Bitcoin was introduced in 2008 by an anonymous entity known as Satoshi Nakamoto. As a cryptocurrency and decentralized payment system, Bitcoin operates independently, free from governmental or central authority control.
Bitcoin, widely recognized as the pioneering cryptocurrency, has played a pivotal role in shaping the crypto industry. It has established a strong foundation and served as a catalyst for the emergence of numerous other cryptocurrencies. Bitcoin's influence has been instrumental in fostering the growth and evolution of the broader crypto ecosystem.
In 2009, the first Bitcoin came into existence, marking the beginning of a transformative era. Satoshi Nakamoto, who mined approximately one million Bitcoins, mysteriously vanished in 2010. Nakamoto entrusted the network alert key and control of the code repository to Gavin Andresen. Andresen went on to become the lead developer at the Bitcoin Foundation, a nonprofit organization committed to advancing and promoting the Bitcoin network.
Bitcoin relies on a Proof of Work (PoW) mechanism for security, with transactions verified by a network of nodes and recorded on a publicly distributed ledger called a blockchain.
As the pioneer cryptocurrency, Bitcoin has consistently maintained a higher value than other crypto assets. It currently holds the top spot in terms of market capitalization, surpassing Ethereum (ETH) and Tether (USDT). Additionally, Bitcoin played a significant role in popularizing blockchain technology, which has since evolved and found numerous applications beyond the realm of cryptocurrency.
How does Bitcoin work
Bitcoin operates on a blockchain, a transparent ledger recording all Bitcoin transactions. As new transactions occur, the blockchain expands by adding "completed" blocks.
Each block comprises a preceding block's cryptographic hash, timestamp, and transaction data. By utilizing the blockchain, Bitcoin nodes discern genuine transactions from instances of double-spending, wherein coins that have already been spent are fraudulently reused.
The ownership and governance of the Bitcoin network are decentralized, eliminating the control of any individual or entity over its changes and upgrades. Moreover, Bitcoin's open-source software allows for suggestions and alternative versions from anyone in the community.
What is Bitcoin mining
Bitcoin mining is the process of generating new Bitcoins through computationally intensive operations. Miners verify and record transactions on the blockchain and, in return, receive Bitcoins as a reward.
Miners utilize specialized software to solve mathematical problems and earn a specific number of Bitcoins. This system incentivizes individuals to participate in mining activities while ensuring a fair and predictable creation of new Bitcoins.
As time progresses, the number of Bitcoins awarded for each block diminishes due to the network's adjustment of the block addition rate on the Bitcoin blockchain. Presently, miners receive a reward of 6.25 Bitcoins for each block they successfully mine.
Bitcoin's energy consumption
The operation of the Bitcoin network consumes a substantial amount of energy due to the computational requirements of running the computers responsible for verifying and recording transactions on the blockchain. As the Bitcoin user base expands and more miners participate in the network, the energy demand necessary to sustain the Bitcoin network will continue to rise.
Critics raise concerns about the sustainability of this energy consumption and its potential environmental impact. Nevertheless, miners can potentially adopt alternative energy sources, such as solar or wind power, to mitigate these concerns. Furthermore, experts speculate that as the Bitcoin network develops and matures, it may become more energy-efficient over time.
What is the Bitcoin Foundation
The Bitcoin Foundation is a non-profit organization dedicated to advancing the adoption and understanding of Bitcoin and blockchain technology. Established in 2012, its primary objectives are to standardize, safeguard, and promote the global use of Bitcoin cryptographic currency.
The foundation receives support from various entities and individuals involved in the Bitcoin industry, including exchanges, wallets, payment processors, and software developers. Additionally, it provides grants to fund projects that align with its mission.
The Bitcoin Foundation operates based on four core principles: prioritizing user privacy and security, advocating for financial inclusion, fostering technical standards and innovation, and responsibly managing available resources.
BTC price and tokenomics
Bitcoin's demand is driven by three key factors: its use as a store of value, its inclusion as a valuable asset within portfolios, and its utility as a payment system.
A distinguishing characteristic of Bitcoin is its maximum supply of 21 million tokens. This limited supply makes Bitcoin a deflationary asset. Unlike fiat currency, which central banks can create, Bitcoin's supply is fixed, resembling assets such as gold that possess a limited quantity.
Over the years, an estimated 20 percent of Bitcoins have been lost. This loss can be attributed to various factors, including users misplacing their private keys, forgetting their passwords, or passing away without sharing their account information. Consequently, Bitcoin's circulating supply is reduced, sparking speculation about potential value appreciation.
