- Bitcoin was launched on January 3, 2009.
- The crypto asset holds almost half the market share currently.
Since the first cryptocurrency Bitcoin (BTC) emerged in 2009, the crypto market has grown significantly. To this date, BTC has dominated the sector. Currently, there are nearly 100 Million BTC owners worldwide. The asset’s value is a primary reason why people hold it. But only a few know about its ecosystem and why it was released in the first place.
What is Bitcoin?
In simple terms, it is a means to transfer funds without relying on an intermediary. It is a peer-to-peer digital asset developed using cryptography. Bitcoin is an ecosystem persisting on a blockchain while BTC is the native token supporting the network. Each individual holding BTC powers the Bitcoin blockchain in some way.
Satoshi Nakamoto, an anonymous entity, developed the network’s whitepaper in 2008 and released it in 2009. BTC’s genesis block contained this inscription: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” Bitcoin is also the first generation of blockchain technology.
What Purpose Does Bitcoin Serve?
Primary aim BTC serves is to eliminate reliance on centralized entities to transfer money. The ecosystem is largely decentralized. Hence, it is entirely dependent on trust. However, due to the lack of regulations, the asset is not risk-free because of the increased likelihood of cyber threats.
Bitcoin genesis block’s message was a headline of an article published in a British daily newspaper The Times. Many believe Satoshi Nakamoto wasn’t really fond of large failing centralized financial institutions. The BTC ecosystem is meant to serve differently from such institutions. Additionally, several others think it is a hedge against inflation, courtesy of its limited supply.
What is Bitcoin Mining?
Like natural resources are extracted from planet Earth, BTC requires extraction too, however, digitally. Similar to Earth’s finite resources, there are 21 Million Bitcoins, out of which, over 19 Million are in circulation. Currently, 1 BTC is worth over $30K. Its price peaked at nearly $69K in November 2021.
Bitcoin mining is a process to mine BTC blocks by solving complex mathematical problems to verify transactions. A crypto miner requires high-end equipment including graphics processing unit (GPU), power supply unit (PSU), application-specific integrated circuit (ASIC) and more.
Miners receive a specified number of Bitcoins as a reward for mining a block. However, rewards are halved after every 210,000th block is mined and this process is called halving. Following a halving event, network difficulty (difficulty to mine a block) increases where miner incentives are reduced for every block mined.
To mine BTC, the network uses a proof-of-work (PoW) consensus algorithm. Number of transactions are pooled into a block where crypto miners try to solve mathematical problems to process that block. The winner (the one who solves the problem first) eventually receives the predetermined reward. As of 2023, a miner is gets 6.25 BTC to mine a block.
How Trust is Established on The Network?
Nodes power the Bitcoin ecosystem, which are basically servers on which the BTC blockchain is running upon. A node broadcasts a block to all the nodes upon its discovery. The decentralized and transparent nature of an open blockchain enables anyone to track such activities easily.
What Impact Does BTC Mining Have On Climate?
Crypto mining is an energy-intensive process; it contributes to greenhouse gas (GHG) emissions. Bitcoin mining allegedly consumes energy equal to what Washington State consumes annually. The PoW consensus mechanism requires heavy equipment and traditional fuels like coal and petroleum to power them.
According to an estimate, Bitcoin consumes nearly 145 TWh energy annually. Furthermore, BTC mining produces more than 30,000 tonnes of e-waste every year. Renewable energy sources like solar and wind power may help decline energy consumption from the activity.
How A User Can Buy BTC?
Users can easily buy BTC via crypto exchanges including Coinbase, eToro, Binance and more. They need to create a wallet to execute transactions. Additionally, they can acquire it via BTC wallet apps. However, users must always verify the authenticity of an exchange. Exchanges providing high yields on crypto investments is usually a deceptive tact to execute frauds.
Where Global Adoption of Bitcoin Has Reached?
To this date, only El Salvador and the Central African Republic (CAR) have accepted BTC as a legal tender. Canada, the United States, Australia and more allow Bitcoin utility under a shack of regulations. However, they have not accepted it as a legal tender.
What is The Future Potential of Bitcoin?
The biggest cryptocurrency emerged as a means to transfer funds without any intermediaries. However, Ordinal’s emergence in January 2023 added to its utility. New functionality could lead to a greater adoption globally. For crypto miners, halvings may render BTC mining difficult due to scarce profits.
As of now, BTC dominates almost half the crypto market. While cryptocurrencies including Ethereum (ETH), Cardano (ADA), Polygon (MATIC) and more are getting popular among investors these are unlikely to surpass BTC in the near future.