Bitcoin Guide 2022 - Full Explanation and Tokenomics of BTC

What is Bitcoin?

Bitcoin is two things - A database (or blockchain) and the first cryptocurrency to solve the double-spend problem. Additionally, Bitcoin is completely decentralized, and it enables peers to send irreversible trustless secure transactions over the Internet. 

It aligns incentives of miners and the users, so the irreversibility of the transactions is upheld. 

On top of that, Bitcoin may be the most secured database in the world.

BTC is also divisible into smaller parts, called Satoshis. One Satoshi equals 0.00000001 of a Bitcoin.

Six things make BTC unique:

  1. Remains the first decentralized peer-to-peer payment network.
  2. Ignited the creation of all other cryptocurrencies.
  3. Has a fixed supply of 21 million BTC.
  4. Keeps all network information immutable – it can’t be erased or edited.
  5. It is a highly liquid store of value.
  6. You can walk Bitcoin across borders by just remembering your 12-word seed phrase. 

Who founded Bitcoin?

It’s interesting to note that the idea of "cryptocurrency" was first talked about on a mailing list in 1998. In 2009, Bitcoin’s primary specs were published in a cryptography mailing list by an anonymous entity with the name Satoshi Nakamoto. Satoshi (the namesake of the smaller parts of a Bitcoin) left the project in late 2010. Now, many developers work on Bitcoin’s open-source software and protocol.

 

How does Bitcoin work?

Users use mobile apps or computer programs with wallets to send and receive BTC.

The Bitcoin network or blockchain shares a public ledger that keeps every processed transaction. Digital signatures let users send Bitcoin from their own wallet addresses. Bitcoin transactions are processed by specialized hardware. Doing so is called “mining” – more on that later.

What is Bitcoin’s objective?

Nakamoto, Bitcoin’s creator, saw the need for “an electronic payment system based on cryptographic proof instead of trust.” Because Bitcoin is a decentralized digital currency, you can buy, sell, and exchange it directly, without an intermediary like a bank.

How does Bitcoin get minted?

New bitcoins are minted, or created, by a competitive and decentralized Proof of Work (PoW) process called "mining". Only the right miner to get the right answer (or closest one) to a numeric hash problem creates new blocks on the blockchain and, as a result, earns new BTC. Bitcoin miners use expensive, specialized hardware with a lot of computing power for figuring out the problems, as well as processing transactions and securing the network to prevent double spending.

Based on the Bitcoin protocol, each new coin is created at a fixed rate, making mining very competitive. As more miners join, it’s harder to make a profit and they must look for ways to efficiently manage their operating costs. No one miner has the power to control or fix the system to boost profit.

 

Because Bitcoin has a set supply, the number of new coins mined is automatically halved every four years. That will continue until the supply hits 21 million coins in existence, which is estimated to be in about 2140. Then, it’s thought that miners will collect their earnings from transaction fees.

 

How is Bitcoin distributed?

When mined, the new BTC is put into circulation by a reward portion given to miners.

 

How does Bitcoin get burned?

It does not get burned. 

 

Where do the transaction fees go?

The BTC transaction fee goes to the miner who mined the block the transaction is included in.

 

Is Bitcoin inflationary or deflationary?

Bitcoin is deflationary because it has a fixed supply and the mining reward, as explained above, is halved every four years.  

Additionally, there are many people who misplace their hard drives with stored BTC. People who forget their keys to access their BTC or people who send BTC to ghost wallets.

 

When you own Bitcoin what exactly do you own? 

You own the ability to transact on the Bitcoin blockchain. 

 

What is on Bitcoin’s roadmap? 

Bitcoin does not have a roadmap. Developers can work on Bugs, write code, and review other people’s code for the Bitcoin blockchain.

On top of that, there are many different projects being built on top of the Bitcoin blockchain. One of the more spoken about projects is the Lightening Network. It is attempting to enable lightning-fast bitcoin transitions with next to no fees on the Bitcoin blockchain.

 

What risks does Bitcoin have? 

A 51% attack 

This is when more than 50% of the miners who control more than 50% of the networks hash rate. If successful, the rogue miners could block or reverse transactions and spend the same BTC again. 

As of July 2022, would be 51% attacks would need 101 EH/s of hashing power. To execute, attackers would need 396,000 ASIC miners at a cost of over US$8 billion.

 

ESG or the green movement

Bitcoin’s PoW mining process requires expensive, energy-intensive computers, making it seem unfriendly towards the environment. 

A misunderstood reality is inexpensive energy is needed to ensure profitable mining. Miners situate themselves as close to inexpensive energy as possible. On top of that, they would be consuming excess energy entering the grid at any given time. 

Some consider mining storing excess energy vs. wasting it.

 

Government Regulation

In China, mining or holding cryptocurrency is illegal. And India has put a 30% tax on crypto transactions. 

In many other countries, institutions are searching for clarity around cryptocurrency regulation.  

