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About Bitcoin
- Bitcoin is a decentralized cryptocurrency created in 2008 by Satoshi Nakamoto.
- It is a peer-to-peer online currency that allows for direct transactions without intermediaries.
Founders of Bitcoin
- Satoshi Nakamoto is the pseudonymous founder of Bitcoin.
- The true identity of Nakamoto remains unknown.
What Makes Bitcoin Unique?
- Bitcoin is the first decentralized cryptocurrency.
- It has created a global community and inspired the development of thousands of competing projects.
Bitcoin Circulation
The Pioneering Cryptocurrency: Bitcoin
Unveiling Bitcoin (BTC): The Pioneering Cryptocurrency
In 2008, a seminal whitepaper introduced Bitcoin, a decentralized cryptocurrency, to the world, courtesy of the enigmatic Satoshi Nakamoto, a pseudonymous individual or collective. The following year, in January 2009, this pioneering digital currency was officially launched.
Bitcoin is a decentralized, peer-to-peer digital currency, wherein all transactions are executed directly between equal, autonomous network participants, eliminating the need for intermediaries to facilitate or validate them. As envisioned by Nakamoto, Bitcoin was designed to enable “online payments to be sent directly from one party to another without going through a financial institution.”
Precursors to the concept of a decentralized electronic currency existed prior to Bitcoin, but it holds the distinction of being the pioneering cryptocurrency to achieve practical implementation and widespread adoption.
The Enigmatic Founders of Bitcoin: Unveiling the Mystery
The enigmatic creator of Bitcoin, known only by the pseudonym Satoshi Nakamoto, has managed to maintain an air of mystery, with the true identity of the individual or organization behind the alias remaining shrouded in secrecy as of 2021.
On October 31, 2008, Nakamoto unveiled Bitcoin’s seminal whitepaper, which meticulously outlined the framework for a decentralized, peer-to-peer online currency. The visionary proposal introduced a novel concept: a decentralized ledger of transactions, aggregated into batches dubbed “blocks,” and secured by the unyielding fortress of cryptographic algorithms – a paradigm that would subsequently come to be known as the “blockchain.”
Just two months later, on January 3, 2009, Nakamoto successfully mined the inaugural block on the Bitcoin network, dubbed the genesis block, thereby inaugurating the world’s pioneering cryptocurrency. When first introduced, the Bitcoin price was a mere $0, and the majority of Bitcoins were acquired through mining, a process that only required moderately powerful devices (e.g., PCs) and specialized mining software. The first recorded Bitcoin commercial transaction took place on May 22, 2010, when programmer Laszlo Hanyecz exchanged 10,000 Bitcoins for two pizzas. As of mid-September 2021, those pizzas would be valued at a staggering $478 million. This event has since been commemorated as “Bitcoin Pizza Day.” In July 2010, Bitcoin commenced trading, with its price fluctuating between $0.0008 and $0.08 during that period.
Notwithstanding Nakamoto’s pioneering role as the creator of Bitcoin and the architect of its inaugural implementation, he relinquished the network alert key and stewardship of the code repository to Gavin Andresen, who subsequently assumed the position of lead developer at the Bitcoin Foundation. Throughout the years, a multitude of contributors have enriched the cryptocurrency’s software by rectifying vulnerabilities and integrating novel features.
Notably, Bitcoin’s source code repository on GitHub boasts an impressive roster of over 750 contributors, featuring prominent figures such as Wladimir J. van der Laan, Marco Falke, Pieter Wuille, Gavin Andresen, Jonas Schnelli, and many others.
The Unparalleled Attributes of Bitcoin
Bitcoin’s most distinctive advantage stems from its pioneering status as the inaugural cryptocurrency to emerge in the market.
Through its profound impact, it has successfully fostered a global community and spawned an entirely novel industry, comprising millions of enthusiasts who create, invest in, trade, and utilize Bitcoin and other cryptocurrencies in their daily lives. The advent of the first cryptocurrency has laid the conceptual and technological groundwork, subsequently inspiring the development of thousands of competing projects.
