What Is Bitcoin?
Bitcoin is the first-ever decentralized global digital currency. Among other things, this means that it is entirely computerized and doesn’t exist in a physical form.
Bitcoin can be sent quickly and securely from any point in the world, and you only need an internet connection. Bitcoin’s price is determined by the free market, subject to supply and demand.
Built on a decentralized network, Bitcoin operates free of any central control, including but not limited to bank or government oversight. It relies on open-source and peer-to-peer software and cryptography. Known as blockchain, this technology is also fully transparent and immutable. Any changes to it can only happen following a majority consensus.
The consensus algorithm that powers Bitcoin’s blockchain (also commonly referred to as distributed ledger technology) is called Proof of Work.
The cryptocurrency can be stored in digital addresses that are spread throughout the Internet. To make it easier to safe keep for the regular users, there are many digital wallet providers, each one with its dedicated address where you can receive BTC.
As mentioned above, Bitcoin is based on open-source technology, and many developers have contributed and continue working on the protocol on a daily basis.
Who invented Bitcoin?
In 2008, during the global economic meltdown, also known as the Subprime mortgage crisis, someone using the pseudonym Satoshi Nakamoto, decided that it was the right time for the very first decentralized currency. More than a decade later, this individual or a group of people remains unknown, but here are five interesting facts that you may not know about Satoshi Nakamoto.
Although some people have since claimed to be Satoshi, none of them have provided sufficient proof of that.
On October 31st, 2008, the idea for Bitcoin was introduced with the release of a whitepaper. Titled Bitcoin, a Peer-to-Peer Electronic Cash System, it was written by Satoshi Nakamoto.
In the first couple of years, BTC had almost no monetary value. However, it propelled the creation of active and strong communities of people who would continuously work and improve the protocol.
Back in 2010, Satoshi left the development of the cryptocurrency, with their last known communication being an email from April 2011.
In the following years, the community became bigger and stronger as more and more improvements were made and new use cases for Bitcoin started to appear.
Who controls Bitcoin?
It was once the belief that a central entity such as a major bank or a government must stand behind a currency and work to guarantee the stability of the economy.
Just a few decades ago, though, the so-called Debt Economy started to take shape, propelled by inefficient monetary policy. It’s the era that we’re in today – one where central banks can literally create money and print new bills from thin air without them having any backing by a tangible asset (such as gold, for example.)
As seen in the years during the global COVID pandemic amidst 2020, the excessive printing of money in the trillions, while a short-term fix, creates major long-term issues. In May April 2022, the Consumer Price Index for All Urban Consumers in the United States – a metric largely used to gauge the levels of inflation, clocked in at 8.3% – the highest it has been in over 40 years. This erodes the value of currency over time.
Bitcoin, on the other hand, gives us complete control. It’s governed by mathematics based on a transparent algorithm that’s verifiably predictable and unfazed by human decisions. It gives us complete control over the money we hold.
Behind the Scenes: Bitcoin’s Blockchain
Bitcoin’s protocol is built on distributed ledger technology, also commonly referred to as blockchain. It represents a ledger of blocks, each consisted of all transactions in Bitcoin’s history.
This technology draws power from its nodes – computers who have installed Bitcoin’s software and are actively validating transactions and powering up the blockchain. They are scattered throughout the world, and anyone can create a node to help secure the network.
This is the reason why Bitcoin is decentralized – there’s no single entity, be it a bank, company, or a government can control the network or shut it down.
Who is eligible to create a Bitcoin account?
Unlike banks, anyone can create a Bitcoin wallet on their own. This brings many benefits, and perhaps the most important ones are accessibility and censorship-resistance.
You see, banks create policies, and customers must oblige. If they fail to do so – the banks have the authority to shut down their accounts. They can also reverse or freeze transactions. This can’t happen with Bitcoin – there’s no central authority. Oh, and Bitcoin’s network works 24/7, 365 days of the year.
In terms of accessibility – literally, anyone in the world with access to the Internet can obtain, send, store, and transact with Bitcoin and open a “Bitcoin account.” All they need to do is download a digital wallet app. Sending large amount of BTC is a lot quicker and cheaper than sending fiat currency through traditional bank transfers. When was the last time you sent $300 million for a $1 fee?
Bitcoin creation: What is Bitcoin mining?
The process of making the functioning of the Bitcoin network possible (read: validating, verifying, and processing transactions) also creates new coins. It’s called Bitcoin mining, and it’s the protocol’s beating heart.
When Joe wants to send Annie some BTC, he creates a transaction and signs it with his private key, and broadcasts it to the network. This is where miners come into the place.
Miners validate and verify transactions, put them into blocks, and add them to the public ledger (a.k.a the blockchain). For their work, they receive a block reward and a mining fee. Here comes the beauty of Bitcoin’s algorithm – the newly mined Bitcoins will never exceed 21 million – this is the total number of BTC that can ever be created. Until then, anyone can verify exactly how much BTC the miners receive.
