, when the price repeatedly reached new highs, breaking through the historic $50,000 mark. At the moment, the price of Bitcoin is still fluctuating. At the end of 2023, the price of Bitcoin fluctuated between $20,000 and $30,000, but despite this, Bitcoin remains one of the most influential assets in the digital currency market. Reasons for price fluctuations include market demand, regulatory policies, the macroeconomic environment, and the supply constraints of Bitcoin itself.

It is worth noting that the price of Bitcoin is not only influenced by investor sentiment, but also driven by some major events. For example, when some large institutions or companies announce the purchase of Bitcoin or use it as a means of payment, the price of Bitcoin often rises rapidly.

Bitcoin’s ecological gameplay

Bitcoin ecosystem technology classification

• Derivative Assets:
  • BRC-20 seriesIt allows for the issuance of fungible tokens on Bitcoin, and despite some technical challenges (such as a large number of junk transactions), it has still attracted the issuance of many tokens, such as Ordi and Sats.
  • UTXO series: It mainly relies on the UTXO model of Bitcoin, similar to BRC-20, but with a greater emphasis on decentralization and off-chain processing.

Image:https://unisat.io/market

• Bitcoin Layer 2 Network:
  • Including the UTXO camp and the EVM camp, mainly improving the transaction speed and privacy of Bitcoin through technologies such as state channels, sidechains, Rollup, etc.
• Infrastructure:
  • This includes wallets, exchanges, cross-chain bridges, modular indexers, and more for the infrastructure that supports the Bitcoin ecosystem.

Core Protocol and Technology

• OrdinalsBy assigning a unique identifier to each satoshi (SATS), allowing it to store text, images, or code data, making it a unique NFT.
  • BRC-20: The issuance standard of homogeneous tokens generates a large number of junk transactions and, despite controversy, still receives widespread attention.
  • BRC-420：A protocol that adds “royalties” functionality to Bitcoin tokens and inscribed assets, attempting to run across engines and chains, but still has flaws due to the limitations of the Bitcoin network.
  • Runes: A protocol designed to simplify use, providing a more concise way to issue tokens by reducing unnecessary UTXO bloat.
• Lightning NetworkA second-layer solution for Bitcoin, allowing users to make instant payments without the need to directly go on-chain, thus improving transaction efficiency.
• Taproot AssetsSupport for creating native assets on Bitcoin and conducting low-cost, large-scale transactions using the Lightning Network, despite facing issues with centralized storage indexers.
• Nostr: A decentralized social protocol that is resilient and immutable based on cryptographic keys and signatures for sharing text and data.
  • Nostr AssetsCombine Taproot assets with native Bitcoin payments, allowing users to make payments through their Nostr account.

Innovative Protocol

• Atomicals: A protocol based on the UTXO model used to issue and transfer digital objects (such as tokens) on the Bitcoin chain. Each satoshi can represent a unique token.
  • ARC-20: Based on the token standard of the Atomicals protocol, each token represents at least 1 satoshi, ensuring that the token has a minimum value and can be divided and combined.
• STAMPS: Bitcoin NFT protocol based on the Counterparty protocol, characterized by the ability to permanently store images on the Bitcoin blockchain, with immutability, but high transaction fees.
• RGB and BitVM：
  • RGB protocolAllow the issuance and management of assets on the Bitcoin blockchain, using Bitcoin’s UTXO model to ensure the security of assets.
  • BitVM ProtocolDesigned to run complex contracts by optimizing the Bitcoin virtual machine (similar to EVM) without changing the basic rules of Bitcoin.

How to buy Bitcoin?

BTC can be purchased on major exchanges, such as Gate.com. After completing the registration and identity verification, you can buy BTC in the spot trading area, link:https://www.Gate.com/trade/BTC_USDT
The price of virtual currency fluctuates greatly, so please trade cautiously and pay attention to the risks.

Common Bitcoin Risks and Precautions

As a high-risk investment, Bitcoin has many risks that investors need to be aware of:

**Price Fluctuations**: Wild fluctuations in the price of Bitcoin can lead to huge losses in the short term. **Regulatory Risk**: Due to the different regulatory policies of different countries on Bitcoin, it may have an impact on the price of Bitcoin. •**Security Risks**: The security of Bitcoin transactions and storage is very important, and users need to do a good job of asset protection to avoid being hacked or losing their private keys. Market Manipulation: Due to the low transparency of the market, some large investors may manipulate market prices for personal gain.

Conclusion: The future of Bitcoin

Bitcoin, as an emerging digital asset, has gone through many years of development. Despite its volatile price fluctuations, it still attracts a lot of investors’ attention. With the continuous advancement of technology and the gradual maturity of the market, the Bitcoin ecosystem will become more enriched, and its application scenarios will gradually expand. For those who are interested in investing in Bitcoin, it is crucial to understand how to operate Bitcoin, master investment strategies, and guard against risks.

Overall, Bitcoin is not just a digital currency, but also an innovative technology worth our attention and exploration. If you are interested in learning how to play with Bitcoin, you can start your cryptocurrency journey through the guide provided in this article.