The entire cryptocurrency market, now boasting a staggering valuation of over $2 trillion, is founded upon the pioneering concept introduced by Bitcoin: a decentralized monetary system that enables seamless, borderless transactions, unshackled from the traditional reliance on trusted intermediaries, such as banks and financial services companies.
Owing to its trailblazing spirit, Bitcoin has maintained its premier position in this vibrant market for over a decade. Despite relinquishing its uncontested dominance, it remains the largest cryptocurrency, boasting a market capitalization that surpassed the $1 trillion milestone in 2021, following a record-breaking price surge to $64,863.10 on April 14, 2021. This remarkable feat can be attributed, in large part, to the burgeoning institutional interest in Bitcoin, as well as the proliferation of platforms that provide diverse use-cases for BTC, including wallets, exchanges, payment services, online games, and more.
The Circulating Supply of Bitcoin: A Closer Look
Bitcoin’s total supply is capped by its underlying software, ensuring that it will never surpass 21,000,000 coins. The creation of new coins occurs through the process of “mining,” wherein transactions are broadcast across the network, aggregated by miners, and consolidated into blocks, which are subsequently secured by intricate cryptographic computations.
In return for dedicating their computational power, miners are incentivized with rewards for each block they successfully append to the blockchain. At the inception of Bitcoin, the reward stood at 50 bitcoins per block, with this number undergoing a halving process every 210,000 blocks mined, a cycle that takes the network approximately four years to complete. As of 2020, the block reward has undergone three halvings, currently consisting of 6.25 bitcoins.
Notably, Bitcoin has never been premined, implying that no coins were mined or distributed among the founders prior to its public availability. However, during the initial years of BTC’s existence, the competition among miners was relatively low, enabling the earliest network participants to amass substantial amounts of coins through regular mining activities: it is believed that Satoshi Nakamoto, the enigmatic founder, alone possesses over a million Bitcoin.
Mining Bitcoins can be a lucrative venture for miners, contingent upon the prevailing hash rate and the current Bitcoin valuation. Although the process of mining Bitcoins is intricate, we delve into the timeframe required to mine a single Bitcoin on CoinMarketCap Alexandria — as previously mentioned, mining Bitcoin is more accurately understood as the duration it takes to mine a single block, rather than a single Bitcoin. As of mid-September 2021, the Bitcoin mining reward is capped at 6.25 BTC following the 2020 halving, which translates to approximately $299,200 at the current Bitcoin price.
The Impeccable Security of the Bitcoin Network: A Testament to Cryptographic Excellence
Bitcoin’s robust security is underpinned by the SHA-256 algorithm, a member of the esteemed SHA-2 family of hashing algorithms, which is also employed by its fork Bitcoin Cash (BCH) and numerous other cryptocurrencies.
The Pivotal Role of Bitcoin as a Store of Value
Bitcoin, the pioneering decentralized, peer-to-peer digital currency, serves a dual purpose. Not only does it facilitate seamless transactions, but it also functions as a decentralized store of value, akin to a physical asset or a unit of account. However, the legitimacy of this store-of-value function has sparked intense debate. Many crypto enthusiasts and economists envision a future where widespread adoption of the premier cryptocurrency will usher in a new era of modern finance, where transaction amounts are denominated in smaller units.
The smallest denominations of Bitcoin, amounting to 0.00000001 BTC, are affectionately referred to as Satoshis (or Sats for short), a nod to the cryptocurrency’s enigmatic creator. Currently, with the prevailing Bitcoin price, a single Satoshi is equivalent to approximately $0.00048.
The premier cryptocurrency is widely regarded as a store of value, akin to gold, by many investors — rather than a medium of exchange. This notion of the pioneering cryptocurrency as a repository of value, rather than a means of payment, has led many to adopt a buy-and-hold strategy, opting to retain their assets for the long haul (a practice colloquially referred to as “HODLing”) instead of utilizing them for everyday transactions, much like one would with traditional fiat currency, thereby treating it as a digital equivalent of the precious metal.
