1.08 What is Bitcoin?
In this lesson, we dig deep into the roots of the crypto and blockchain tree - Bitcoin.
If cryptocurrencies and blockchain applications are the branches and fruits, Bitcoin is the very root of this entire industry tree. While attempts at digital currencies have been made in the past, Bitcoin is the first successful cryptocurrency that has attained remarkable success and popularity. Today, tens of thousands of digital assets exist in the market; however, Bitcoin leads the crypto market dominance to date.
Over the next few lessons, we go over Bitcoin’s fundamentals and features to better understand its value as a digital asset.
In this lesson, we dig deep into the roots of the crypto and blockchain tree - Bitcoin.
- What is Bitcoin?
- The origin of Bitcoin
- Unique features of Bitcoin
What is Bitcoin?
Bitcoin is a form of digital currency that allows you to buy, sell, or exchange directly without relying on intermediaries like banks and other financial institutions.
Bitcoin, the most popular cryptocurrency, is the first real-time application of blockchain technology. It paved the way for all other alternative coins or altcoins. As Bitcoin exists only on the internet, it is also called digital currency.
The transactions of Bitcoins are recorded and stored on a decentralized public ledger.
In other words, the ledger and the network are managed and operated by the nodes (participants) of the Bitcoin blockchain. The Bitcoin network does not have any gatekeepers and hence anyone across the globe can become a member of the blockchain without seeking any permissions.
The cryptographic methods used to create this digital currency ensure that there are no loopholes to double-spend Bitcoin. In other words, one Bitcoin can never be spent twice.
Origin of Bitcoin
After the global financial crisis in 2008, an anonymous person or an institution issued a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. It was published on 31 October 2008 under the pseudonym “Satoshi Nakamoto.”
In early 2009, open-source software was released for developing Bitcoin. It is a permissionless network; hence, anyone can join the software and participate in its development. The first-ever transaction took place in January 2009 between Nakamoto and one early adopter of Bitcoin.
The main purpose behind creating Bitcoin is to enable a peer-to-peer or person-to-person global payment without depending on any third-party institution like banks and brokerages.
According to the original white paper, Bitcoin is a way to send money from one party to another without going through a financial institution. When it was first introduced, the value of Bitcoin was $0 in 2009. The price of Bitcoin has increased tremendously after a decade of its inception.
Based on the source code used to create Bitcoin, it has a finite or limited supply. The total supply of Bitcoin has a limit of 21 million coins. The supply is expected to reach its limit by the year 2140.
Unique features of Bitcoin
Bitcoin - the world’s largest cryptocurrency by market cap - encompasses unique features within its architecture.
Easy to set up
Suppose you want to create a bank account, credit checks, and dealer records. In that case, you need to go through a lengthy procedure like filling the application form, verification of details, inquiries, etc.
In the case of Bitcoin, anyone can join its network. All you have to do is download and run a Bitcoin client which connects to other nodes.
The primary aim of Bitcoin’s founder, Satoshi Nakamoto, is to eliminate intermediate financial institutions like banks and brokerages to make a transaction.
Bitcoin is a decentralized digital currency that maintains a distributed public ledger to record and store transactions. Any central authority like the government has no control over the Bitcoin network.
The Bitcoin network is transparent. You may not know how many Bitcoins a person owns, but you can view details of the transaction information like sender, receiver, and the amount under the respective public address.
The transactions are transparent and can be viewed by any member of the Bitcoin public blockchain network.
Banks know every detail of their users like name, address, phone number, legal papers, history of transactions, etc. They have access to information including date, time, amount, and the receiver of a transaction.
In the Bitcoin network, your identity remains completely anonymous. It is possible to identify the wallet address behind transactions, but you cannot link the identity of the address to the user.
Going a step further, Bitcoin is a decentralized network. However, centralized exchanges offering the services to buy and sell digital currencies need to comply with regulatory rules such as KYC and AML. Legal compliance adds a security layer against bad actors.
Bitcoin transactions are near-instant and take a few minutes to complete irrespective of geographical location and time.
Bitcoin transactions are irreversible. In other words, once you have sent a Bitcoin to someone, it is impossible to reverse the transaction.
This lesson covered the basics of what Bitcoin is. In our upcoming lessons, we decode this cryptocurrency into further detail.
This material does not constitute investment advice, nor is it an offer or solicitation to purchase any cryptocurrency assets.
This material is for general informational and educational purposes only and, to that extent, makes no warranty as to, nor should it be construed as such, regarding the reliability, accuracy, completeness or correctness of the materials or opinions contained herein.
Certain statements in this educational material may relate to future expectations that are based on our current views and assumptions and involve uncertainties that could cause actual results, performance or events to differ from those statements.
BB Trade Estonia OU and its representatives and those working directly or indirectly with BB Trade Estonia OU do not accept any liability arising from this article.
Please note that investing in cryptocurrency assets carries risks in addition to the opportunities described above.
2.04 Understanding market capitalization
This lesson centers on understanding cryptocurrency market capitalization.
2.03 Common crypto trading terms
This lesson is a compilation of the most commonly used crypto trading terms.
2.01 Why to invest in cryptocurrencies
This lesson explains why cryptocurrencies might be a good asset to include in your investment portfolio.
2.07 Measuring market depth and liquidity
This lesson explains market depth, market liquidity, and volatility.
2.08 Three major types of trade orders you need to know
This lesson explains three major types of trade orders and how they work.
2.09 Fundamental and technical analysis for crypto trading
This lesson focuses on explaining how fundamental and technical analysis will help you assess cryptocurrencies.
2.10 Bull markets vs Bear markets
This lesson explains bull and bear markets and what you can do in each case.
1.09 How Bitcoin price is defined
This lesson helps you understand what determines the price of Bitcoin.
1.10 Sending and receiving Bitcoin
In this lesson, we explain how to send and receive Bitcoins.
1.11 What is Bitcoin halving?
This lesson takes you through the concept of Bitcoin halving.
1.12 Understanding Bitcoin nodes
This lesson explains what a Bitcoin node is and the different types of nodes.
1.13 Can Bitcoin network be hacked?
In this lesson, we discuss why it is nearly impossible to hack the Bitcoin blockchain.
1.14 The fundamentals of altcoins
In this lesson, you learn about the fundamentals of altcoins.
1.20 What is Ethereum and how does it work?
This lesson helps you decode Ethereum thoroughly.
1.19 Bitcoin mining difficulty & pre-mined coins
This lesson covers two concepts - Bitcoin mining difficulty and pre-mined coins.
1.18 How do mining pools work?
This lesson explains the function of mining pools in detail.
1.07 Best practices to keep your crypto safe
This lesson provides you with valuable tips and tricks to keep your cryptocurrencies safe.
1.17 What is mining in blockchain?
This lesson will explain the basics of the cryptocurrency mining process.
1.06 Understanding crypto wallet terms
In this lesson, we take a deep dive into crypto wallet terms like public and private keys, wallet address, and ...
Zonda is now zondacrypto!
As the exchange continues to evolve and grow, we're thrilled to announce that we're rebranding and changing our name to better reflect our vision and values. We're still the same team you know and trust, but with a fresh new name that captures our spirit of innovation and customer-centric approach.
Some things may look a bit different but don’t worry - all operations remain the same and your login details work as usual.
Stay tuned for more updates and exciting changes as we embark on this new chapter together. Thank you for your continued support and loyalty!