Guides to Cryptocurrencies
Founder: Satoshi Nakamoto
Protocol: Proof-of-Work (PoW)
Speed: Around 7 TPS
Chinese Name: 比特币
This article provides readers a beginner crash course to BTC currency which is the abbreviation of the Bitcoin. Abbreviations are usually used by investors to identify and trade desired coins on a cryptocurrency exchange.
Bitcoin is an open-source cryptocurrency that was created with the objective of becoming the world's Peer-to-Peer Electronic Cash System and it was the first decentralized cryptocurrency that had since grown to become the digital token with the largest market cap of more than $140 billion USD as of June 2019.
Bitcoin was originally invented and created by an unknown person or a group of people under the name or pseudonym of Satoshi Nakamoto in 2008 and bitcoin.org domain name was registered on 18 August in the same year. The mystery of Satoshi Nakamoto's true identity is still unsolved with some people claiming themselves to be Satoshi but none provided evidence to back it up.
On 3 Jan 2009, Satoshi Nakamoto mined the first block of bitcoin (block 0) with a reward of 50 bitcoins and the bitcoin network was born. The following text was embedded in the coinbase transaction of the genesis block: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” It refers to a news article published in The Times on the same day.
Some believed Satoshi Nakamoto embedded the text as proof that the genesis block was created on that day or that he was sharing his concerns on the instability caused by fractional reserve banking. Sometime later, an early bitcoin contributor by the name of Hal Finney received the first bitcoin transaction from Nakamoto.
The bitcoin community grew and in year 2010, Satoshi Nakamoto announced Gavin Andresen as the lead developer and handed over network alert key together with control of source code repository to him. For the purpose of spreading responsibilities, Nakamoto then transferred several related domains to prominent members of the bitcoin community that were not bitcoin developers and left the bitcoin project.
Proof of Work (PoW) Consensus Protocol
Bitcoin blockchain uses the Proof of Work (PoW) consensus protocol to validate transactions on a blockchain and to create new BTC coins. Miners create new bitcoins by solving mathematical puzzles using computers or mining rigs with high computing power, the first miner that solves the puzzle gets to place the next block on the blockchain and claims the next newborn virtual coin. The same process verifies the previous transactions on the blockchain to prevent frauds.
Energy Consumption of Mining
Forbes reported that bitcoin’s Proof of Work mining mechanism consumes huge amount of energy equivalent to powering an entire country. High energy consumption may lead to global warming, hence some critics denounced bitcoin and its ecosystem to be harmful for the environment, commenting that the amount of energy needed will be tremendous when bitcoin technology reaches mass adoption level. Pro-bitcoin groups disagreed with the above critics and informed that bitcoin mining uses only a small amount of total electricity produced on earth. A Quartz article reported that bitcoin's energy consumption is not as bad and that miners are increasingly moving to cheap and clean energy nations that are emerging like the Pacific Northwest due to the massive availability of hydropower which is good news for the environment.
Bitcoin has a cap of 21 million coin supply with a total coin circulating supply of around 17.7 million as of 3 June 2019. Experts estimate that it will hit the supply cap in around year 2140. After reaching the supply cap, miners can no longer receive new bitcoin as rewards after mining a new block, instead they will only receive transaction fees for their efforts.
Market speculators predicted that BTC price will rise because there will be no more new bitcoins to meet new demands, they predicted that miners will get higher transaction fees when that happens to cover lost income of acquiring new bitcoins.
Bitcoin network's on-chain transaction processing capacity is limited by the block creation time of 10 minutes on average and limit of 1 megabyte block size. In spite of that, BTC is one of the most stable cryptocurrencies regarded by many traders to be a stable coin that will not fluctuate too wildly in price. Some traders switch their cryptocurrency portfolio to bitcoin after making a profit from other altcoins to wait for a better buying opportunities elsewhere.
Because of its success, many traders and investors consider all other cryptocurrencies that are not bitcoin to be altcoins, meaning alternate coins. Some investors consider bitcoin to be gold 2.0 as a cryptocurrency asset to hedge against risk. Bitcoin was frequently voted to be one of the best cryptocurrency in the world as of May 2019. Bitcoin trading and investment are among the most popular conversation topics between blockchain investors.
Bitaddress.org is reported to be an open-source wallet generator that creates brain wallet or paper wallet for users to trade bitcoins on the blockchain.