About Bitcoin (BTC)
What Is BTC?
Launched in 2009, Bitcoin (BTC) is the earliest known digital currency. Since its inception, it’s been the world’s largest cryptocurrency by market capitalization. As the first virtual currency, Bitcoin gained widespread popularity and encouraged hordes of other cryptocurrencies.
As described in Bitcoin’s white paper, its meaning is deceptively simple: “A peer-to-peer electronic cash system.” Simply put, Bitcoin is a software-based currency that enables instant payment between two parties that may not necessarily be human. For example, Uber vehicles or self-driven taxis could have their own Bitcoin wallets. Bitcoin also opens up several opportunities for the development of the Internet of Things (IoT).
Additionally, the decentralized nature of this peer-to-peer technology eliminates the need for any central authority or intermediaries, such as banks. Unlike fiat currencies, BTC is created, traded, stored and distributed using a decentralized public ledger system known as the blockchain.
Who Is the Founder of BTC?
The first mention of Bitcoin was in a white paper, released in 2008, written by a pseudonymous Satoshi Nakamoto, also referred to as the “Father of Bitcoin.” Bitcoin software launched in January 2009. Despite much speculation, the identity of the author(s) has remained a mystery to date. Experts believe that Satoshi owns about 1 million bitcoins, valued at approximately $31 billion as of May 10, 2022 (close to 5% of the total bitcoins in circulation).
The probable reasons that favor Satoshi’s anonymity are privacy (from the government, media and banks) and protection (since the concept of BItcoin threatens the foundations of the globally existing banking and monetary system). Also, owning a $31 billion fortune (accurate as of May 10, 2022) in cryptocurrency is a riskier threat to the industry than we can imagine. However, the mystery around Satoshi’s identity is highly compelling, and efforts to unveil his/her/their identity will unquestionably continue.
What Is Bitcoin Used For?
Initially, Satoshi introduced Bitcoin for use as a digital, decentralized transaction currency. The world’s first Bitcoin transaction occurred in January 2009, when Satoshi sent 10 BTC to Hal Finney, a famous developer who downloaded the Bitcoin software on its release date. The use of Bitcoin as a currency increased steadily from 2009 to 2013. In 2010, the first commercial Bitcoin transaction took place when a programmer, Llaszlo Hanyencz, bought two Papa john's pizzas for 10,000 BTC. (In retrospect, of course, the irony of such a transaction is mind-boggling.) By the end of 2012, BitPay, a payment processor that lets merchants accept Bitcoin, had 1,000 registered merchants ready to use their service.
However, it was Bitcoin’s anonymity that popularized it as a medium of payment for dark web transactions. In 2013, the FBI seized Silk Road, a dark website, and collected 26,000 BTC in the process. Consequently, the FBI confiscated another 144,000 BTC from the founder and former owner of Silk Road, Ross Ulbricht. (Ulbricht is currently incarcerated in Tucson, AZ, at the US federal penitentiary.) That year proved to be a decisive one for Bitcoin, as the currency underwent two price bubbles in the same year, followed by a multi-year slump in price.
Despite negative press and volatility, Bitcoin continued to gain popularity. The price bubble attracted speculators, and Bitcoin became an attractive store-of-value and investment asset, similar to gold. Although Bitcoin has no physical existence, it has value since it’s characterized by limited supply, as well as divisibility and transportability.
Bitcoin users and investors have always been bullish about the currency’s promise. Bitcoin offers lower transaction fees than banks, even for international payments. It presents a multitude of opportunities in the worlds of Fintech and the Internet of Things (IoT). Thus, Bitcoin is used for making instant, barrier-free payments, and as a store-of-value and investment.
Why Is Bitcoin Valuable?
Very few countries accept Bitcoin as legal tender. Yet Bitcoin is currently the most valuable cryptocurrency in the world, priced at approximately $31,000 as of May 10, 2022. Any successful currency acquires value because of five key attributes. Let’s take a look at what these attributes are, and how they apply to BTC.
