The History of Bitcoin
With a relatively short history, Satashi Nakamoto, Blockchain, and Bitcoin have all become household names that push the limits of how we view global currencies.
Just as popular as its origins, Bitcoin has also become notorious for price swings that often make news headlines and grab the attention of financial traders. It has also led to the creation of other digital currency such as Ethereum, Litecoin. Bitcoin even has other crypto currencies that were created when nodes chose not to upgrade to the latest protocol, creating a new currency out of Bitcoin’s old protocols, such as Bitcoin Cash ABC (BABUSD).
What coins existed before Bitcoin?
While it is true that Bitcoin is often deemed the father of cryptocurrencies as many consider it to be the first-ever cryptocurrency, there are many other coins that are considered its predecessor. Before Bitcoin, there were many attempts at creating cryptocurrencies like Blinded Cash, DigiCash, B-Money, Bit Gold, Hashcash, and more. Nevertheless, none of those attempts measure up to Bitcoin’s success or leverage.
When and why was Bitcoin Created?
Bitcoin was created in 2009 as the first decentralized currency to run on Blockchain technology.
First mentioned in a white paper that was published by someone with the pen name Satoshi Nakamoto, Bitcoin promised the ability to conduct government-free transactions, relying on digital signatures and digital coins instead of on centralized government-issued fiat currencies like the Euro and the US dollar among other Forex pairs. All transactions were kept on a ledger which can be publicly accessed, ensuring transparency.
Crypto Miners, the individuals who volunteer their personal computing power to the network to keep it running, are paid for in Bitcoin and have a say in new protocols that are adapted to the blockchain network. This allows them to work as a type of central bank, looking out for the best interest of the digital coin as a collective., this is similar to the role central banks like the ECB and FOMC have in determining the status of fiat currencies.
Bitcoin’s decentralized and blockchain protocols require all nodes to verify a transaction. Since these computers are spread across the globe and run by various individuals, it is considered very difficult to hack or corrupt.
This is considered by some to be a secure system and has continuously captured public interest since its creation.
Despite Bitcoin being well known amongst traders for its price swings, many believe that this leading digital currency is here to stay.
How is Bitcoin different from other Cryptocurrencies?
While Bitcoin may be the original digital currency, others have been created since. Yet, Bitcoin has managed to remain unique in a number of ways and other cryptocurrencies are even referred to as Altcoins (alternative coins to Bitcoin)...
Other cryptocurrencies have been developed since 2009 with the potential to manage digital economies like Ethereum. They focused on developing contracts and digital services that can be paid for using their own specific digital coins. For example, Axie Infinity (AXSUSD) is actually a native token and coin made for payment and operation on its own network and game, while Bitcoin can act as a fiat currency.
Bitcoin has remained a form of cross-platform currency. Without being limited for use on specific Bitcoin-only platforms, this cryptocurrency can be used to make purchases anywhere in the world where it is accepted. Furthermore, the main aim behind Bitcoin is to increase transaction speed without numerous government restrictions.
In 2020 Bitcoin made headlines when Paypal (PYPL) announced that this popular currency will be recognized as a payment on their platform.Bitcoin Mining
Mining refers to the process of using high-powered computers to validate block transactions through solving complex mathematical equations.
There are mined and non-minded cryptocurrencies and Bitcoin is considered the former. Bitcoin is powered by individuals who offer anywhere from individual computers to full server farms to keep the ledger active and verified.
In exchange, miners are given a predetermined amount of Bitcoin in return for the number of transactions they approve. As more Bitcoin is created, there are built-in ‘Halving’ events built into the protocol every time 210,000 blocks are processed.
It is called a halving event because the amount of Bitcoins a miner is awarded for processing a block becomes half when passing these thresholds. Whereas other cryptocurrencies like Cardano (ADA), Solana (SOL), and Polkadot (DOT) are non-mineable, the purpose behind non-mineable and mineable cryptocurrencies is the same. Both types of cryptocurrencies aim to validate transactions, and eventually, each blockchain transaction needs to be verified one way or the other.Bitcoin Verification and Block Time
Block time refers to the amount of time needed by miners to verify Bitcoin transactions in one block and produce a new block in the blockchain. The Bitcoin network requires all active nodes to be able to verify the same transaction and share its ledger with all other network users. This keeps the system transparent and harder to compromise.
While this is not unique to Bitcoin, it is something that other digital currencies have laxed their rules in order to reduce processing time.
One of Bitcoin’s most significant downsides is the long verification time, which can take an average of 10 minutes. In comparison, Ethereum, one of Bitcoin’s biggest competitor's network takes approximately 13 seconds.
How Many Bitcoins Are There?
Bitcoin has a maximum amount of 21 million coins that can be mined or created. This limit of 21 million coins is called a hard cap and it's encoded in its source code and enforced by the nodes on the network. Once it reaches this limit, no more Bitcoins can be created and miners will be able to collect transaction fees for their work while mining Bitcoin.
In comparison, Ethereum ETHBTC has no limit on how many coins can be mined.
While there are differences between each type of crypto currency, Bitcoin remains a favourite instrument for traders and has the biggest market cap in comparison to other cryptocurrencies in the market. All crypto currencies are extremely volatile and subject to various market factors.
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