What is Bitcoin halving
Bitcoin's code is intelligently designed to gradually reduce block generation rewards. As a result, the amount of Bitcoin awarded to miners for adding blocks is cut in half approximately every four years or every 210,000 blocks. This event is known as Bitcoin Halving. Bitcoin has already experienced three halvings: in November 2012, July 2016, and May 2020. The next Bitcoin Halving is expected to take place in April 2024.
These halvings are done to progressively reduce the rate at which new BTC enters the circulating supply. With a total cap of 21 million, this controlled scarcity will positively impact the value of BTC.
Once all 21 million BTC have been minted and distributed, there will be no new BTC rewards. At that point, miners will rely solely on transaction fees as their source of income.
Currently, the block reward is 6.25 BTC. The upcoming Bitcoin Halving will take place in early 2024, bringing the reward down to 3.125 BTC.
About the founders
Bitcoin was created by a pseudonymous individual or team called Satoshi Nakamoto. On October 31, 2008, Satoshi unveiled the influential Bitcoin whitepaper titled "Bitcoin: A Peer-to-Peer Electronic Cash System." It is worth noting that this took place amidst a global financial crisis, a mere six weeks following the high-profile bankruptcy declaration of the Lehman Brothers. Satoshi's visionary contribution came at a critical juncture, setting the stage for a digital currency that would reshape the financial landscape forever.
On January 3, 2009, Satoshi mined Bitcoin's genesis block, marking the birth of the world's first decentralized digital currency that operates independently from any government or authority. Bitcoin was $0 at its launch, and individuals could easily obtain new BTC by mining them using personal computers.
Subsequently, Satoshi entrusted Bitcoin's alert key and the control of its code repository to Gavin Andresen, who later assumed the role of the lead developer at the Bitcoin Foundation. Bitcoin's Github repository boasts an impressive list of over 750 contributors, including notable individuals such as Jonas Schnelli, Gavin Andresen, Marco Falke, and Wladimir van der Laan.
Bitcoin highlights
El Salvador adoption
El Salvador's adoption of Bitcoin in 2021 marked a significant milestone as the country became the first in the world to embrace Bitcoin as a legal tender.
President Nayib Bukele announced this initiative at the Bitcoin 2021 Conference in Miami, highlighting Bitcoin's potential to boost the nation's economy. Bukele asserted that the adoption of Bitcoin would reduce annual remittance fees by approximately $400 million, which would, in turn, enable larger transfers of funds.
Under the new law, all businesses in El Salvador are required to accept Bitcoin as a form of payment. In line with this decision, the Salvadoran government has allocated $150 million to a trust to facilitate dollar conversions. The government also introduced a digital wallet named Chivo, meaning "cool" in Salvadoran slang, and incentivized citizens with $30 worth of Bitcoin for downloading it.
To ensure accessibility, Salvadorans can withdraw funds in cash from 200 ATMs across 50 locations. Notably, the Salvadoran government also made a significant purchase of 400 Bitcoins, valued at approximately $21 million at the time of purchase.
Central African Republic adoption
Like El Salvador, the Central African Republic (CAR) adopted Bitcoin as a legal tender in April 2022, becoming the first African country to do so. This progressive move solidifies the recognition of cryptocurrency as an accepted form of currency within the nation.
Celebrity interest
Bitcoin has experienced a surge in interest from retail and institutional buyers, driven in part by the enthusiasm of celebrities and a favorable market.
Among these influential individuals is tech mogul Elon Musk, the CEO of Tesla. Jack Dorsey, co-founder of X, formerly Twitter, and the payments company Square, has also been an outspoken advocate for Bitcoin. He has actively promoted it at various events and even collaborated with Jay Z on the BTrust initiative, which aims to advance Bitcoin's development.
Other notable personalities like Mark Cuban and Snoop Dogg have also expressed their support for Bitcoin and are believed to hold significant amounts of it.
The Lightning Network
The Lightning Network, developed by Lightning Labs, is a Layer 2 solution built on top of the Bitcoin network. It was introduced in March 2018 to address Bitcoin's scalability issue by enabling faster and more cost-effective transactions.
Regarded as a game-changer by some in the Bitcoin community, the Lightning Network has delivered its promise of quicker transactions and gained traction. However, challenges relating to costs and security remain, impeding wider adoption.