Bitcoin offers a much larger degree of divisibility than fiat currencies. A single Bitcoin is divisible up to eight decimal places, with the smallest unit, a Satoshi, equal to 0.00000001 BTC (or one hundred-millionth of one Bitcoin). Such divisibility enables the circulation of quadrillions of individual Bitcoin units throughout the world economy.
In its original white paper, Bitcoin’s author(s) capped the total supply of BTC tokens at 21 million. As of May 10, 2022, there are about 19 million tokens in circulation. The last token will be mined around the year 2140. Scarcity drives Bitcoin's worth higher.
Bitcoin beats fiat currencies for ease of transferability. Apart from low transaction fees and instant payments, it presents ease of storage and trading through Bitcoin wallets and exchanges. In addition, fiat currency incurs both higher cost and settlement times for international transfers than Bitcoin.
Bitcoin uses blockchain technology for the validation of transactions and record-keeping, which opens up a vast realm of opportunities for the use of BTC beyond the cryptocurrency space. With the evolution of Fintech and IoT, Bitcoin has found utility in other areas as well.
Difficulty of Illegal Reproduction
The decentralized nature of blockchain technology makes BTC almost impossible to reproduce via illegal means. Counterfeiting is possible only in the event of double spending or a 51% attack. However, both are highly unlikely to occur, due to the decentralized nature of blockchain technology.
Overall, Bitcoin is valuable because it possesses all the must-have attributes for a successful digital currency.
What Makes BTC Unique?
If we compare histories of various cryptocurrencies, three things separate Bitcoin from all the others.
First Cryptocurrency to Appear on the Market
When introduced, BTC was the first of its kind. In addition to the novelty factor, Bitcoin also offered a strong value proposition. The world had never thought of a “decentralized virtual currency” beyond the control of any bank or financial institution. Within two years, the world witnessed many “improvisations” on the original idea and gained some awareness of Bitcoin’s flaws. However, the innovative idea of a decentralized currency left a lasting impact.
If we look at the history of the global cryptocurrency market, Bitcoin ranking has always been at the top. Over time, various alternative cryptos — or altcoins — have attempted to replace Bitcoin. However, Bitcoin's market capitalization remains the largest among all popular cryptocurrencies to date. One study reveals that Bitcoin constituted close to 66% of the total crypto market share in 2020. This figure has since dropped to 40% in 2021, but Bitcoin still leads the crypto market by a wide margin.
These properties make Bitcoin unique, distinct from all other pretenders to the throne. It would be overly optimistic to say that nothing can replace Bitcoin. But looking at the past and present of the cryptocurrency market, we know that Bitcoin is the reigning digital currency, and no other crypto can take its place anytime soon.
The Bitcoin network largely relies on a proof of work (PoW) mechanism, which requires that thousands of miners use energy-intensive machines to verify and add transactions daily to the blockchain. The complexity of the verification process is only bound to increase with a rise in the volume of transactions, thereby consuming higher amounts of energy over time. Additionally, the process of Bitcoin mining is also highly energy-intensive. According to Cambridge University's Bitcoin Electricity Consumption Index (CBECI), Bitcoin mining consumes 133.68 terawatt-hours (TWh)/year of electricity, which is equivalent to the annual electricity consumption of a midsize European country.
In September 2020, a study concluded that only 39% of Bitcoin's energy consumption was carbon-neutral. The main concern related to this level of energy consumption is that most miners utilize nonrenewable sources of energy, leaving behind an alarming carbon footprint. To combat this problem, Bitcoin miners need to invest in and utilize renewable sources of energy, like solar, hydro and wind. Various organizations and agreements, such as the Crypto Climate Accord, are advocating that companies adopt environmentally friendly sources of energy. They also aim to help the world achieve net zero emissions by 2030.
How Many Bitcoins Are in Circulation?
Bitcoin has undoubtedly come a long way since Satoshi launched it in 2009. The source code in the white paper limited the total number of bitcoins that can be mined or circulated to 21 million, ensuring that this cryptocurrency remains scarce. This scarcity will also hold the Bitcoin price steady for years to come.
