Crypto

Bitcoin

Read about the most widely-used permissioned blockchain in the Hyperledger family, Hyperledger Fabric, in this article from Bybit.

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We’ve all heard of it. Many of you will own some. 

But what do you actually know about it? And what do you want to know about it?

Keep reading this definitive guide for everything you need to know about Bitcoin. 

A good place to start would probably be to ask actually what is Bitcoin?

Bitcoin is the first cryptocurrency that was created. It was invented by pseudonymous creator Satoshi Nakamoto, with the first block created on 3rd January 2009. Although it can be used as an alternative to fiat, it is popular with many investors because of its perceived status as a store of value. 

Bitcoin has been through many challenges from 

 to mining bans, but it still remains the top 

, it has been around the longest and is the most likely to survive, but have you wondered what makes it special? It is because of its combination of properties: 

 Anyone can run a Bitcoin node and help to govern the network, it is not owned by any single group or entity, unlike banks or governments.

 Transactions are done directly from person to person, without any third party (like a bank) to approve transactions, meaning transactions and accounts cannot be frozen or censored. 

 International transactions can be made with whoever and wherever, for cheaper fees and at faster speeds than the current money system. 

 Transactions are final once it is validated and it is near impossible to change the history of blockchain transactions. All transactions are also public and can be viewed on the public 

 Thanks to its consensus mechanism, Bitcoin cannot be spent twice, ensuring that users do not spend Bitcoin that they do not have, which was a breakthrough in digital currency for its time.  

, and this number has been hardcoded into the source code. The emission rate also halves every four years, making it disinflationary which is unlike Fiat currency.  

 isn’t mining in the traditional sense – obviously – but rather through a process in which miners verify any new transactions, with the data being added to and stored on the

This blockchain, which is basically a public ledger, stores these transactions through a secure peer-to-peer network, which is connected through devices called nodes.

All Bitcoin miners, those who create the new Bitcoin,  must agree to and verify any new transactions before they are added to the blockchain, through the 

PoW helps to maintain the integrity and safety of Bitcoin by ensuring that double-spending and 

don’t occur. Essentially, miners compete against each other to verify and confirm new transactions on the blockchain. 

This works by rewarding miners who can solve complex mathematical problems called hashes with new Bitcoin. The current block reward, after the 2020 

, is 6.25 Bitcoins. A halving occurs just under every 4 years, or 210,000 blocks. 

The next bitcoin halving will take place estimated in March or April 2024 when the protocol is set to repeat the halving once more, dropping the block reward to 3.125 BTC. 

 and so miners pool their resources together with other miners in mining pools to perform Bitcoin mining. This also means that normal computers just won’t do the job. Therefore, specialist hardware called mining rigs are used to perform the task. 

This power is measured through something called hash rate, which indicates how much computer processing power is needed to mine Bitcoin. 

A high hash rate is good news for the safety of the network, as it means more power is needed to launch a 51% attack, where a group of individuals can take over more than half the network and reverse transactions.

Luckily, the power needed to launch such an attack on the Bitcoin blockchain is so immense that it has never happened, and is extremely unlikely ever to happen. 

Related to the hash rate is mining difficulty, which is a measurement of the difficulty of adding new blocks to the blockchain. 

Bitcoin is added every 10 minutes to the network, and mining difficulty acts as a sort of checks and balances system, ensuring that this regularity is kept up.

As the hashrate increases, so does the security on the blockchain. However, this hashrate can’t get out of control, because then so would the number of blocks being produced.

Therefore, if the hash rate increases, then the mining difficulty increases too. On the other hand, if the hash rate decreases, the mining difficulty also decreases. Mining rigs are congregated in places called mining farms, where the Bitcoin mining takes place. 

are located in Russia, Switzerland, and China.

The rewards for miners are halved roughly every 4 years. In 2012, it was cut from 50 to 25 BTC. In 2016, it was cut from 25 to 12.5 BTC. In 2020, it was cut from 12.5 to 6.25 BTC.

It is estimated at the time of writing (February 2021) that out of the 21 million Bitcoins that will ever exist, there are around 2.3 million Bitcoins left to be mined. The last Bitcoin will be mined in 2141. 

But is Bitcoin mining worth it? Several factors determine this.

Bitcoin mining has come a long way since its humble origins. 

Even by 2010, an average computer using a Central Processing Unit (CPU) wouldn’t do the job. By that point, you needed a Graphic Processing Unit (GPU) to do the job. 

Soon after, mining rigs was the only way to do it, and Application-Specific Integrated Circuit (ASICs) were needed to mine Bitcoin. This equipment can be very expensive, running into several or hundreds of thousands of dollars. 

The high energy consumption costs of Bitcoin mining has inevitably led to some negative media coverage. 

article in January 2019 proclaimed Bitcoin as being the “next big environmental fight” (after Oil) and “Bitcoin’s environmental footprint will haunt it”. Moreover, an 

 in February 2021 revealed the process of mining Bitcoin “consumes more energy than Argentina”.

It gives a caveat to Bitcoin miners that as the world moves away from oil and seeks cleaner energy, environmentalists could see Bitcoin mining as the next big enemy.

Bitcoin is a highly volatile asset, but why is it so volatile? 