Evolution of Bitcoin’s Technology: An Ongoing Pursuit of Excellence
A hard fork constitutes a profound alteration to the protocol, rendering previously invalid blocks or transactions valid, thereby necessitating a universal upgrade among all users. For instance, in a scenario where users A and B are at odds over the legitimacy of an incoming transaction, a hard fork could retrospectively validate the transaction for users A and B, while leaving user C unaffected.
A hard fork constitutes a protocol upgrade that is inherently non-backward compatible. This necessitates that every node – a computer connected to the Bitcoin network via a client responsible for validating and relaying transactions – undergoes an upgrade prior to the activation of the new blockchain, which will subsequently reject any blocks or transactions originating from the preceding blockchain. Meanwhile, the legacy blockchain will persist, continuing to accept transactions, albeit potentially in a state of incompatibility with newer Bitcoin clients.
A soft fork constitutes a modification to the Bitcoin protocol, wherein solely previously valid blocks and transactions are rendered invalid. As old nodes will acknowledge the new blocks as valid, a soft fork is inherently backward-compatible. This type of fork necessitates merely a majority of miners upgrading to enforce the novel rules.
Notable examples of prominent cryptocurrencies that have undergone hard forks include Bitcoin, which spawned Bitcoin Cash, and Ethereum, which gave rise to Ethereum Classic.
Since its inception, Bitcoin Cash has undergone a series of hard forks, notably giving rise to Bitcoin SV. To delve deeper into the distinctions between Bitcoin, Bitcoin Cash, and Bitcoin SV,
read more here
.
Unveiling Taproot: A Revolutionary Upgrade to the Bitcoin Protocol
Taproot, a forthcoming soft fork, consolidates BIPs 340, 341, and 342, with the overarching objective of bolstering the scalability, efficiency, and privacy of the blockchain ecosystem by introducing a plethora of innovative features.
The two pivotal changes are the incorporation of the Merkelized Abstract Syntax Tree (MAST) and Schnorr Signature. MAST introduces a conditional clause enabling the sender and recipient of a transaction to jointly ratify its settlement. Meanwhile, Schnorr Signature facilitates the aggregation of multiple signatures into a single, unified signature for a solitary transaction. This innovation enables multi-signature transactions to appear indistinguishable from regular transactions or more intricate ones. Furthermore, the introduction of this novel address type allows users to reap the benefit of reduced transaction fees, as even complex transactions are rendered visually identical to simple, single-signature ones.
Although HODLers may not perceive a significant impact, Taproot is poised to become a pivotal milestone in empowering the network with smart contract capabilities. Notably, Schnorr Signatures will lay the groundwork for more intricate applications to be constructed atop the existing blockchain, as users increasingly transition to Taproot addresses. If widely adopted, Taproot could, in the long term, culminate in the network evolving its own decentralized finance (DeFi) ecosystem, rivaling those on alternative blockchains, such as Ethereum.
Unveiling the Lightning Network: A Revolutionary Payment Protocol
The Lightning Network is an off-chain, layered payment protocol that facilitates
bidirectional payment channels, thereby enabling instantaneous transfers with
instantaneous reconciliation. This innovative solution empowers private,
high-volume, and trustless transactions between any two parties, while
scalably increasing transaction capacity without incurring the costs
associated with transactions and interventions on the underlying blockchain.
Prominent Corporate Custodians of Bitcoin: A Who’s Who
A mere few years ago, the notion that a publicly traded company would dare to hold Bitcoin on its balance sheets was deemed utterly inconceivable. The pioneering cryptocurrency was perceived as excessively volatile, rendering it an unsuitable asset for any reputable business. Prominent investors, including the venerable Warren Buffett, dismissed it as a “bubble waiting to burst.”
