21 Days of Bitcoin - Bitcoin Magazine

On January 3, 2009, a pseudonymous genius named Satoshi Nakamoto officially

invented Bitcoin.

Bitcoin (capital “B”) is a global, borderless, decentralized protocol that enables the
peer-to-peer exchange of the bitcoin currency (lowercase “b”), which has a fixed max
supply and a known, decreasing issuance rate.

It allows us to send money to anyone, anywhere in the world, without the need for an
intermediary.

What Does Bitcoin Solve?

Centralization: Bitcoin alleviates the need for a centralized third-party system — like
a credit card company or a central bank — to confirm and validate transactions.
Rather than requiring the current base-layer financial system to broker our transfers
and settlements, Bitcoin works purely peer-to-peer, ridding the need for trust in a
centralized government controller.
Verifiability: Bitcoin enables unit-level currency validation that isn't possible with fiat
(government-backed money). For instance, there are plenty of fake dollar bills in
circulation (the U.S. Treasury estimates that one in every 10,000 bills is counterfeit)
that the average person fails to discover. However, nobody can create fake bitcoin
because the Bitcoin network is secured cryptographically via a public blockchain that
anybody can access and validate any amount of bitcoin as real.

Inflation: Bitcoin's supply is capped at 21 million. There will never be any more
bitcoin than that. No one can just "print more bitcoin" like we currently print dollars,
inflating the money supply. Unlike fiat currencies, bitcoin doesn't take away your
purchasing power over time.

With Bitcoin, however, nobody is in control. Bitcoin's supply is capped at 21 million,

whereas fiat dollars can be boundlessly printed.

The result of bitcoin's supply cap is scarcity. As demand for bitcoin rises, so will its
price, and thus, its purchasing power as well.

Proof of Work is a consensus algorithm that requires its participants — the Bitcoin
miners — to expend energy and computational power in order to lock-in batches of
new transactions. In exchange, they are rewarded with bitcoin if they are the first to
successfully calculate a difficult 64-character hexadecimal serial number (a hash)
that identifies the past transaction history, the new transactions, and their own ID as
the winning miner.

In other words, miners want this bitcoin reward for themselves, so they will work
tirelessly to try and create a winning solution. The winner then sends their solution
and the list of transactions it includes to the blockchain, thus securing those
transactions publicly, forever. About every ten minutes, this process repeats itself to
help decentralize, secure, and confirm all transactions on the blockchain while
rewarding miners for their proof of work.

The Bitcoin protocol has a built-in difficulty adjustment. Every 2016 blocks (about two
weeks), the difficulty to mine bitcoin adjusts as more miners either come online or go
offline. If there is more computational power working to solve the hash, then it
becomes more difficult to find a winning solution. If miners come offline for some
reason (like after China banned miners), then it becomes easier for miners who are
still online to mine bitcoin.

The goal is to ultimately find equilibrium and issue new bitcoin at a steady rate — an
average of ten minutes per new block. You can track how difficulty adjusts here:
https://btc.com/stats/diff
Bitcoin mining is unlike any other kind of mining. It's simple to set up, runs 24/7, and
violates no human rights or labor laws.

Here's how it works. Basically, a bunch of specialized computers (ASICs:

application-specific integrated circuits) are set up to mine bitcoin somewhere where
electricity is cheap (since miners require a lot of computing power). As stated
yesterday, miners can work together in pools to split profits and increase their odds
of winning a new block.

With each new Bitcoin block that is mined, batches of transactions are recorded and
confirmed to the blockchain. By confirming transactions and computing a winning
hash, miners are rewarded with newly minted bitcoin. However, this block reward
won't last forever, since the supply of bitcoin is capped.

The Halving: A Four Year Cycle

At the Bitcoin network's genesis, 50 bitcoin were mined in each block.

For every 210,000 blocks — approximately every four years — the number of
new bitcoin mined per block is cut in half. As of 2021, only 6.25 new bitcoin
are mined in each block. Some time in 2024, the block reward will be cut to
3.125 bitcoin.

This is the Bitcoin halving schedule:

Running Your Own Full Node
Did you know that you can run your own node? It's very easy with user-friendly, open
source node installers like Umbrel! You can follow their guide for detailed
instructions. It's inexpensive, fairly straightforward, and helps contribute to the
security of the Bitcoin network.

Although Bitcoin is fairly secure and many claim that running an extra node will not
do much for enhancing the network, it helps to have an excess number of nodes
worldwide in the case of rare Black Swan events, such as nodes under certain
government jurisdictions being shut down all at once.

Running your own node also helps you eliminate the trust needed for other nodes to
remain honest. Though most of them remain true, by running transactions through
your own full node, you are essentially becoming your own bank. That's a pretty cool
feature that isn't really possible with fiat, gold, or anything else that can be used as
money.
The Lightning Network
The Lightning Network was created in 2015, designed as a second layer protocol
that would help scale bitcoin transactions in order to lower user fees and allow for
instantaneous transactions.
DJ - Traders Carnival
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