So far, about 19.04 million bitcoins are already in circulation, i.e., close to 91% of the total that will ever be produced. This leaves us with a little under 2 million bitcoins yet to be mined. However, as the number of bitcoins mined increases, the complexity of mining a new block also increases. According to experts, about 97% of the total bitcoins will be in circulation by the next decade. The final 3%, however, will be mined in the next century, and the last Bitcoin will enter circulation around the year 2140. The reason behind this slow mining is a process called halving (explained later in the article).
The process of Bitcoin mining, an analogy to gold mining, is a mechanism to issue new bitcoins. It also verifies and adds Bitcoin transactions on the blockchain. Mining requires high-speed computers called “nodes” to independently validate transactions and add blocks of validated transactions to the ever-growing chain, which holds a complete, permanent and public record of every Bitcoin transaction ever made. This requirement of validating transactions for authenticity before adding them to the blockchain is called proof of work.
Proofs are hard to generate, because one node needs to try billions of calculations per second before the proofs are created. Bitcoin miners earn rewards in Bitcoin for their efforts in issuing new bitcoins, or creating proofs and verifying individual transactions. The entire process of mining prevents fraud or false information from being recorded. Over the years, mining has become an increasingly competitive business, as the Bitcoin network automatically increases the difficulty of finding new, valid blocks.
How Long Does Bitcoin Take to Send?
Receiving a payment notification is almost instantaneous when conducting a Bitcoin transaction. However, the process of verifying the transaction and adding it to the block consumes time. The network sends the transaction to multiple miners for authentication. Once verified, the user receives confirmations by a consensus of miners. The duration required for a confirmation notification ranges from a few seconds to 90 minutes, with 10 minutes being the approximate average. Users are free to determine at what point they consider their transaction successful. On average, users wait till six confirmations to declare their transaction safe and complete.
When Is the Next Bitcoin Halving?
The process of halving in Bitcoin affects the number of Bitcoin tokens found in a newly created block. In 2008, every freshly mined Bitcoin block contained 50 BTC. In the Bitcoin white paper, Satoshi devised a formula by which the number of BTC tokens, present in a mined block, halves approximately every four years. Since 2008, we’ve seen three halving events (November 28, 2012; July 9, 2016; and May 11, 2020). Currently, a block only contains 6.25 BTC. After the next halving occurs, each block will have only 3.125 BTC.
Halving helps lower the rate at which new bitcoins are made available. Consequently, halving increases Bitcoin's value by limiting its supply. The next halving will occur in the spring of 2024.
How to Store BTC
Investors and users can store their BTC in BTC’s official online wallet, or in unofficial desktop wallets or cold storage. Fortunately, there’s no lack of BTC wallets available on crypto exchanges, so you can take your time to browse and choose the one that best suits your needs.
How to Buy BTC
You can buy BTC from any top crypto exchange, including Bybit.
How to Buy BTC on Bybit
To purchase BTC on the Bybit exchange, simply follow these steps:
- Head to the spot trading page of BTC.
- Select your trading pair on the left side of the page. For BTC, you can choose to trade with USDT, USDC or DAI.
- Choose the type of order you’d like: Limit Order, Market Order or Conditional Order.
For Limit Orders:
- Select Limit.
- Enter the order price.
- Enter the amount of BTC you wish to buy.
- Click on Buy BTC.
- Once you’ve confirmed that the information is correct, click on Buy BTC.
- View your order details under Active on the web page, or Orders if you’re using the Bybit app.
For Market Orders:
- Select Market.
- Enter the amount of USDT you’ve paid to buy BTC.
- Click on Buy BTC.
- Once you’ve confirmed that the information is correct, click on Buy BTC.
- View your order details under Filled.
For Conditional Orders:
- Select Conditional.
- Enter the trigger price.
- Choose to execute at Market Price or Limit Price.
- Market Price: Order price need not be set.
- Limit Price: Order price needs to be set.
- Market Buy: Enter the amount of USDT you’ve paid to buy BTC.
- Limit Buy: Enter the number of BTC you want to buy.
For more help, you can also visit the Bybit spot trading guide.