🟠Crypto Asset Statement - Bitcoin (BTC)

HBP LINK LTD. (HBP) believes that our users should have a better understanding of the background knowledge of the crypto assets they can trade through our OTC platform. Bitcoin (BTC) is one of the major crypto assets available to clients. We summarize the history, features and risks of BTC so that you can understand the fundamentals and risks associated with trading it.

Background of Bitcoin

Bitcoin (BTC) was invented in 2008 by Satoshi Nakomoto, who is an unknown person or group of people. On 31 October, 2008, Satoshi Nakamoto published the paper "Bitcoin: A Peer-to-Peer Electronic Cash System", which proposed the method of using a peer-to-peer network to generate what was described as "a system for electronic transactions without relying on trust".

The first retail transaction which involves physical goods was paid on May 22, 2010, by exchanging 10,000 mined BTC for two pizzas delivered from a local pizza restaurant in Florida, marking May 22 as the Bitcoin Pizza Day for crypto-fans. At the time, a transaction's value was typically negotiated on the Bitcoin forum.

On 3rd January, 2009, The first Bitcoin was generated with the mining of the "Genesis Block". The block consists of a text note: “Chancellor on Brink of Second Bailout for Banks.” It referred to the 2008 financial crisis.

How does Bitcoin work?

From the standpoint of the user, Bitcoin is simply an electronic device that provides a Bitcoin wallet that allows the user to send and receive bitcoins. For the most part, this is how Bitcoin works. In fact, the Bitcoin network shares a public ledger known as the "blockchain". This ledger stores every transaction ever made, allowing a user's computer to check the validity of each one. Digital signatures corresponding to the sending addresses ensure the legitimacy of each transaction, giving all users complete control over transferring bitcoins from their own Bitcoin addresses. Furthermore, anyone can process transactions utilizing the computer capacity of specialized devices and earn bitcoins in exchange - this is called mining.

Features of Bitcoin

(i) Decentralized

Bitcoin is the first decentralized digital asset. Bitcoin has no central authority, unlike traditional currencies, which are issued and administered by a central authority, which could be the government of a country or any other entities. While stocks, real estate are owned by centralized parties, the supply and distribution of Bitcoin are determined by its algorithm.

(ii) Transparency and Immutability

On the Bitcoin network, each transaction is stored in a block that is linked to a previous block of transactions. Because blockchain technology is immutable, no entity can delete or edit any data on the network. Bitcoin transactions are cryptographically confirmed by network nodes and recorded in the blockchain, which is essentially a public ledger. Because every transaction can be seen by the public, Bitcoin is full of transparency, given that Bitcoins are not traded in centralized exchange.

(iii)Scarcity

Bitcoin is a digital asset with limited supply, which is scarce with a maximum supply of 21 millions Bitcoin. A Bitcoin halving means that the mining rewards of a new block is halved, this happens after every 210,000 blocks, which is approximately 4 years. The first halving happened in 2012, while the second is in 2016, the third is in 2020, and the fourth will be in 2024.

Risks

Although Bitcoin is the most well-known crypto-assets, there are some risks when investing in Bitcoin. These risks include: (i) price volatility; (ii) loss and theft; (iii) cybersecurity problems.

(i) Price volatility

Bitcoin’s price follows the rules of demand and supply, the price of Bitcoin may fluctuate for more than 10% within 24 hours, that means Bitcoin can be more volatile than any other assets.

(ii) Loss and Theft

Bitcoin wallet files containing private keys can be accidentally deleted, lost, or stolen. Users are responsible for managing their own private keys, if the private keys or passwords are forgotten, or the electronic devices that store BTC are permanently broken, damaged or stolen, users will be unable to access the BTC wallets, resulting in a permanent loss of the BTC, given that they do not back up their private keys. When a user loses his wallet, his bitcoins are taken out of circulation.

(iii) Cybersecurity problems

Although Bitcoin's technology is considered hacker-proof, users may lose Bitcoin if their electronic devices are hacked, because hackers can obtain their private keys or passwords and transfer their Bitcoin out of their wallets.

How HPB decides to list crypto assets

Before listing crypto assets, HPB considers their risk, utility, liquidity, demand and supply, and regulations. HPB's crypto-assets are currently provided by our liquidity providers. We decided to make ETH available for our clients to buy and sell because it has the highest market cap of any crypto-asset and has a massive supply and demand. Aside from that, we take into account a variety of other factors when evaluating crypto-assets in a comprehensive manner.

Regulatory Information

HPB provides over-the-counter (OTC) trading for users to exchange between crypto assets and fiat currencies . We do not offer users custody services or any crypto contracts. HPB is a licensed Money Service Business Company in Ontario that deals with virtual currencies. FINTRAC regulates HPB in order to serve Canadians.