When was the first Bitcoin mined?
The first Bitcoin was mined back on January 3rd, 2009. Known as the “Genesis block,” block number 0 had a reward of 50 BTC for the miners. Interestingly, it also carried a message, referring to an article published in The Times.
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.
What is the miners’ reward?
There are two types of rewards that miners earn – the first is the fee for validating transactions, and the second is the reward for successfully adding a new block to the public ledger.
To add a block, the miner needs to solve a cryptographic problem, and the first one to do so gets the so-called “block reward.” This is a fixed number of BTC. At the time of this writing, every block carries a reward of 6.25 BTC.
The Bitcoin algorithm, however, is designed in a way where this reward is slashed in half every 210,000 blocks are mined – it happens roughly once every four years, and this even is known as the Bitcoin halving. The last one was in May 2020. The next one should take place in 2024 and will reduce the reward miners get in half.
So why isn’t everyone mining?
Well, mining is essentially a process of solving difficult mathematical cryptographic problems based on a hashing algorithm, and this process gets harder depending on how many miners there are.
In the early years of Bitcoin, a personal computer with a regular GPU could produce enough electricity to mine BTC. However, the competition has grown tremendously since then, and it’s big companies that scale their operations and invest millions into equipment that are mining.
- HODL Or Mining: Is Bitcoin mining worth it nowadays?
It’s worth stressing out that there will only be 21 million coins in existence. Once this number is reached (estimated to happen somewhere in 2140), no new BTC will be created, and miners will only be compensated with fees.
How to buy Bitcoin?
The simplest and easiest way to buy Bitcoin is online through a reliable exchange or through a Bitcoin ATM – there are many of these located around the world.
The leading cryptocurrency exchange by means of volume and users is Binance, and you can buy Bitcoin with a credit card on CryptoPotato via Binance, the largest crypto exchange by trading volume.
How and where to store Bitcoin?
Just as regular coins are stored in your wallet, Bitcoins are also stored in a dedicated digital wallet. Each one has its public digital address where coins can be received.
The address is a string of numbers and English letters – it’s about 30 characters long. There is no cost to create a wallet, and there’s no limit as to how many wallets you can have. There are several types of digital wallets that differ mainly in their security levels.
Is it safe to send Bitcoin?
A Bitcoin transaction is a digitally signed order, and it’s securely encrypted.
Once the transaction is signed by the outgoing wallet, it gets broadcast to the public ledger (and the Internet, respectively) and gets listed on the block explorer, where it’s visible to anyone.
Where can I track my Bitcoin transaction?
The block explorer is an interface where all transactions on the public ledger are visible.
The public ledger, on the other hand, keeps a live log of all Bitcoin transactions. The Bitcoin network is fully transparent, remember? The ledger itself is broken down into blocks, and each one of them contains many log commands – once the block is added to the network, the actual transaction gets finalized.
How long does it take to send Bitcoin?
Usually, it takes an average of about 10 minutes to close a block and confirm a Bitcoin transaction. This varies and is subject to network usage.
What is the cost to send Bitcoin?
The only cost associated with sending Bitcoin from one address to another (doesn’t matter the physical distance) is the transaction fee, which is added to each order and paid to the miner for his work. Remember – miners have to validate and verify the transaction and add it into a block.
Relative to the means of money transfers, the cost of transferring Bitcoin is significantly cheaper. The fee is not fixed, and most of the digital wallets automatically calculate the minimum necessary fee.
The higher the fee, the faster the transfer will be (i.e., your transaction will be prioritized because of the higher fee) As of writing this, Bitcoin’s transaction cost (fee) is even less than $1 for most transactions.
To emphasize how cheap it is to send vast amounts in Bitcoin, this transaction of $101,000,000 was sent only for $121 in fees, which is roughly 0.00001%.
Is it possible to buy or send less than one Bitcoin?
Bitcoin has eight numbers after the decimal. The smallest amount is 0.00000001 Bitcoin, and this unit of measurement is called one Satoshi. You can send as much or as little as you need to.
Bitcoin use: Who accepts Bitcoin? What can I buy with Bitcoin?
Today more and more business industries are adopting Bitcoin as a valid payment method. Bitcoin’s daily use as money is still not as common as the traditional FIAT, but your Bitcoin account can be linked directly to VISA debit cards (side note: you should check applicable taxation regulations for this).
What is the Guinness record for the most expensive pizza?
During the summer of 2010, when Bitcoin was still in its infancy, one of the early adopters – Laszlo Hanyecz – tried very hard and succeeded in ordering pizza and paying for it with Bitcoin.
Back then, Bitcoin was worth cents on the dollar, and to order two family pizzas worth $30, Hanyecz paid 10,000 Bitcoins! What was later considered as the first-ever purchase in Bitcoin, also became the world’s most expensive pizza, as 10,000 BTC today is worth more than worth today more than $300 million.
The following has to have been the most expensive pizza trays:
