Bitcoin

• Launched in 2009 by an anonymous person or group known as Satoshi Nakamoto, Bitcoin is a peer-to-peer (P2P) digital currency system that operates independently of any central authority.
• Using blockchain technology to secure and verify transactions, Bitcoin gained popularity for several reasons, including scarcity, security, privacy, and decentralisation.
• BTC, Bitcoin’s native coin, can be earned through mining or purchased on an exchange.
• Freely available to anyone, Bitcoin wallets are typically used to buy, store, and send Bitcoin.
• Bitcoin’s price volatility makes it attractive to certain traders.
• An estimated 14% of all US adults own Bitcoin.

In 2008, Satoshi Nakamoto introduced the world to Bitcoin and its underlying technology: blockchain. But the true identity of Bitcoin's creator remains a mystery to this day. While there have been speculations and proposed candidates, no concrete proof of Nakamoto’s identity has been uncovered.

Regardless of their identity, Nakamoto's impact and legacy in the cryptocurrency world are undeniable, and their identity continues to be a topic of interest and discussion within the cryptocurrency community. It is estimated that Nakamoto may possess around 1.1 million BTC, equivalent to 5% of all bitcoins to be created.

While Bitcoin’s creator remains anonymous, the reasons behind its creation remain speculation. However, it may have been driven by several factors, as gleaned from the white paper:

First, Bitcoin aimed to address the flaws of traditional financial (TradFi) systems based on trust, such as centralised control, high transaction fees, and limited accessibility.

Second, Bitcoin's underlying principles include decentralisation, trustlessness, security, and privacy — all achieved through blockchain technology. By eliminating intermediaries, Bitcoin enables fast and low-cost transactions, financial inclusivity, and greater transparency.

These factors also mirror public criticism of the global financial system at the time of Bitcoin’s launch — soon after the 2007–08 global financial crisis.

Bitcoin is based on a technology called blockchain, which is governed by a consensus mechanism. In simple terms, a blockchain notes down all transactions in a digital ledger, which can be publicly viewed by anyone online.

Bitcoin is not governed by one centralised institution; rather, a group of stakeholders maintain the ledger (the blockchain) together to reach agreement on which transactions are right or wrong. This is called a consensus mechanism. Bitcoin relies on the Proof of Work (PoW) consensus mechanism, the first blockchain consensus ever created.

Bitcoin is valued by members of the cryptocurrency community for several reasons. First, it is a decentralised currency, meaning its issuance is not controlled by any government or central authority.

Second, Bitcoin has a limited supply, with only 21 million coins ever to be mined. This scarcity is often compared to gold by the cryptocurrency community and makes Bitcoin an attractive asset for some. Unsurprisingly, Bitcoin has been dubbed ‘digital gold’.

Third, Bitcoin operates on a secure and transparent technology called blockchain. This ensures that transactions are recorded and verified by a network of computers, making it virtually impossible to alter or counterfeit transactions. Some consider that these factors have combined to make Bitcoin a valuable and increasingly sought-after digital asset.

Unlike fiat currencies, which are issued and backed by governments, no one owns the Bitcoin payment network itself; it is entirely independent of any one person or organisation (miners work together to maintain the Bitcoin network). However, people and organisations can own BTC, the native currency of the Bitcoin network, and make software to buy, store, or transfer bitcoins.

The number of Bitcoin owners has continued to steadily grow. According to a Morning Consult survey, 26% of millennials and 14% of all US adults own Bitcoin. Globally, it is estimated that by the end of 2023 there were 580 million crypto owners, with over 296 million Bitcoin owners. These estimates translate to an average global crypto ownership rate of 6.8% as of June 2024.

The largest holder of Bitcoin is believed to be Satoshi Nakamoto, the pseudonymous founder of Bitcoin. Nakamoto is estimated to own over one million BTC. Additionally, there are other large holders of Bitcoin, known as ‘whales’.

While miners mine to be rewarded and receive bitcoins, their mining fulfils another important task (other than creating new bitcoins): It records Bitcoin transactions safely and immutably (i.e., they can’t be tampered with) on the Bitcoin blockchain.

Both the sender and receiver need a Bitcoin wallet to complete a Bitcoin transaction with each other. The sender transmits the amount of Bitcoin and wallet address to the network, and within a few minutes, the transaction is verified by miners, included in the next block, and considered complete. The receiver can then log in to their wallet with their private key (i.e., the password to their wallet) and confirm the receipt of the transaction.

In addition, everyone in the Bitcoin network can verify and accept the transaction as valid, as the wallet addresses are immutably recorded on the blockchain and can be viewed publicly with a block explorer.