A pronounced shift in sentiment appears to have taken place, as a multitude of corporate giants have been actively acquiring Bitcoin since 2020. Notably, business intelligence firm MicroStrategy has been at the forefront of this trend, having invested a substantial $425 million in Bitcoin in August and September 2020. This move has seemingly paved the way for others to follow, with prominent companies such as electric vehicle manufacturer Tesla also joining the fray.
MicroStrategy boasts the largest Bitcoin portfolio among publicly-traded companies, having adopted the cryptocurrency as its primary reserve asset. Through aggressive purchases in 2021 and 2022, the business analytics platform has amassed a substantial holding. As of August 30, 2022, its reserve comprised 129,699 Bitcoin, valued at approximately $2.5 billion.
Notable corporate holders also include Marathon Digital Holdings, boasting a substantial 10,054 BTC, followed by Coinbase with 9,000, Square Inc. with 8,027, and Hut 8 Mining Corp. with 7,078.
Is Bitcoin an Ideology or a Tool for Political Expression?
Bitcoin is increasingly assuming a political dimension, particularly in the wake of El Salvador’s groundbreaking decision to recognize it as legal tender. The country’s president, Nayib Bukele, unilaterally announced and implemented this move, brushing aside criticism from his citizens, the Bank of England, the IMF, Vitalik Buterin, and numerous others. Since the passage of the Bitcoin legal tender law in September 2021, Bukele has also unveiled ambitious plans to establish Bitcoin City, a futuristic metropolis powered entirely by geothermal energy harnessed from volcanoes, with a focus on Bitcoin mining.
Rumors have circulated that countries such as Mexico and Russia are poised to follow suit, but to date, El Salvador remains the sole nation to have adopted Bitcoin as legal tender.
On the flip side, countries like China have taken a draconian stance, imposing stringent regulations on Bitcoin mining and trading activities. In May 2021, the Chinese government issued a blanket ban on all crypto-related transactions, deeming them illegal. This move was swiftly followed by a relentless crackdown on Bitcoin mining operations, prompting numerous crypto-related businesses to relocate to more hospitable jurisdictions.
Notwithstanding the Chinese government’s staunch anti-cryptocurrency stance, the industry has continued to thrive. According to data from the University of Cambridge, China has emerged as the second-largest contributor to Bitcoin’s global hash rate, trailing only the United States.
The Value of Bitcoin: A Constantly Evolving Landscape
The valuation of Bitcoin is in a perpetual state of flux, oscillating constantly throughout the day and night. As a truly global asset, its price trajectory has been nothing short of remarkable, surging from a humble beginning of under one cent per coin to the staggering figures we see today, representing a meteoric rise of thousands of percent. The prices of all cryptocurrencies are notoriously volatile, which means that one’s understanding of Bitcoin’s value is subject to minute-by-minute fluctuations. Furthermore, prices can vary significantly across different countries and exchanges, making one’s perception of Bitcoin’s value inextricably linked to their geographical location.
Where to Acquire Bitcoin (BTC): A Comprehensive Guide
Bitcoin, the pioneering cryptocurrency, has become virtually synonymous with the concept of digital currencies, making it accessible on nearly every crypto exchange, where it can be purchased with both fiat currencies and other cryptocurrencies. Notably, some of the primary markets where BTC trading is readily available include:
- The esteemed Binance exchange
- Coinbase Pro, a premier trading platform
- OKEx, a stalwart in the digital asset space
- Kraken, a venerable cryptocurrency exchange
- Huobi Global, a leading digital asset exchange
- Bitfinex, a renowned cryptocurrency trading platform
If you’re new to the world of cryptocurrency, CoinMarketCap’s comprehensive educational portal, Alexandria, is an ideal resource to learn the ropes of buying Bitcoin and other digital assets.
