Launched in 2009, Bitcoin (BTC), the first and the head of all cryptocurrencies, was designed to become a peer-to-peer electronic cash system. It remains the digital asset with the largest market capitalization in the crypto market despite being the first and the oldest of its kind.
The brainchild of the pseudonymous figure Satoshi Nakamoto, Bitcoin is the first well-known application of innovative blockchain technology.
With all the mentioned credits, Bitcoin has significantly impacted the whole crypto market, including alternative currencies or altcoins.
BTC proves to be the most liquid cryptocurrency, with over 5,000 altcoin trading pairs.
Bitcoin Key Points
|Consensus Protocol||Proof of Work (PoW)|
|Block Time||Approximately every 10 minutes|
|Mining Rewards||6.25 BTC every block|
|Current All Time High||$68968 in November 2021|
|Maximum Supply||21,000,000 BTC|
How Bitcoin Works
Bitcoin is a digital currency within a decentralized distributed ledger known as a blockchain. To distinguish between Bitcoin and blockchain, look at blockchain as a globally-accessible online spreadsheet that contains all Bitcoin transactions on its cells (blocks).
Bitcoin is not backed or controlled by any centralized body like banks or governments. It was developed primarily to remove the intermediary from traditional financial transactions. Users can use bitcoin to transact quickly and safely over the blockchain.
Bitcoin also has a total supply of 21 million, all of which are exclusively available in digital format. Using a unique 26–35 character address that is linked cryptographically in the blockchain, users can store, trade, and transfer their assets to peers and crypto exchanges globally.
Also, users can secure their bitcoins with public and private keys in various crypto wallets. A public key is similar to the bank account number you have, while the private key is needed to authorize any BTC transaction you will conduct.
Bitcoin or any other altcoins are not controlled by any government entities, hence it is decentralized. This makes the coin an independent asset. Transaction verification and impenetrable security are possible since Bitcoin was designed to function freely through a machine-driven ecosystem. Unlike the traditional financial banking system that is mandated by regulators, Bitcoin is strictly run by thousands of trustless nodes.
Bitcoin values privacy among its users. One of the key aspects of blockchain transactions is anonymity. For example, users do not need any physical addresses, financial history, or phone numbers to successfully make transactions. Through Bitcoin wallets, users can send and receive bitcoin and other supported cryptocurrencies seamlessly. When someone buys, sells, and keeps bitcoins, they can remove all connections to their own identity.
Block explorers allow users to view bitcoin transactions in real-time. The users can also know the specifics of transactions by using a search engine and entering the wallet address, transaction hash, or block height from the blockchain. Blockchain transactions are thought to be naturally unchangeable. Furthermore, altering any transaction requires a shift in the block hash of the previous block, which is really impossible. Additionally, each node receives real-time updates on all blockchain activity.
Over 10,000 active full nodes serve for processing and validating all transactions on the Bitcoin blockchain. These are machines distributed across the globe that are responsible to maintain the huge blockchain (roughly 240 GB and continuously growing).
The creators of Bitcoin created its blockchain to be secure and avoid any cases of double-spending through the proof-of-work (PoW) consensus. The special nodes (miners) do the process of crypto mining, which basically requires solving the Hashcash mathematical puzzle.
Tracing the History of Bitcoin
Satoshi Nakamoto published the Bitcoin whitepaper online.
The genesis block was mined with a text that says, “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
Florida programmer Laszlo Hanyecz paid 10,000 BTC for Papa John’s pizza, marking the first real-world Bitcoin transaction.
The Bitcoin market cap exceeded the $1 million mark.
The first mobile Bitcoin transaction occurred as a Bitcoin Forum member double-compiled Bitcoin on the Nokia N900 mobile computer.
- Silk Road, the darknet’s first bitcoin-based marketplace, opened for business.
- TIME magazine published the first-ever article about Bitcoin.
- BitPay launches as the first e-wallet and bitcoin payment service provider.
- P2Pool, the first P2P decentralized pool, mined its first Bitcoin mainnet block at the 142,312th block.
- The Bitcoin Foundation began to help create further awareness about Bitcoin and how it can be utilized by everyone globally.
- The first halving day occurred at the 210,000th block, reducing the 50 BTC block rewards to 25 BTC.
- The Bitcoin market cap exceeded the $1 billion mark.
- The first Bitcoin ATM debuted in San Diego, California.
- Shopify starts accepting Bitcoin for payments.
- Considered the most significant Bitcoin heist in crypto history, Mt.Gox, the world’s largest Bitcoin exchange at the time, went offline. As a result, the community lost up to 850,000 bitcoins.
- More people joined the Bitcoin and altcoin bandwagon. As a result, the price of BTC reached its all-time high (ATH) at the time — a price of almost $20,000 in December 2017.
Museum of Applied Arts, Vienna became the first museum to acquire art using Bitcoin.
- Cabinet of Japan considered virtual currencies including Bitcoin to have a function similar to real money.
- Number of online stores consuming Bitcoin increased in Japan by 4.6 times compared to the past year.
- The exchange trading volume of Bitcoin continues to increase.
- Stripe, an online payment firm announced that it would discontinue its support for Bitcoin payments due to declining demand, high fees, and longer transaction times.
- Also, South Korea introduced regulations for Bitcoin traders to reveal their identity. This was to ban the anonymous trading of the coin.
- This year marked the fall of BTC price below $4,000 after a troublesome year for the global crypto market.
- Paypal announced that it would allow trading Bitcoin on its platform for its users. But withdraw or deposit options are not allowed.
- The Swiss canton of Zug enabled tax payments in Bitcoin and as well as other cryptocurrencies.
- El Salvador government declared its decision to adopt Bitcoin as legal tender, making it the first country to accept Bitcoin legally. The pro-government deputies voted for ‘Ley Bitcoin’ (Bitcoin Law) to make the coin legal tender.
- The price of Bitcoin plunged below $40,000 due to global economic factors that emerged after the Ukraine-Russia war.
- Also, the collapse of Terra-Luna and its stable coin UST made the Bitcoin price fall more steeply.
The advent of the Bitcoin network has led to the evolution of many other altcoins. Although Bitcoin is the guide for the creation of all other altcoins, each of these coins has its own working process.