Bitcoin (BTC), the first and foremost decentralised digital currency, considered the gold standard against which all other cryptocurrencies are measured.
|Consensus Protocol:||'Proof of Work' (POW)|
|Mining Reward:||12.5 BTC (halving every 210000 blocks)|
|Block Time:||10 minutes|
|Average No. of Confirmations Usually Required:||3 - 6 (dependant on exchange or service)|
Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network.
Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Bitcoin is designed around the idea of using cryptography to control the creation and transfer of money, rather than relying on central authorities.
Bitcoin uses public-key cryptography, peer-to-peer networking, and proof-of-work to process and verify payments. Bitcoins are sent from one address to another with each user potentially having many, many addresses.
Each payment transaction is broadcast to the network and included in the blockchain so that the included bitcoins cannot be spent twice.
Between a few seconds to 90 minutes, each transaction is locked in time by the massive amount of processing power that continues to extend the blockchain.
Using these techniques, Bitcoin provides a fast and extremely reliable payment network that anyone can use.
Bitcoins cool, money-like properties:
- difficult to counterfeit.
Bitcoin Transactions are:
- Permissionless and borderless. The software can be installed by anybody worldwide.
- Private; does not require any ID to use - Making it suitable for the unbanked, the privacy-conscious, computers or people in areas with under-developed financial infrastructure.
- Are censorship-resistant - Nobody is able to block or freeze a transaction of any amount.
- Irreversible once settled, like cash. (but consumer protection is still possible.)
- Fast. Transactions are broadcasted in seconds and can become irreversible within 90 minutes.
- Ubiquitous: Online and available 24 hours a day, 365 days per year.
Bitcoin can also be a store of value. Some have said it is a 'Swiss bank account in your pocket'.
- Cannot be printed or debased. Only 21 million bitcoins will ever exist.
- Of this 21m, 17,151,375 Bitcoins have already been mined ~82%. (This is the theoretical 'circulating supply' but does not take into account lost coins)
- Estimates vary over the number of lost Bitcoin. Some studies have suggested that as many as 4m Bitoin have already been lost forever
Mining: The Block reward keep halving every 210,000 blocks. Eventually, as the block reward tends to zero and ultimately the last Satoshi is mined in the distant future, the expectation for the mining industry is that the network fee for mining transactions into blocks will be high enough to replace the block reward as overall use of the network (transactions) is expected to increase.
Bitcoin Cash (BCH), IS NOT TO BE CONFUSED with the real Bitcoin (BTC).
On August 1, 2017, the bitcoin protocol underwent a hard fork which split the network in two and gave birth to bitcoin cash.
Tired of the infighting and perceived lack of progress on bitcoin's scaling debate, and unhappy with the decision to go ahead with the SegWit upgrade (which would increase block capacity – but not its size – by restructuring how transaction data was stored), a group of community participants developed an alternative bitcoin with different characteristics. BCH was born with 8MB blocks, 8x larger than Bitcoin's 1MB blocks.
Bitcoin Cash however faces recent accusations of having very poor decentralization, with up to 49% of mining occurring from a single source (Alibaba) and this could open it to risk.
Scaling Bitcoin: Currently on the real Bitcoin's blockchain, on chain transactions per second are limited. Bitcoin devlopers are currently testing 'the lightning network' an off chain transaction solution that will allow the network to scale volume and speed up exponentially.