The Crypto World Simplified Bitcoin
Bitcoin is the Big Daddy of the crypto world. It was the first to have its own blockchain, and to date, holds the record share of the Cryptomarket. In October of 2008, Satoshi Nakamoto published a White Paper abstract for peer-to-peer electronic cash that conquered the problem of “double-spending” by timestamping a peer-to-peer transaction and hashing it to an ongoing chain of hash-based, proof-of-work that cannot be changed without redoing the initial Proof-of-work and all the submissions of the transaction that follow.
This digital currency, Bitcoin, became the first “decentralized” money, different from the centralized (government-controlled) US dollar. It sits on the blockchain in everyone’s computer (who uses the blockchain) within a ledger of transactions on multiple computers, within Nodes that make up the blockchain of recorded transactions. This makes it safe in that one would have to hack every computer to change a transaction or “hack” the chain.
Here is a YouTube video from “99 Bitcoins” that explains the terms and shows what Bitcoin is and how it came about in late 2008. Bitcoin is a digital currency that gets its value from the market using the coin to trade and conduct business transactions.
As one can see, Bitcoin (BTC), the Big Daddy in the crypto world, is used by many to transact business on the internet. It, for a short time, captured a trillion-dollar market value in the crypto business making it the largest or Big-Daddy” of the crypto world.
Bitcoin is a ‘digital’ currency, so it only exists as lines of code rather than in any physical form unlike a fiat currency that has physical paper and coins. There are a set total of Bitcoins to ever be made available (21 Million). Bitcoins are earned (released by the system) by miners and released into the system for use. Currently, over 19 million coins have been released. As we approach the total of 21 million available, it is speculated that the value of BTC will explode as demand is greater.
Miners are paid in Bitcoins for solving complex mathematical problems (requiring large amounts of energy to run massive computers). The first to solve a problem and verify the transaction receives the allowed-for-the-verification solution, Bitcoin tokens. This amount is determined by the “halving” of the coin which happens every 4 years.
A Bitcoin halving is scheduled to take place every 210,000 blocks. Three Bitcoin halvings have already taken place, one on November 28, 2012, on July 9, 2016, and the last halving on May 11, 2020. The next Bitcoin halving prediction is set to occur about February 21, 2024. Currently, the halving reward is 6.25 BTC, in 2024 the halving will be reduced to 3.125 BTC. Bitcoin mining operations (large and small) will have their revenue also cut in half. But, BTC may be worth a lot more by that halving. If not, Miners will be hard hit to pay the high cost of mining.
This slow release of the token controls the inflation of the coin. Miners also get fees for verifying transactions from those who are transferring BItcoin. There is so much more to the business world’s use of Bitcoin. The pace at which new Bitcoins are mined varies through time, with miners’ rewards halved every four years to maintain a steady flow that won’t lead to inflation. It is estimated that all 21 million Bitcoin will have been mined and in circulation by 2040.
A working currency needs to be scarce, divisible, portable, durable, fungible, and easy to verify. BTC hits all of these criteria. Marketers can buy or exchange small portions of a full BTC to transact business. BTC will become scarce as it is mined and used in the business world and is easy to verify in the blockchain. BTC obviously is portable once placed into a Blockchain wallet and protected by the wallet’s holder’s secret key and password, and it is able to be divided into small Satoshi. The value of fiat currencies, which are also not backed by any physical asset, is in the fact that they are accepted as a representation of value and means of exchange. BTC has the same accepted value by the coin’s users.
