Bitcoin (BTC)

Bitcoin (BTC) is most well known as a digital decentralized cryptocurrency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer Bitcoin network without the need for intermediaries, such as payment gateways or banks or routing services.

Think of bitcoin as Internet money, that you can send and receive directly, to and from anyone, and you can use it to pay for stuff.

No single person or business or government controls bitcoin.

That makes it decentralized.

The cryptocurrency was invented in 2008 by Satoshi Nakamoto, an unknown person (or group of people) hiding his or her identity from the world.

He introduced the world to bitcoin (BTC) by writing a whitepaper outlining the Bitcoin network’s technical specifications and suggesting it could be used as an online payments system.

The Bitcoin software was first released online in 2009 as open-source software.

Being open-source software makes Bitcoin open to the public, where anybody can look at the source code behind it.

In the same way, Bitcoin can be used by anyone, anywhere, as long as he or she has a device and Internet connection.

There are no other additional requirements to use it.

The term bitcoin also describes the Bitcoin “blockchain” or “Bitcoin network”, which is a public ledger, that records all of the transactions that occur on the blockchain.

You’ll see that bitcoin is spelled with both an uppercase B and a lower case B.

The lower-case “b” is usually used when referring to the currency itself.

The upper-case “B” is used when discussing the network or technology.

Bitcoin nodes, or computers running the bitcoin software, combine and communicate together to create the bitcoin network, which maintains the blockchain.

These network nodes, or servers, compete to validate transactions that occur on the bitcoin blockchain, taking their validated transaction, adding them to their own copy of the ledger, and then sending these changes to other nodes.

All the transactional information that takes place on the blockchain is recorded in a block.

And chains of blocks are what make up a blockchain.

The “Bitcoin network” was created when Satoshi Nakamoto mined the first block of the chain, called the genesis block.

The Bitcoin blockchain uses the Proof-of-Work (PoW) consensus mechanism, which is known to contribute to Bitcoin mining being extremely energy-intensive, requiring high amounts of computational power to validate the network’s transactions.

Remember, Bitcoin miners, who validate transactions to the blockchain, compete against other Bitcoin miners to solve a complex math problem called the hash.

Whoever solves the hash the fastest gets the block, gets to create the block, and is rewarded for their trouble.

And the more that Bitcoin is used, the more difficult these math problems become in the future, resulting in miners needing more mining equipment that is stronger and faster than the next miner.

Although there are thousands of computers and servers hoping to “win” the race to solve the hash, ultimately, only one miner wins per block.

It takes about 10 minutes for a miner to verify transactions within one block and get that new block created and added to the blockchain.

This is called Block Time.

Bitcoin has a supply limit of 21 million coins.

Bitcoin does not have an infinite supply like other coins, so there will never be more than 21 million coins.

Bitcoin has a circulating supply of 19,109,000 coins as of July 2022. You can view the current circulating supply of bitcoin here.

Bitcoin has been forked into two other cryptocurrencies, Bitcoin Cash (BCH) and Bitcoin Gold (BTG).

Related Terms

Genesis Block

The very first block or first few blocks recorded on a blockchain or blockchain-based protocol. The genesis block is often called Block 0 or Block 1. The genesis block sets the foundation for the rest of the blocks that are added to form a chain of blocks. That’s where we get the word “blockchain”. The most famous genesis block, and the very first Bitcoin block, called the Genesis Block, was created on January 3rd, 2009, by Bitcoin’s infamous and mysterious creator, Satoshi Nakamoto. Some consider this date to be the start of the cryptocurrency revolution – the start of it all!

Immutability

A core feature of blockchains that makes their ledgers, the data record of transactions, unchangeable and unalterable. Immutability drives the trustworthiness and integrity of blockchain data as chain transactions and rulesets are protected from fraud, hacking and other wrongdoing.

Full Node

A type of node that participates in a blockchain network, performing some function for the network, like securing the network or validating transaction data. A full node stores a complete copy of the blockchain data. Information about every block and the recorded transactions within each block is available in the full copy of the blockchain.

Blockchain

Blockchain networks are at the heart of cryptocurrencies. A blockchain is a database, or digital ledger, made up of a series of interconnected blocks containing transaction data created on the network over some period of time. Each block in a blockchain also contains a unique identifier unlike any other block in the chain called a hash. Think of the hash as a fingerprint identifying that block for all other blocks. Distributed ledger technology (DLT) is another name frequently used in relation to blockchains.

Block Reward

Incentives or prizes given to miners after they use their computing resources to successfully validate a new block of transactions and add them to the blockchain.