The Blockchain Handbook - Chapter 1: Bitcoin (BTC)

Perhaps the most well-known of all cryptocurrencies, Bitcoin, created in 2009 by the enigmatic and pseudonymous Satoshi Nakamoto, is a worldwide payment system, blockchain and peer-to-peer transaction network. The term "Bitcoin" can refer to either the token, which holds the value assigned to currency, or the actual network that maintains the ledger of Bitcoin balances and enables the features that are associated with the platform. It's the first of the decentralized peer-to-peer networks, and as such, has stood out from the pack for a number of years.

As a digital asset, Bitcoin saw relatively stable growth leading into 2018, followed by a sudden surge at the beginning of the year when interest hit new heights. It's tapered off since then, but values can be volatile, and the price seems to be recovering for the world's most valuable cryptocurrency. At present, it holds a market cap of around $183,797,336,575, a value near $10,889 and a 24-hour volume of about $8,819,850,000. Approximately 16,879,175 of the maximum supply of 21,000,000 BTC are in circulation. As Bitcoin becomes more and more mainstream, the swarm of curious enthusiasts seems to expand ever greater, and the current number of unique users is estimated to somewhere in the range of 3-5 million.

Bitcoin: Competition, Pros and Cons

As the top dog in the cryptocurrency landscape, Bitcoin has more than its fair shares of emulators and competitors. Many claim to have improved upon Bitcoin's design, but, as it's the first of the pack to achieve such a level of recognition, it's worth going over what Bitcoin started. It's a blockchain -- in short, a list of records linked and secured via cryptography. Bitcoin's blockchain is the public ledger that holds its transaction history, and maintenance of this blockchain is done through a network of nodes that run Bitcoin's software. From the Bitcoin FAQ:

"This ledger contains every transaction ever processed, allowing a user's computer to verify the validity of each transaction. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses, allowing all users to have full control over sending bitcoins from their own Bitcoin addresses."

One way to think of it is as a database that is distributed over many computers. To verify Bitcoin amounts, each of the individual nodes has its own copy of the Bitcoin ledger and broadcasts additions to that ledger (transactions) to other nodes in the network. A group of transactions is a block, and this is sent to the nodes so that Bitcoin's software can then determine how much of the Bitcoin currency has been spent.

As such, Bitcoin isn't owned by any one person, and the network, according to Bitcoin's official documentation, is controlled by all users. The software is improved, but there's no way to force users to adopt changes in Bitcoin's protocol. Consensus is required for the platform to function correctly, since Bitcoin only works correctly with a "complete consensus among all users."

As for the currency itself, most users simply interact with the app/computer program that allows them to control their digital wallet and assets. It's important to touch on the process of mining, however, as this is a method for adding new blocks to the chain and receiving rewards in the form of payments. Whether done solo or as a pooled effort, it takes computer processing power to complete, and, in the case of Bitcoin's process, uses a concept known as proof-of-work for verification and acceptance by the rest of the network.

It's impressive technology, and anyone looking to take a deeper dive into the wealth of information on how Bitcoin functions would do well to peruse the developer guide, developer documentation and Bitcoin resources. As the frontrunner in the cryptocurrency space, though, there's been a lot of time for criticism of Bitcoin's platform to accumulate. Apart from critiques of Bitcoin's technical limitations (slow transaction rates, rising fees, difficulties with scalability, etc.), the main sources of derision have been about the booming level of interest in Bitcoin across the globe.

Some have been wary of the recent volatility of Bitcoin's price, which rose and fell dramatically at the beginning of 2018. Others, like JPMorgan Chase CEO Jamie Dimon, have called the cryptocurrency a fraud, and, while he later expressed regret for the hasty remark, it's still a sentiment shared by other naysayers. Warnings of Bitcoin being any and all things, from an outright Ponzi scheme to a speculative bubble, though, have not deterred newly minted cryptocurrency enthusiasts from flocking to the platform, which continues to try and blaze new trails in the blockchain and crypto future.

The Uses of Bitcoin

Bitcoin is primarily a digital currency used for peer-to-peer and business transactions and a store-of-value used as a trading asset on various exchanges. Bitcoin keeps a list of the many merchants and exchanges that have adopted the cryptocurrency, which continues to grow as time progresses.

The Future for Bitcoin

As Bitcoin's value continues to swing, many wonder if it will be able to maintain its top spot among the ever-growing heap of cryptocurrencies. There are platforms that process transactions faster and cheaper and provide whole hosts of features unavailable on Bitcoin's network. That doesn't mean that Bitcoin isn't trying to innovate, though. A look at the Bitcoin Projects page reveals a number of additions that are in the work, and those interested can track their progress as they come to maturity in the near future. Even if Bitcoin does fall from the top of the mountain, the technologies they've inspired will likely continue to evolve well into the future.

Sources:

1. https://coinmarketcap.com/currencies/bitcoin/
2. https://bitcoin.org/en/
3. https://bitcoin.org/en/faq#what-is-bitcoin
4. https://bitcoin.org/en/developer-documentation
5. https://bitcoin.org/en/developer-guide
6. https://bitcoin.org/en/resources
7. http://www.bitcoinprojects.net/
8. https://bitcoin.org/en/exchanges
9. https://coinmap.org/welcome/
10. https://www.coindesk.com/information/what-is-bitcoin/
11. http://fortune.com/2017/09/18/jpmorgan-buy-bitcoin-ceo-callingfraud/