WTF is Bitcoin? – A View on Cryptocurrency


bitcoinWhat is Bitcoin?

Bitcoin is the first decentralised cryptocurrency which is powered by Blockchain. It was invented in 2009 buy an anonymous programmer named Satoshi Nakamoto.

Bitcoin is a digital currency. Unlike Rupee, Dollar or Euro it can not be held or stored physically. Bitcoin is used as medium of transaction which is completely digital in nature.

Understanding Blockchain, decentralisation & cryptocurrency.

Blockchain is a distributed ledger system that records the data in a network of servers rather than in one place and allow anyone to excess these data.

Decentralisation is a method of hosting data and powering systems through a vast network of stake holders, not letting one entity controls the system.

Cryptocurrency is a digital commodity that facilitates the transaction of product and services. Cryptocurrency doesn’t require a mediator to carry out transaction.

How bitcoin is created?

Bitcoin is created through a process called Mining.

Mining is the process of carrying out high level complex calculations with high power computers through blockchain.

In bitcoin mining, miners verify the bitcoin transactions and write it to the bitcoin ledger. And in return miners are rewarded with bitcoins.

Why bitcoin is so valuable?

Value of a commodity is derived from the demand and acceptance. Like Gold, people are willing to accept gold in exchange of cash.

Much like this, Bitcoin is also slowly becoming a mode of transaction. And due to its limited nature of supply, people (traders) are willing to pay higher amount for bitcoin. Thus the price of Bitcoin is growing.

What are the uses of Bitcoin?

Investment: Investors are investing in bitcoin and cryptocurrency.

Trading: Bitcoin is slowly becoming a commodity of choice for traders. Traders also trade in bitcoin derivatives.

Mode of payment: Due to its faster speed and lower fees, bitcoin is gaining popularity as mode of payments for product and services.

The History of Major Bitcoin Forks

Bitcoin forks have got a lot of interest because when a new coin is created, those who have the original coin will get the same value in the new coin. This means that a fork can be profitable for people who have a stake in the market. Therefore, it pays to understand the history behind forks.

Bitcoin Cash (BTC)

The first major bitcoin fork occurred on 1st August 2017. Roger Ver, the promoter, claimed that Bitcoin Cash was better than bitcoin because the transactions were faster, due to increased block size.

Bitcoin Gold

Bitcoin Gold was a hard fork that followed shortly after bitcoin cash, in October 2017. The creators of this hard fork aimed to restore the mining functionality with basic graphics processing units (GPU), as they felt that mining had become too specialized in terms of equipment and hardware required.

Segregated Witness (SegWit)

This was a soft fork so did not create a new currency. However, it reduced the size of individual transactions, which led to the BTC hard fork – the announcement that this change was coming was enough that Bitcoin Cash developers wanted to create a new currency. It went live after the BTC hard fork did.

Bitcoin Diamond (BTD)

This hard fork went live on 24th November 2017 to solve a perceived lack of privacy and slow transaction confirmation speeds. According to the developers, it does not need a new blockchain.

Super Bitcoin (SBTC)

This hard fork promised extra capacity of coin, pre-mined and held in the Super Bitcoin Foundation, to be used to encourage early developers and keep the market busy. Offering support for smart contracts and embedded zero-knowledge proofs to safeguard privacy.

Super Bitcoin allows for bigger blocks, more scalability and faster transactions on the lightning network.

BitcoinX (BTX)

Offering a more reliable, easier to use and environmentally friendly coin, BTX went live on 13th December 2017.

There have been many other forks announced. For example:

  • ABitCoin (ABTC)
  • Bitcoin Hot (BTH)
  • Bitcoin Oil (OBTC)
  • Bitcoin World (BTW)
  • Bitcoin Stake (BTCS)
  • Bitcoin Faith (BCF)
  • Bitcoin God (GOD)

There are many more; some have passed the snapshot block, but none of these have yet gone live.

This list demonstrates that not only are there many changes to the protocol that could create new coin.

What are the benefits of Bitcoin?

Anonymity: Bitcoin transactions can be done without revealing true identity or personal info.

Decentralised: There is no authority that monitor or regulate bitcoins.

Inflation proof: Bitcoin is created to be finite in nature. This prevents the chances of inflation.

Faster transaction: Due to transactions happen in electronic medium, the transactions are faster and cheaper than bank transfers.

Issues with Bitcoin:

Volatility: The volatility of bitcoin is much higher than other tradeable assets.

Scam/fraud: Bitcoin and crypto scams are becoming very common.

Unregulated: Due to unregulated nature, there is no legal remedies available in case of scam and fraud.

Illegal operations: Due to its anonymous nature, bitcoin is the default mode of payment for everything illegal, from drugs to crime.

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