Crypto Consulting Group
The Crypto Think-Tank

What is Bitcoin?


What is Bitcoin?

 
 
 
 

In short, Bitcoin (BTC) is a digital currency, that runs on blockchain technology.

No one controls BTC because it is a decentralized system meaning it doesn't need a centralized certifier like a bank or government. The Bitcoin blockchain is maintained and secured by a community of users called "nodes". BTC was created in 2009 by an unknown coder under the pseudonym Sataoshi Nakamoto and paved the way for the flourishing market of over 750 digital currencies.

The system allows users to transact on a peer-to-peer decentralized network regardless of boundaries. Bitcoin was the first of its kind and introduced a revolutionary blockchain technology. It works by grouping information or in this case transactions into "blocks". These are formed every 10 minutes by the blockchain and then validated by the nodes by solving cryptographic puzzles. Once a node finds a solution to the algorithm, it is posted in chronological order onto the blockchain for every other node to then validate. The first node to solve the puzzle is rewarded a fixed ammount of BTC that halves every 4 years. The current reward is 12.5 BTC per block. This process of creating new coins and securing the network is called "mining". It creates an incentive for nodes to use the network and ensure security because the majority of the nodes must come to a consensus that the solution is correct. If a hacker tried to change a block to double spend, it would immediately be caught and thrown out because of its lack of validation by other nodes. This system is called the proof-of-work (PoW), because nodes must prove their work by verifying that of others.

What makes Bitcoin special is its decentralized nature. It allows users to connect anonymously, quickly, and for a lost cost.

Once transactions occur, they're non-repudible. Thus creating a secure record book of each users actions on the network. These actions are forever imbedded into the blockchain, making validation easier.

Each user is given a digital identity when they log onto the network. A public key and private key come together to create that virtual identity. Your public address is what you use to send and receive coins. Your private key is specific to you and should not be shared.

Bitcoin has grown from less than $100 in 2013 to all time highs of over $2,500 at the time of writing. The price of a BTC has been influenced by a recent spark of interest in blockchain tech among corporate titans. Bitcoin convergence is also taking hold in tech superpowers like Japan, who plans to have power 300,000 stores that accept BTC by the years end.

The future of Bitcoin is unclear. However, we can assume if it continues its trend, the future is bright to say the least.