What is Bitcoin?
Bitcoin is a global peer-to-peer network, with no central authority, open to everyone 24/7, transparent and censorship-resistant. It can be used as a payment network, a store of value, and to a lesser extent as a data storage solution.
The Bitcoin protocol
Bitcoin with a capital “B” is an open-source computer software, freely accessible by whoever wishes to, that was presented to the public by its creator Satoshi Nakamoto in 2008. This name is a pseudonym, the identity of the creator(s) remains unknown to this day.
Any programmer can analyze Bitcoin’s code, ensure that it contains no loopholes or backdoors, and suggest improvements. Hundreds of programmers contribute daily to the evolution of the protocol and the tools to interact with it.
The Bitcoin blockchain
Bitcoin, still with a capital “B” is also a distributed ledger, called the Bitcoin blockchain. Its role is to store all transactions or information that take place on the network. This ledger has two fundamental characteristics: it is distributed, i. e. thousands of synchronized copies via a peer-to-peer computer network exist worldwide, and it is immutable, which means that no data stored on the Bitcoin blockchain can be altered or deleted.
These two characteristics of public blockchains give it extreme robustness against computer attacks and attempts at censorship.
Immutability is achieved via Proof-of-Work, a method that makes it very expensive to push blocks of transactions to the network and ensure that validators stay honest through monetary creation, we talk about the mining process. With Proof-of-Work, it becomes prohibitively expensive to reverse a transaction, which makes for an extremely secure network.
Satoshi Nakamoto is the first person to have found a solution that combines blockchain technology, cryptographic techniques, and game theory in an open-source program to create a coherent and secure system.
Bitcoins (BTC) are the units of value of the network
Bitcoins, with a small “b”, are the units of value generated by the protocol for miners. Their particularity is to be the first scarce digital asset which cannot be duplicated and can be owned by an individual. It is these digital assets that we are talking about when we talk about buying bitcoins. This removes the major obstacle that had hitherto stood in the way of the creation of a digital currency without central authority.
Bitcoin gives real control to the user
Bitcoins are secured by cryptographic keys generated by Bitcoin wallets. In addition to managing these keys, these software programs allow the reception and sending of bitcoins by their owners. It is important to understand how Bitcoin wallets work, and to determine which wallet best suits your profile.
Apart from the owner of the keys, no one has the possibility to block an address, initiate a transaction, or limit the interlocutors. We are facing a new form of digital property here.
Bitcoin’s monetary creation is predictable
On January 3 2009, the day the network was launched, 50 bitcoins were generated by miners every ten minutes on average. The programme stipulates that the reward of miners through money creation is halved every four years. The next division, or “halving”, will take place around May 2020. We will then go from 12.5 to 6.25 bitcoins created every ten minutes. Following this scheme, a maximum of 21 million bitcoins will be in circulation by the year 2140.
17.9 million units are currently in circulation, but in a decade we will already have reached 20 million.
Bitcoin is rare, but highly divisible
21 million units for 7 billion people may seem insufficient if Bitcoin wants to establish itself as a means of exchange that can be used by everyone on a daily basis, but this is a false problem. Bitcoin units are currently divisible up to eight decimal places, and it is possible to go even further if necessary.
In honor of its creator, the smallest unit in the system is called the satoshi. A bitcoin is therefore equal to 100,000,000 satoshis.
Unlike a currency controlled by a central bank which can determine an interest rate, the Bitcoin price is fixed, as for commodities or precious metals, only by supply and demand. There are trading platforms on which a significant number of transactions are carried out each day, making it possible to set a price.
Today, Bitcoin is still an emerging technology and its capitalization is low compared to traditional financial assets, which is why it remains highly volatile.
At the time of writing, on 16 April 2019, you are offering yourself 0.022 Bitcoins, or 2,218,097 satoshis for 100 euros. But this is changing rapidly. So, to become satoshi-millionaire, or even satoshi-billionaire, click here and get on board!
Simply put, Bitcoin is an innovative payment network and a new form of money. This technology is anchored in the dynamics initiated by the Internet, which has enabled the decentralization of information and the instantaneous nature of communications around the world. Bitcoin, on the other hand, brings the decentralization of exchange of values and the instantaneous nature of transactions worldwide.
- When is the best time to buy cryptocurrencies?
- Why Bitcoin?
- How does Bitcoin work?
- History of Bitcoin
- What is the Lightning Network?
- What determines the price of Bitcoin?
- What is the best Bitcoin wallet?
- Can Bitcoin be hacked?
- Why 21 million as the number of bitcoins to be created?
- Who controls Bitcoin?