Bitcoin is a Cryptocurrency
Bitcoin is a cryptocurrency, which simply means it is a digital currency that is created independently and secured using cryptography. But what is a digital currency? There are 2 types of digital currency.
Firstly there is what we refer to as “FIAT” money. This is government money. They create, produce and control the value of money which they distribute via the Central Bank.
Secondly there is cryptocurrency like Bitcoin which is not controlled by any single entity or group of entities. It is a peer-to-peer electronic messaging system for transacting value. This is possible without the need of any central third party to verify it.
What Makes Bitcoin Different?
- It is a permission less network that does not discriminate. You do not need anyone to approve you in order to transact on the Bitcoin network.
- There will only ever be 21 Million coins, of which more than 90% is already in circulation. Bitcoin is therefore scarce, making it a deflationary currency.
- 1 Bitcoin can easily be divided into 100million Santoshi. Furthermore, A Satoshi is the smallest unit of account on the BTC network.
- You can easily transport, send and receive bitcoin with the tap of a button. As a result it is the perfect solution to store and transact value.
- Fungibility and Pseudo anonymity are the cornerstones on which the bitcoin Network is built. Consequently, all Bitcoins are exactly the same. It is simply a unique entry in a distributed ledger.
The Beginning of BTC
In 2008/9 an anonymous developer (or group of developers) by the Name of Satoshi Nakamoto released an open source project called Bitcoin. The reason it is unique is as a result of Nakamoto utilising a new technology which he called Blockchain.
A blockchain is a solution to a computing problem called the Byzantine Generals Problem. In a nut shell it describes the state of a computer system or network, where components may fail, but there is no reliable information on whether a component has failed or not.
Bitcoin After a Decade
Bitcoin has matured over the first decade of operation to spawn a whole new industry. Consequently, we have thousands of crypto coins today which provide utility to a host of markets and services. The industry has grown to include DeFi and NFTs
Bitcoin is the top cryptocurrency in terms of dollar value but is also the number one investment in over the last decade. It outperformed any other investment out there, including stocks and shares like Amazon, Google, Tesla, Microsoft.
Who Does the Development?
Open Source Developers maintain the network and codebase via Github. The community enforce consensus on code changes or additions through miners. The miners are located all over the world and contribute to keeping the system secure. When developers want to upgrade the system they have to propose a change which is publicly peer reviewed. They then create an update to the software, which becomes the default version once more than 51% of the miners signal their support for the new standard.
There are many private companies who contribute to the open source project as well as build commercial products on top of the BTC network. One such company is Blockstream, who we credit with running the first Bitcoin node in space.
There are also many products and service which further extend the eco-system for example hardware and software wallets. Furthermore there are exchanges, trading platforms, investment platforms and gaming platforms.
Bitcoin + Lightning
Bitcoin has limitations in terms of scalability which prevents it from being an everyday transactional currency for small purchases. The Developers propose that the Lightning network is one way to overcome these limitations, consequently, we call the Lightning network a layer 2 solution.
In a few words, the Lightning network is a peer-to-peer system on top of BTC. It makes micropayments possible through a network of bidirectional channels. This happens without delegating the custody of assets.
This is solution makes bitcoin an everyday currency you can use to easily and quickly pay for a cup of coffee. If you are new to all of this you can try Bluewallet. It is a Bitcoin + Lightning wallet, where you control the private keys.
High Profile Attention
NBA Basketball players are receiving part of their salaries in BTC and Countries like El-Salvador have BTC in their treasury. Michael Saylor, Head of Software Analytics Firm, MicroStrategy as well as Tesla’s Elon Musk have added Bitcoin to their respective company balance sheets. Jack Dorsey, founder of Twitter is an avid proponent of Bitcoin and has invested millions into development of the eco-system.
Changpeng Zhao(aka CZ) founder of Binance, is one of the worlds richest people. Bloomberg Billionaires Index estimate his fortune (excluding crypto holdings – yes that is correct, excluding his BTC and BNB holdings) at round 100Billion Dollars
The Future of Money
There is no crystal ball and nobody can predict what will happen in the future with certainty. FIAT money as we know it is on its last legs. As a result, society will be looking to a new form of money. Right now, cryptocurrency such as Bitcoin fill that void.
The governments across the world are all experimenting with Central Bank Digital Currencies to one degree or another. We can safely assume that such a form of money will dominate well within our lifetimes. The question we need to ask ourselves is, who will be issue and control it?
