Key points you should know:
- Bitcoin was launched in 2008 and is the world's first decentralized digital currency
- Bitcoin is powered by blockchain technology
- Bitcoin uses a consensus protocol called proof-of-work
- Bitcoin is decentralized
- Bitcoin is mined via hardware
- Bitcoin is the world's largest cryptocurrency by market capitalization
- Bitcoin has inspired a host of other cryptocurrencies
- Bitcoin can be bought using a cryptocurrency exchange
Nobody knows who invented Bitcoin, the world's first decentralized digital currency. We only know them by their screen name, Satoshi Nakamoto. In 2008, the mysterious individual or individuals known as Satoshi published the Bitcoin whitepaper as well as the original software.
Bitcoin is a cryptocurrency, a digital currency designed to act as money and a form of payment outside the control of any one person, group, or entity, thus removing the need for third-party involvement in financial transactions. Unlike fiat currencies, there is no central bank controlling it. Instead, the financial system in Bitcoin is run by thousands of computers distributed around the world. Anyone can participate in the ecosystem by downloading open-source software. This is a core tenant of decentralization.
Unlike payment services such as Venmo and PayPal, which rely on the traditional financial system intermediaries, Bitcoin is decentralized: any two people, anywhere in the world, can send Bitcoin to each other without the involvement of a bank, government, or other institution. This permissionless and trustless nature is core to the idea of Bitcoin and cryptocurrencies.
The only way to create new Bitcoin is through a process called mining. The coin is rewarded to blockchain miners for the energy-intensive proof-of-work done to verify transactions. Every Bitcoin transaction is tracked on the blockchain, similar to a bank's ledger or log of funds going in and out of the bank.
Bitcoin has a finite max supply, fixed at twenty-one million coins, but not all units are in circulation yet. As of 2020, just under 90% of these have been generated, but it will take over one hundred years to produce the remaining supply, which should theoretically be mined in 2140. This is due to periodic events known as halvings, which gradually reduce the mining reward. Bitcoin rewards are halved every 210,000 blocks. There is currently around 3 million Bitcoin still available to be mined, which will happen more and more slowly as time goes on.
While Bitcoin was initially designed and released as a peer-to-peer payment method, its use cases are growing due to its increasing value and competition from other blockchains and cryptocurrencies. Bitcoin is also the world's largest cryptocurrency by market capitalization. Bitcoin's history as a digital cash and store of value has been turbulent and has gone through several boom and bust cycles over its relatively short lifespan. The story of Bitcoin is still being written before our eyes.
- Bitcoin is open
- Bitcoin is global
- Bitcoin is irreversible
- Bitcoin is private
- Bitcoin is secure
What is bitcoin and how does it work?
Bitcoin is a digital currency which operates free of any central control or the oversight of banks or governments. Instead it relies on peer-to-peer software and cryptography. A public ledger records all bitcoin transactions and copies are held on servers around the world.
The Basics on Bitcoin (BTC)
Bitcoin is a cryptocurrency, a virtual currency designed to act as money and a form of payment outside the control of any one person, group, or entity, and thus removing the need for third-party involvement in financial transactions. It is rewarded to blockchain miners for the work done to verify transactions and can be purchased on several exchanges.