Bitcoin (btc) review, what is bitcoin?


Andrew Rosenbaum
Senior Content Specialist
Andrew Rosenbaum has been a financial journalist for more than 15 years. He has worked for Euromoney, Institutional Investor, Time magazine, MSN Money and the Wall Street Journal before joining… Read more

Bitcoin is the original cryptocurrency, the first one that launched the entire industry.  It began with a white paper published under the name Satoshi Nakomoto in 2008 –  no one knows who Nakamoto really is, but it is known that he created the Bitcoin network along with several associates, and then dropped out of sight completely.

Nakamoto wrote just as the financial crisis was building up across the globe. Blaming the banks and financial intermediaries for the crisis – with some justice – Nakamoto proposed that we “remove the intermediaries” from the Internet payment process. Instead of going through a bank, the payment would be made directly from peer to peer.

But how could such payments be secured? Nakamoto created the original blockchain, the concept that has resonated throughout business not only for cryptocurrencies, but for many other applications. The reason is because the blockchain creates a public ledger of transactions that is distributed over a computer network. No one can forge a transaction, because they are all verified by the entire chain. Each is attached to a “block,” which is created by a mining process based on solving a complex mathematical equation.

The total number of Bitcoins is limited, but they are still in the process of creation by “miiners,” who solve mathematical equations to create blocks.

This is the principle on which all cryptocurrencies operate, although many simply create all their coins at the outset and leave out the mining. There are, currently, about 30 cryptocurrencies launched every day, according to Coinbase.

Nakamoto created Bitcoin as a simple payment method, but its popularity rapidly spread as an investment as well. When Bitcoin was launched in 2010, its price stayed at less than a dollar for almost a year, then jumped to more than $500. In 2017, it rose above $22,000, but has fallen back and is now, at this writing, at about $13,000.

Acceptance of Bitcoin, both as a concept and in terms of use, has also grown phenomenally. You can use Bitcoin to buy on Amazon, to buy real estate in California, to purchase tickets to sporting events in Australia. Regulators have, however, begun to react to the spread of Bitcoin and in some countries it has been outlawed completely. Of course, anyone with Internet access can buy Bitcoins and use them wherever they are.

Because of the fees involved in using Bitcoin, however, not everyone wants to spend it in shops. Buy a cup of coffee with Bitcoin, and you’ll pay about  a $10 fee. Buying Bitcoin itself today can cost fees of more than $50. This writer recently received a Bitcoin payment equivalent to $150 that cost the sender $38.

To cope with the enormous expansion that has befallen it, the Bitcoin network has adopted a number of steps, some of them quite controversial. It has decided, for example to retain the original block size of 1MB, rather than scale up. This has slowed transaction times to periods as long as weeks. The Bitcoin network has adopted techniques like Segregated Witness which change the way the blocks function. And Bitcoin core has spawned two alternative crytpcurrencies, Bitcoin Cash and Bitcoin Gold, which are intended to take the pressure off the original network. Considering that Bitcoin Cash’s price has now reached more than $2,000, one could argue that this move is successful.

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