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What Is Bitcoin?
This is a very interesting question because Bitcoin means different things to different people and interest groups. The most common term associated with Bitcoin is “cryptocurrency”. Some call it a “currency” which is not entirely accurate. Bitcoin is many things to many people.
Bitcoin is all of the following:
- a software protocol
- decentralized protocol used to assign and transfer value without the need for a trusted third party intermediary
- Store Of Value
- Settlement Layer
- scarce digital asset
- the first decentralized peer-to-peer payment network powered by its own users without the need for a trusted intermediary
- created and released into the world in 2009 by an unknown person using the alias Satoshi Nakamoto
- Wikepedia says the following: It is a decentralized digital currency without a central bank or single administrator that can be sent from user-to-user on the peer-to-peer bitcoin network without the need for intermediaries.
What Is A Bitcoin?
A Bitcoin or a unit of Bitcoin is the output from the process known as mining. Miners are rewarded for protecting and supporting the network by receiving units of Bitcoin when they complete a block. This is known as the “block reward”. The block reward size drops in half every four years and there will only ever be 21 Million total Bitcoins in circulation.
What Is Bitcoin Used For?
Bitcoin is used for several things. Many hold it s a Store Of Value to protect against inflation and the loss of purchasing power. Many use it for speculation. Many use it to purchase things. Some receive their pay in Bitcoin.
If one spends enough time roaming the crypto space, one will certainly encounter a “Blockchain” talking head that declares “it’s all about Blockchain and not Bitcoin”. Generally this is a scammer or snake oil salesmen (see SEC actions like this one) of some sort trying to pitch you on why their new arcade token is “better than Bitcoin”. Nic Carter does a masterful job tearing apart the lunacy of the entire “Blockchain vs Bitcoin” debate.
In the middle half of 2018 the Lightning Network began to emerge in force. The Lightning Network is a second layer protocol on top of the main Bitcoin blockchain. Lightning nodes and the overall size of the network are exploding in size. Forbes captured how payments via Lightning are skyrocketing.
The Lightning Network continues to dazzle and skyrocket as many “altcoins” are left to wonder what purpose they strive to serve if Bitcoin can enable lightning fast payment rails as a second layer to the core Bitcoin blockchain. Why do we need thousands of coins as a method of payment or store of value?
The Bitcoin community took it upon itself to pass the Lightning Torch to high value contributors. This has been highly successful and even enabled a Tweetstorm by none other than @jack. Herewith below:
I only have bitcoin https://t.co/C24xNJxuFB— jack 🌍🌏🌎 (@jack) February 5, 2019
More on this interaction and Lightning Torch movement is found here.
How Does Bitcoin Work?
One must be careful when looking for strong sources on Bitcoin information and knowledge. So much is at stake with creating a new financial system controlled by the people rather than privately owned central banks, there inevitably is a world filled with scammers and charlatans trying to capture your mind with their self proclaimed expert knowledge on Bitcoin and “crypto”.
One source NOT overrun with scammy tactics and misguided intentions is a new book titled The Bitcoin Standard. This book is presented on the context of embracing the open and permissionless existence of Bitcoin. Feel free to check it out.
The Bitcoin Standard covers just about all of the bases to include how Bitcoin mining works.
Bitcoin is a huge threat to the status quo, rent seeking financial system. To wit, one needs to look no further than how banks create money and the real way the system functions and relies on debt.
Microsoft And Bitcoin
Microsoft recently announced more details about its initiatives in creating a decentralized ID system. Microsoft is building this DID platform on top of Bitcoin. That is a very important point. It did not choose to create a shitcoin or use Ethereum. It chose Bitcoin.
Here is another analysis of this move.
The nature in which Big Tech is interacting with Bitcoin is very telling, especially in light of the increased focus on Big Tech and privacy. One must wonder at what point individual consumers fight back against Big Tech and the establishment by using Bitcoin and other tools to control their own data and information.
Regardless, it’s fascinating to see the cold hard facts about which big tech companies are aligning with Bitcoin or against it in some type of either direct or indirect attempt to compete with Bitcoin. Bitcoin is permissionless and open source, so there is nothing stopping any organization from building with Bitcoin or on top of Bitcoin. Microsoft is doing just that.
Twitter to this point based on facts is clearly building with and on top of Bitcoin. There is the obvious connection with Square and CEO Jack Dorsey, and the company has made official statements about Bitcoin work.
Facebook on the other hand is trying to launch its own cryptocurrency called Libra, but it isn’t even a genuine cryptocurrency. it’s a centralized stablecoin.
While charlatans continue to pump their blockchain snake oil, the Bitcoin economy and ecosystem continues to evolve. BAKKT is an emerging player in this space that is already running a new exchange where bitcoin futures contracts are settled the same day with actual bitcoin, not fiat. This is a revolutionary step forward in the world of finance.
Lolli is one of what will be many players offering bitcoin as a reward for spending much like many credit cards do and similar to the concept of airline frequent flier miles. This plays to the crowd looking to use bitcoin as a Store of Value. PEI also rewards folks with Bitcoin as well. It seems plausible that te big players such as Facebook and Google will get involved with Bitcoin at some level and at some point.
A new interesting entrant to the crypto space is Tezos. Bitcoin’s hashrate continues to set record highs after record highs, and we are seeing the amount of Bitcoin stored without moving for at least 12 months and the number of wallets holding Bitcoin continue to reach all time highs. People are holding on, so perhaps the concept of staking and baking with XTZ will gain momentum. So many things can link together such as deep learning and artificial intelligence. Even Elon Musk tweets about Bitcoin now and again.
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