WHY IS IT REVOLUTIONARY?
Bitcoin technology facilitates a trustless economic system where borderless financial transactions can be finalized without intermediaries. While traditional banking and payment systems heavily rely on trust, Bitcoin offers a way out of this system with no third party to resolve the double-spending problem and maintain properties like censorship resistance, immutability and decentralization.
Such a framework allowed the creation and implementation of a system effectively disjoined from government control, delivering a revolutionary separation of money and state for the first time in history. Bitcoin breaks all models we’re used to, starting with reduced state power and control, the exact reason governments and their affiliated mainstream media spread disinformation, fear and doubt about it.
Bitcoin offers real digital scarcity which makes it a store-of-value asset; censorship resistance as an assurance that everyone can use it at any time and everywhere, with no discrimination; settlement finality, which almost instantly ensures that transactions are irreversible.
Bitcoin’s settlement finality is still a widely underrated feature, while it represents a valid alternative to more traditional payment methods like Visa credit cards and SWIFT as the underlying structure of bank payments. These more conventional payment systems may take up to six months to settle, while a typical Bitcoin transaction is finalized within 10 minutes to a couple of hours.
HOW DOES IT WORK?
When users send or receive bitcoin, their transaction is sent to the network of nodes. Each node receives the file and verifies that it’s legitimate. Once verified, it’s added to the Mempool and then passed onto the other nodes in the network. The Mempool stores valid, yet unconfirmed transactions.
Miners then group those transactions together and create a block of transactions, typically selecting those transactions with the highest fees first. Each block is encoded with a block header, transaction counter and transactions, which contains supporting information about the transactions and the hashes.
Miners then compete with each other to be the first to append the next block to the blockchain. The miner or mining pool with the most computational power has the best chance of doing so, however that isn’t deterministic. Transactions are confirmed and new blocks are added thanks to a proof-of-work (PoW) consensus algorithm that requires miners to find a valid hash below a target set by the network. The successful miner is rewarded with new bitcoin as a reward for securing the network; this is known as the block reward and it’s how new coins are minted.
Each block is linked to the previous block thus creating a chain of blocks that cryptographically establishes a public record of valid transactions that can’t be altered (immutable) without altering its block and the ones after it..
It’s worth noting that the protocol defines the rules and PoW determines how these rules will be followed and is regarded as one of the most secure solutions to the Byzantine Generals Problem, a more academic term for solving the double-spending problem without relying on any third party.
Users don’t need to know how Bitcoin works precisely, like they probably don’t know how the internet works despite benefiting from its use. However, it is helpful to grasp the basics as this will help them understand why Bitcoin matters.
WHAT IS BITCOIN?
Bitcoin is open source, permissionless, peer to peer programmable money. The supply is hard capped at 21 million coins, which cannot be changed. The network is peer-to-peer and transactions take place between users directly, without an intermediary such as a central bank. These transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.
The various avenues will be revealed when going down the rabbit hole, and the journey will be captivating. With this article, you can start learning about Bitcoin’s purpose, who creates the coins, and if it is real money, including more practical advice about buying bitcoin and how to keep your coins safe.
Bitcoin (with an uppercase letter B) refers to the protocol, software, and network, while bitcoin (with a lowercase b) describes the native monetary asset.
ORIGINS OF BITCOIN
Unveiled by a mysterious person or a group known as Satoshi Nakamoto, it is the first cryptocurrency ever created and was described in detail in the white paper published on October 28, 2008. A digital version of cash, which in its physical form is inherently peer-to-peer, was the hardest thing to build, and the genius of Satoshi was to combine existing technology and processes to overcome the enduring issue of double-spending digital currencies without relying on a third party.
Nobody knows the true identity of Satoshi, who disappeared in 2011, leaving the project to volunteers to expand and upgrade. Therefore, it’s fair to say that Bitcoin has no single leader and can survive and thrive without a CEO.
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Bitcoin is a decentralized digital currency that was created in 2009 by an unknown person or group using the name Satoshi Nakamoto.
Bitcoin transactions are recorded on a public ledger called the blockchain, which is maintained by a network of nodes or computers around the world.
The total supply of Bitcoin is limited to 21 million coins, and as of 2021, over 18 million Bitcoins have already been mined.
Bitcoin's price is highly volatile and has experienced several booms and busts over the years. In 2021, Bitcoin's price reached an all-time high of almost $65,000, but it has since dropped significantly.
Bitcoin can be used to purchase goods and services, but it is also widely traded as a speculative investment.
Bitcoin transactions are irreversible and are processed quickly without the need for intermediaries such as banks.
Bitcoin's underlying technology, blockchain, has many potential applications beyond just currency, including in supply chain management, voting systems, and more.
To own Bitcoin, you need a digital wallet to store your coins and a private key to access and send them. It's important to keep your private key secure to prevent theft.
Bitcoin is often criticized for its energy consumption and the environmental impact of its mining process, which requires a lot of computational power.
Bitcoin has spawned many other cryptocurrencies, collectively known as altcoins, that have similar but often different features and use cases.
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BLUEWALLET TO SUNSET CUSTODIAL LIGHTNING WALLET SERVICE
On-chain Bitcoin wallets and self-custody Lightning wallets will not be impacted, according to a blog posted by the mobile Bitcoin app company.
BlueWallet, a Bitcoin wallet with apps in both the iOS and Android stores, has announced that it will end its custodial Lightning wallet service by April 30, 2023.
In a blog post, the company explained that “Today, we are announcing that the Lightning node, Lndhub.io, where BlueWallet provides Lightning wallets to its users, is sunsetting. While you can still withdraw your sats, creating new or refilling existing Lightning wallets on LndHub node will no longer be possible.”
The post proceeds to request that users remove funds from their BlueWallet custodial Lightning wallets as soon as possible. It is also made clear that regular BlueWallet Bitcoin wallets will not be impacted by this change, nor will self-custody Lightning wallets –– where users connect to their own Lndhub.
“Lndhub started as a weekend experiment on a new fringe technology barely used at the time called the Lightning Network,” the blog explains. “Today, with the availability of more mainstream services offering scalable solutions, Lndhub has fulfilled its purpose in its current form.”
Users will still be able to access Lndhub as a software and self-hosted solution, able to connect to their own LndHub from BlueWallet or other software that supports the LndHub API specification.
The post concludes with an optimistic take, saying that “This may sound like bad news, but this essentially means BlueWallet going forward will only support self-custody solutions. This is good for bitcoin and BlueWallet users.”
