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What is bitcoin?
Bitcoin, the world’s first cryptocurrency, launched in 2009 by someone named Satoshi Nakamoto. Unlike traditional fiat currencies, such as the British Pound, United States Dollar,and Euro, the Bitcoin network is decentralised and runs on thousands of computers worldwide. Bitcoin is both a new type of money – sometimes called digital or electronic money, or cryptocurrency – as well as being a new digital paymentnetwork free from the type of regulation financial institutions like banks andbuilding societies face.
Bitcoin allows users to send and receive digital money (bitcoins or BTC). The network is popular because it is permissionless, non-censored, and investors can make transactions at anytime, from anywhere in the world.
Due to its finite supply,investors often refer to Bitcoin as “digital gold.” Many view the coin as astore of value and believe that it will continue to appreciate over time.
Technical details of bitcoin-
As you can see bitcoins market cap is 1 trillion dollars, but the total market cap withbitcoins andall altcoins is 2 trillion, so you can see bitcoin takes up half of the marketcap, and can see why the market will move around what bitcoin does.
Of course during bull runs which tend to happen every 4 years, which has been what it is since bitcoin was created, with having a 2013 and 2017 bull run; and now with covid 19 last yearin 2020, a big crash was caused but then this enabled the next bull run tobegin into 2021.
So how does bitcoin work?
When an investor makes a payment, it is recorded on a type of database called a blockchain. Every network participant has an identical copy of the blockchain database stored ontheir device. Participants on the peer-to-peer network connect to process new information and record blocks of transactions on the blockchain. We refer to this process as mining.
There is a finite supply of Bitcoins, but not all units are in circulation yet. New coins are added to the blockchain through mining.
Bitcoins white paper (their mission) is a peer-to-peer electronic cash system, in simple terms allowing people to send btc as a form of payment without having to have a third party to essentially authorise your transaction or payment.
Whats the uses of bitcoin?
Bitcoin is a payment systemwhich only exists in cyberspace and has no physical business premises. Becauseof this, the currency can be used freely to pay for online purchases – as wellas being bought for investment. Other cryptocurrencies like Ethereum are usedto buy assets – but cryptos, as they are often referred to, can be used to buyanything, from services to goods and even property. The buyer pays a small feefor every transaction, but Bitcoin can be used globally, making international payments easy and secure. With bitcoin payments, you do have to be careful when sending; as you will have something called an address, so when sending btc you want to make sure the receiver who youre sending the btc to has given you the correct address, and you want to make sure the address is also correct, as once sent and confirmed its gone and its sent into cyberspace. So if the address iswrong then unfortunately your bitcoin is now in cyberspace and wont beretrieved.
Bitcoin mining -
Mining is the process that maintains this trustless public ledger is known as 'mining'. Undergirding the network of Bitcoin users who trade the cryptocurrency among themselvesis a network of miners, who record these transactions on the blockchain.
Bitcoins 'proof-of-work'system is what enables mining for this partiulcar assets, as a cryptocurrency is either going to be a 'proof of work, or a 'proof of stake'; with proof of work being a capped supply which requires mining.
The mining process works bythe miners who have essentially smart computers and high tech software, the seminers operating the computers have to solve mathematical puzzles, once solvedthe puzzle the miner will get rewarded with a certain amount of bitcoin.
Once miners have verified 1MB (megabyte) worth of Bitcoin transactions, known as a"block," those miners are eligible to be rewarded with a quantity of bitcoins.
The 1 MB limit was set by Satoshi Nakamoto, and is a matter of controversy, as some miners believe the block size should be increased to accommodate more data, which would effectively mean that the bitcoin network could process and verifytransactions more quickly.
Note thatverifying 1 MB worth of transactions makes a coin miner eligible to earn bitcoin—not everyone who verifies transactions will get paid out.
1MB of transactions can theoretically be as small as one transaction (though this isnot at all common) or several thousand. It depends on how much data the transactions take up.
To earn bitcoins, you need to meet two conditions. One is a matter of effort; one is amatter of luck:
In addition to lining the pockets of miners and supporting the Bitcoin ecosystem, mining serves another vital purpose: It is the only way to release new cryptocurrency into circulation. In other words, miners are basically "minting" currency. For example, as of Nov. 2020, there were around 18.5 million bitcoins incirculation.
There will eventually come atime when Bitcoin mining ends; per the Bitcoin Protocol, the total number ofbitcoins will be capped at 21 million.
However, because the rate of bitcoin "mined" is reduced over time, the final bitcoin won't be circulated until around the year 2140. This does not mean that transactions will cease to be verified. Miners will continue to verify transactions and will be paid in fees for doing so in order to keep the integrityof Bitcoin's network.
Aside from the short-term Bitcoin payoff, being a coin miner can give you"voting" power when changes are proposed in the Bitcoin network protocol. In other words, miners have a degree of influence on thedecision-making process on such matters as forking.
So how much miners canactually get rewarded in bitcoin for solving the mathematical puzzles;
The rewards for Bitcoin mining are reduced by half every four years. When bitcoin was first mined in 2009, mining one block would earn you 50 BTC. In 2012, this was halved to 25BTC. By 2016, this was halved again to 12.5 BTC. On May 11, 2020,the reward halved again to 6.25 BTC.
Some key points for mining;
Bitcoin halving -
As previously mentioned,miners are rewarded with Bitcoin for verifying blocks of transactions. Thisreward is cut in half every 210,000 blocks mined, or, about every four years. This event is called the halving or "the halvening." Thesystem is built in as a deflationary one for the rate at which new Bitcoin is released into circulation. Bitcoin halving is more based around bitcoin mining,as this determines when halvings can take place due to x amount of blocks beingmined
Some advantages anddisadvantages of bitcoin -
Advantages;
Disadvantages;