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The Environmental Conundrum of Bitcoin: Unpacking the Energy Consumption Consequences
Over the past few decades, a growing awareness of personal energy consumption and its impact on climate change has sparked widespread curiosity among consumers. As news stories began to circulate about the potential environmental drawbacks of Bitcoin’s energy usage, many have expressed concern and criticism. A recent report revealed that a single Bitcoin transaction consumes a staggering 1,173 kilowatt-hours of electricity, sufficient to power the average American home for six weeks. Furthermore, another study estimates that Bitcoin’s annual energy requirements surpass the total hourly energy consumption of Finland, a nation with a population of 5.5 million.
The news has sparked a flurry of commentary from a diverse range of voices, including tech entrepreneurs, environmental activists, and political leaders. In May 2021, Tesla CEO Elon Musk made headlines by announcing that Tesla would no longer accept Bitcoin as a form of payment, citing concerns over its substantial environmental footprint. While many have voiced their disapproval and moved on, others have taken a more proactive approach, posing the question: how can we make Bitcoin a more energy-efficient entity? Meanwhile, some have adopted a defensive stance, arguing that the extent of Bitcoin’s energy problem may be overstated.
Currently, miners are heavily dependent on renewable energy sources, with estimates indicating that Bitcoin’s utilization of renewable energy may range from 40% to 75%. Nevertheless, critics argue that increasing Bitcoin’s reliance on renewable energy will divert solar power away from other essential sectors and industries, such as hospitals, factories, and homes. Conversely, the Bitcoin mining community asserts that the expansion of mining can facilitate the development of new solar and wind farms in the future.
Furthermore, proponents of Bitcoin counter that the gold and banking industries, individually, have an energy footprint that surpasses that of Bitcoin, rendering criticisms of its energy consumption unfounded. Moreover, Bitcoin’s energy usage can be readily tracked and traced, a transparency that eludes the other two sectors. Additionally, defenders of Bitcoin argue that the intricate validation process yields a more secure transaction system, thereby justifying the energy expenditure.
Another argument put forth by Bitcoin advocates is that the energy consumption associated with Bitcoin is comprehensive, encompassing the entire lifecycle of the cryptocurrency, from creation to transportation. In contrast, other financial sectors often overlook crucial components in their environmental impact assessments. For instance, when evaluating the carbon footprint of a payment processing system like Visa, the energy required to print physical currency, power ATMs, or operate smartphones, bank branches, security vehicles, and other elements within the payment processing and banking supply chain are frequently omitted from calculations.
What concerted efforts are governments and nonprofits undertaking to mitigate Bitcoin’s ecological footprint, particularly in terms of energy consumption? Earlier this year, a congressional hearing was convened in the U.S. to deliberate on the future of cryptocurrency mining, with policymakers and tech luminaries converging to express their apprehensions regarding the industry’s reliance on fossil fuels. The gathering also delved into the contentious issue of the coal-to-crypto phenomenon, specifically focusing on the repurposing of coal plants in New York and Pennsylvania into mining facilities.
Beyond congressional hearings, private sector crypto initiatives have emerged to tackle environmental concerns, such as the Crypto Climate Accord and Bitcoin Mining Council. Notably, the Crypto Climate Accord has set an ambitious goal to eradicate all greenhouse gas emissions by 2040. Given the innovative potential of Bitcoin, it is plausible to assume that such lofty aspirations may indeed be realized.
Digital Treasuries: Securely Storing Your Cryptocurrency Assets
Among the most sought-after cryptocurrency storage solutions are both hot and cold wallets. Notably, cryptocurrency wallets can be broadly categorized into two distinct types: hot wallets and cold wallets. The primary distinction between the two lies in their connectivity, with hot wallets being web-connected and cold wallets serving as offline repositories for substantial coin holdings.
Among the most esteemed crypto cold wallets are Trezor, Ledger, and CoolBitX, renowned for their robust security features. Conversely, prominent crypto hot wallets include Exodus, Electrum, and Mycelium, celebrated for their user-friendly interfaces and seamless transactional capabilities.
Undecided about which wallet to choose? Consult CoinMarketCap Alexandria’s comprehensive guides to the top cold wallets of 2021 and top hot wallets of 2021, and make an informed decision.