Bitcoin: The World's 1st Blockchain-Based Currency
Written by John Butler
Posted March 9, 2018
What is a bitcoin (BTC)?
That was the question on everyone's lips at the end of 2017, when Bitcoin was nearing $20,000 in value.
Today, the curiosity surrounding Bitcoin has quieted down. This is mainly because many people already know what it is — at least, to a degree.
Whether they were trying to make a quick buck or were genuinely trying to understand a new technology, investors embraced Bitcoin, blockchain technology, and decentralized networks.
But today, a basic understanding of Bitcoin isn’t enough. We’ve passed the days when Bitcoin was simply digital money and a hype-driven investment.
We’re rapidly approaching stability in the digital currency markets, with more regulators coming in to ensure that both investors and technologists are protected.
That being said, today’s digital currency investors can benefit from knowing the inner workings of Bitcoin, particularly its landmark blockchain technology. And that's why we've written this report.
Over the course of this resource, we look at Bitcoin, its history, and its famous blockchain backbone. As a bonus, we even look at where Bitcoin could go from here...
A Brief Explanation of Bitcoin
We don’t think it’s an exaggeration to say Bitcoin is the world's first successful peer-to-peer digital currency. Bitcoin was introduced to the world in October 2008 by an anonymous individual named Satoshi Nakamoto.
The first line of the white paper introduced the concept fairly sufficiently:
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.
To this day, no one knows who Satoshi was.
They are now a piece of Bitcoin lore. People still speculate over their every characteristic, from identity to gender.
Either way, Satoshi disappeared shortly after the Bitcoin white paper was published. But that didn't stop Bitcoin from developing a loyal cult following.
In the Bitcoin white paper, it's established that Bitcoin was intended to act as a peer-to-peer digital currency that would allow individuals to exchange money without having to go through a bank or central entity.
This is the key reason that Bitcoin has incredible value: It removes the middleman without compromising trust.
Think of it like this...
If you were giving money to someone without a central entity governing the interaction, how would you know if you could trust the transaction or person?
Bitcoin absolves this trust problem through technology called blockchain.
Let’s take a deeper look...
Bitcoin’s Blockchain: The First of a New World
A blockchain is a distributed ledger of information.
In Bitcoin’s case, it's completely decentralized — meaning no central power owns it.
Every transaction that takes place on the Bitcoin network is recorded in the blockchain. And that information is available to everyone on the network. This creates a frictionless system of trust that no party can manipulate.
Aside from allowing Bitcoin users to trust the network, the Bitcoin blockchain also provides the digital currency with other key traits, including:
- Security. A blockchain is more secure than traditional digital storage information. Because it's decentralized, a blockchain is safe from a DDoS attack. Outside of that, it would take a tremendous amount of computing power to alter information on a blockchain. Some experts believe that this amount of computing power is impossible to achieve.
- Freedom from central regulation. Bitcoin’s blockchain allows the digital currency to operate without a central entity. Transactions are validated by a group of individuals operating computing hardware and software. These individuals are called miners. Miners use hardware and software to solve complex computing problems. Miners are rewarded for their efforts that allow Bitcoin transactions to take place without a central party.
- Finite. Many compare Bitcoin to digital gold, and this is a very fair comparison. The amount of Bitcoin that can exist in the world is finite, capping at 21 million. This number was what Satoshi designated in the Bitcoin white paper. The immutable nature of Bitcoin’s blockchain makes it impossible for people to forge fake Bitcoins or to double spend. Beyond that, because the Bitcoin blockchain remains dependent on miners, not a government, it remains safe from government-produced hyperinflation.
These powerful traits have allowed Bitcoin to grow from small internet money for geeks into a global technology disruption.
And it's been busy during its 10 years of existence.
We don't go too deeply into the semantics of blockchain in this piece. But if you'd like to read our blockchain resource page, you can access it here.
For now, we'll move ahead and take a look at Bitcoin’s timeline: 2009 to present...
You might have heard of the Bitcoin pizza.
That's where Bitcoin’s history really kicks off.
In May 2010, a man made the first Bitcoin purchase, paying 10,000 bitcoins for two pizzas.
By 2011, Bitcoin had begun to seep into the mainstream but not in a positive light. People started voicing their concerns over the safety of the digital currency. But in spite of security flaws, Bitcoin continued to gain mainstream acceptance.
In April 2013, Bitcoin's market cap surpassed $1 billion. It was this sudden rise that transformed Bitcoin from niche internet money into a media darling.
In October 2013, FBI agents shut down Silk Road, the world’s largest black market, which was powered through Bitcoin. Silk Road catered to a global audience, allowing anonymous users to buy a wide range of drugs with zero repercussions. The Silk Road event set Bitcoin back, solidifying the existing view that bitcoins were mainly used for illegal activity.
By 2013, Bitcoin was starting to see the earliest inkling of regulation, with regulators agreeing that the digital token had value. In the same year, Bitcoin's price hit $700. During its continued rise, Bitcoin would face other issues and triumphs, including the Mt. Gox breach and its acceptance by many major retailers.
In 2017, investors witnessed the birth of Bitcoin Cash and the Bitcoin boom.
And that leads us to today...
So, Where's Bitcoin Headed?
The truth is that no one knows what lies ahead for Bitcoin.
As the world’s first digital currency, it launched a multibillion-dollar blockchain empire.
That being said, Bitcoin is an aging technology in a world of fast and agile contenders.
Throughout 2018, investors should be asking whether or not Bitcoin actually has the right tools and functions to keep up with the growing market.
Some analysts are still projecting high price ceilings for Bitcoin, some as high as $100,000.
Regardless of those predictions, investors who understand Bitcoin and its value are better prepared to approach the entire digital currency market. Even if Bitcoin isn't the winning blockchain-based currency, it has certainly made history and has paved the way for a whole new asset class.
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For Digital Currency, 2017 Was a Landmark Year…
The price of Bitcoin, the world's first digital asset, soared. And that turned many first-time investors into millionaires within a matter of months. Beyond Bitcoin, other digital assets also gained national attention and the support of massive corporations like Intel, Microsoft, and IBM.
But today, investors are looking at a different digital currency landscape…
A whole new wave of valuable blockchain companies is giving investors a second chance at Bitcoin-level profits.
At Token Authority, our goal is to provide investors with the actionable research and news that they’ll need to profit from this groundbreaking market. Sign up below to receive our free e-letter and a report detailing the top three digital currencies that you should be keeping an eye on in 2018.Sign up to receive your free report. After signing up, you'll begin receiving the The Token Authority e-letter.