Bitcoin (BTC)

Posted by

Bitcoin was the first digital currency and has set the standard for other Crypto currencies, Being the most talked about and with the biggest market cap.

Key Facts

  • Link to main website
  • Link to wiki page
  • Exchange Ticker (BTC)
  • Max Supply (21,000,000)
  • Block time (10 minutes)

Introduction

Bitcoin, The digital currency of the internet. It’s a currency that can be spent anonymously and freely. With no one owning the Bitcoin network it is trustless autonomous network that has changed the way money works.

History

Bitcoin is the first instance of a popularised digital asset. It was born out of the cypherpunk movement and was officially released in 2009 after the financial collapse of the American Stock market.

From then Bitcoin has risen and fallen over the years, An infamous set back in Bitcoins history is the fall of Mt Gox exchange. Mt Gox at the time of its hack was handling roughly 70% of Bitcoin transactions. 850000 Bitcoin missing and the faith in Bitcoin was unsettled. Prices went from $1200 down to $300 and stayed that way for a long period of time. Since then we have seen a recovery in the faith of Bitcoin.

How it works

Bitcoin is founded on the idea of distribution. No one owns it. The amount of Bitcoins that can be created is set, 21 million Bitcoin, No more can be made.

Distributed append only ledger

Bitcoin is built on a blockchain another way to say this would be “distributed append only ledger”. You can think of a spreadsheet that is on thousands of computers across the world. When a transaction is verified by a miner the transaction (The Block) gets added into the spreadsheet (A chain of blocks) which is updated across thousands of computers around the world.

Security

You might find yourself asking how is this secure? The short answer to this is miners. The long answer is a bit more technical.

SHA256 is a hashing function that takes an input of a random size and produces an output of a fixed size. This process is a one way meaning that the it is possible for anyone to guess the output when given the input but impossible for anyone to get the input when given the output. Making it ideal for Bitcoin when creating wallets and validating blocks.

When a Bitcoin is sent to another account, The validation process starts. Miners will have to validate the transaction or block to ensure the block isn’t fraudulent and by doing so the miner is given a very difficult hashing problem to solve. This is called Proof of Work, and it uses the SHA256 hash function to ensure a secure blockchain.

Public and Private Keys

These keys are another part of the Bitcoin network that are produced using the SHA256 hashing function.

When creating a wallet to store Bitcoin a user will be given a private key.Whoever knows the private key owns the wallet. Always keep private keys safe, This is the username and password for your bank account in one key. Public keys are effectively the bank account number that you give people for so they can send you money.

The Bitcoin Cap

As mentioned before there are 21 million Bitcoins that can be created, However only about 16 Million of these Bitcoins are in circulation. The other 5 million are still being mined by miners. Of the 16 million Bitcoins in circulation a huge supply of them are lost. Estimates state about 4 million bitcoin are never going to be seen again.

Unique Facts

  • A Bitcoin can be broken down into a fraction of a peice. Currently the smallest fraction of a Bitcoin is 0.00000001 which is about $0.0001 USD
  • The original developer Satoshi Nakamoto to this day remains anonymous with an address holding approximately 1 million Bitcoin.
  • The first Bitcoin transaction consisted of 10 BTC from Satoshi Nakamoto to Hal Finnley

Laszlo Hanyecz famously bought two pizzas for 10,000 BTC on the 22nd March 2010.

Pros

  • Large
  • Trusted
  • Safe transactions
  • First
  • Users can have multiple addresses and wallets.
  • Very large mining pool for secure transactions

Cons

  • No smart contracts
  • No physical backing (company, commodity or asset)
  • Over hyped
  • Long transaction times when busy (1 hour)
  • GPU mining limited

Team

https://bitcoincore.org/en/team/

The Bitcoin Core project has a large open source developer community with many casual contributors to the codebase. There are many more who contribute research, peer review, testing, documentation, and translation.

Maintainers

Project maintainers have commit access and are responsible for merging patches from contributors. They perform a janitorial role merging patches that the team agrees should be merged. They also act as a final check to ensure that patches are safe and in line with the project goals. The maintainers’ role is by agreement of project contributors.

Contributors

Everyone is free to propose code changes and to test, review and comment on open Pull Requests. Anyone who contributes code, review, test, translation or documentation to the Bitcoin Core project is considered a contributor. The release notes for each Bitcoin Core software release contain a credits section to recognize all those who have contributed to the project over the previous release cycle. A list of code contributors for the last year can be found on Github.

 

Top Exchanges buy or trade Bitcoins.

  • Binance Very high quality exchange
  • Bittrex Very high quality exchange
  • Gate Great exchange