This is because it is still an immature asset class with low liquidity, high leverage, and are largely driven by unsophisticated retail who are very susceptible to fear and greed, so the prices are very reflexive. 

Not surprisingly, Bitcoin’s price can have a big impact on the cost of Bitcoin mining. If the price of Bitcoin increases, then more power is needed to power these machines. 

This also means that smaller mining pools may not be able to cope with any long-term rises in Bitcoin’s price, and only the bigger ones survive. 

To overcome these issues, improving efficiency is the key to lowering energy consumption and as a result, costs. To these ends, some improvements have been made such as 

 which batches multiple signatures and transactions together, and the 

which is being hailed by some as the answer to Bitcoin’s scalability problems. 

The Lightning Network allows many transactions to be completed without actually needing the blockchain to verify them. Therefore, the time and cost of transactions are a fraction of what it normally is. Several crypto exchanges have already implemented it. 

This, along with the move towards green mining is being seen by some as the

In fact, not that far back at all. The extraordinary rollercoaster ride of Bitcoin can be traced back to August 2008, amidst the backdrop of the financial crisis that was enveloping the globe.

This was when Bitcoin.org was registered as a domain. After this, on Halloween 2008, the Bitcoin white paper was published. 

Bitcoin: A Peer-to-Peer Electronic Cash System, 

the white paper, coined by pseudonymous creator Satoshi Nakamoto, laid out a vision of how Bitcoin would revolutionize how we see money. But how so?

Then came the creation of Bitcoin itself on 3rd January 2009. On this fateful day, Nakamoto mined the genesis block. Embedded on this block was the following ominous words:

Chancellor on brink of second bailout for banks

newspaper on that day, that referred to a bank bailout by the then UK Chancellor of the Exchequer, Alistair Darling, as the UK and the whole world struggled to cope with a massive crash in the financial markets.

Well, this headline highlighted exactly the reason why Bitcoin was created. The reasons for the global financial crisis were numerous, but it was obvious the financial markets weren’t working for the masses. 

Here was something that could function without the need for the intermediaries – the financial institutions and governments – who had failed millions of people: Bitcoin.

Bitcoin is a currency, after all, so you can use it to pay for goods and services. It’s becoming increasingly accepted as a form of payment around the world. 

Let’s look at some of the things you can buy with it:

Fancy whizzing around the world thanks to your Bitcoin (when we’re allowed)? 

Well, you can! With Bitcoin, you can book hotels and accommodation on 

Bitcoin is labeled by some as "digital gold", but you can actually buy real gold with it too.

allows you to buy gold and other precious metals such as silver and platinum with your Bitcoin. It could be a useful hedging option if you think Bitcoin’s price is going to fall. 

Yep, you read that right. You can buy real estate with Bitcoin.

lists numerous properties that you can buy with Bitcoin around the world, including in France, Italy, Switzerland, and the United States. Check out our 

guide for a handy overview of other things you can buy too.

An increasing number of payment providers also offer 

, meaning you can spend your cryptocurrency anywhere that will accept debit cards, online or offline. You can also withdraw from ATMs with them. 

Crypto debit cards are a handy way round of spending your crypto, at a time when finding merchants that accept Bitcoin directly may still be a bit limited (but nevertheless, growing!)

The frequent price movements can give traders ample opportunities to make a profit. Two main types of Bitcoin trading exist: 

involves traders speculating on the future price of Bitcoin without actually owning it. Instead, you own a contract that reflects the price of Bitcoin. 

 involves traders actually owning, buying, and selling the Bitcoin itself. As the name suggests, trades are settled instantly – on the spot. 

derivative contacts with up to 100x leverage. This is a core component of margin trading. 

Margin trading involves traders using borrowed funds (leverage) from an exchange to trade in an asset. It attracts traders as it gives them extra flexibility and the possibility of making big profits from relatively low amounts of capital. 

You should also be aware of the risks involved when trading. Margin trading, with leverage, should be approached with caution. In crypto, the market can be very volatile and change very quickly. 

When this happens, so can the liquidation of positions. Therefore, you should fully understand the ins and outs of margin trading before you take out positions with leverage.

Be careful, and only trade what you can afford to lose. Intrigued? Check our 

Is it an acronym? Well, yes. But that’s not how the original term was coined. Confused? Don’t worry! It’s not complicated. 

The term originates from a Bitcoin forum in 2013, where an excited forum member misspelled “I AM HODLING!” when referring to what he was doing with his Bitcoin. It has since gone into crypto folklore, and as a happy coincidence, now also serves as an acronym — hold on (for) dear life. 

As Bitcoin becomes more and more seen as a store of value, the number of hodlers has grown exponentially in recent times. 

If you’re HODLING your Bitcoin, you can actually lend your Bitcoin for a profit. 

You can basically lend your Bitcoin to people who want to take out crypto-backed loans, and earn compound interest on what you’ve lent. Several platforms such as 

 offer fixed interest rates on lending Bitcoin and other cryptocurrencies. 

But why are people HODLing their Bitcoin anyway? Well, for the reasons that we’ll shortly explain as to why you should buy it in the first place. To answer why let’s look at what happened to the price of Bitcoin in the late stages of 2020 and early 2021.

What Is Bitcoin (The Definitive Guide)

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