Market manipulation

Like traditional markets, Bitcoin is subject to pump and dumps, wash trading, spoofing, stop hunting, and spreading false rumours. 

Distinct to crypto, “whales” create buy and sell walls to influence the perception of the market. 

Scaling

Currently, Bitcoin processes 3 transactions per second (TPS). And one block takes 10 minutes to process. Visa processes 65,000 TPS. 

In order for Bitcoin to become a viable payment solution it will need to faster and less expensive than credit card transactions.

Volatility

Also, Bitcoin and other cryptocurrencies continue to be volatile, detracting some investors.

Any of these risks could affect BTC’s price.

 

BTC Tokenomics

BTC ticker: $BTC

Whitepaper

Max Supply: 21,000,000

Total Supply: 19,144,718

Circulating Supply: 19,144,718

Market Cap: CA$484,830,536,437

Fully Diluted Market Cap: CA$531,788,411,623

Price: CA$25,323

ATH: CA$90,255

TPS (Transactions per second): 3 (average)

Developer Activity: High

TVL (Total Value Locked): US$103.42 million

Total Staked: Not applicable

 

Crypto Asset Statement - Bitcoin (BTC)

 

*as of September 8th, 2022 at 10:00AM ET

Get live BTC price data

Explore and compare the price of BTC with the other popular digital currencies we offer on Bitbuy.ca/prices.

More guides

How to Stake Crypto in Canada
How to Earn Crypto Staking Rewards in Canada
How Many People Own Cryptocurrency?

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What is Bitcoin?

Bitcoin is two things - A database (or blockchain) and the first cryptocurrency to solve the double-spend problem. Additionally, Bitcoin is completely decentralized, and it enables peers to send irreversible trustless secure transactions over the Internet. 

It aligns incentives of miners and the users, so the irreversibility of the transactions is upheld. 

On top of that, Bitcoin may be the most secured database in the world.

BTC is also divisible into smaller parts, called Satoshis. One Satoshi equals 0.00000001 of a Bitcoin.

Six things make BTC unique:

  1. Remains the first decentralized peer-to-peer payment network.
  2. Ignited the creation of all other cryptocurrencies.
  3. Has a fixed supply of 21 million BTC.
  4. Keeps all network information immutable – it can’t be erased or edited.
  5. It is a highly liquid store of value.
  6. You can walk Bitcoin across borders by just remembering your 12-word seed phrase. 

Who founded Bitcoin?

It’s interesting to note that the idea of "cryptocurrency" was first talked about on a mailing list in 1998. In 2009, Bitcoin’s primary specs were published in a cryptography mailing list by an anonymous entity with the name Satoshi Nakamoto. Satoshi (the namesake of the smaller parts of a Bitcoin) left the project in late 2010. Now, many developers work on Bitcoin’s open-source software and protocol.

 

How does Bitcoin work?

Users use mobile apps or computer programs with wallets to send and receive BTC.

The Bitcoin network or blockchain shares a public ledger that keeps every processed transaction. Digital signatures let users send Bitcoin from their own wallet addresses. Bitcoin transactions are processed by specialized hardware. Doing so is called “mining” – more on that later.

What is Bitcoin’s objective?

Nakamoto, Bitcoin’s creator, saw the need for “an electronic payment system based on cryptographic proof instead of trust.” Because Bitcoin is a decentralized digital currency, you can buy, sell, and exchange it directly, without an intermediary like a bank.

How does Bitcoin get minted?

New bitcoins are minted, or created, by a competitive and decentralized Proof of Work (PoW) process called "mining". Only the right miner to get the right answer (or closest one) to a numeric hash problem creates new blocks on the blockchain and, as a result, earns new BTC. Bitcoin miners use expensive, specialized hardware with a lot of computing power for figuring out the problems, as well as processing transactions and securing the network to prevent double spending.

Based on the Bitcoin protocol, each new coin is created at a fixed rate, making mining very competitive. As more miners join, it’s harder to make a profit and they must look for ways to efficiently manage their operating costs. No one miner has the power to control or fix the system to boost profit.

 

Because Bitcoin has a set supply, the number of new coins mined is automatically halved every four years. That will continue until the supply hits 21 million coins in existence, which is estimated to be in about 2140. Then, it’s thought that miners will collect their earnings from transaction fees.

 

How is Bitcoin distributed?

When mined, the new BTC is put into circulation by a reward portion given to miners.

 

How does Bitcoin get burned?

It does not get burned. 

 

Where do the transaction fees go?

The BTC transaction fee goes to the miner who mined the block the transaction is included in.

 

Is Bitcoin inflationary or deflationary?

Bitcoin is deflationary because it has a fixed supply and the mining reward, as explained above, is halved every four years.  

Additionally, there are many people who misplace their hard drives with stored BTC. People who forget their keys to access their BTC or people who send BTC to ghost wallets.

 

When you own Bitcoin what exactly do you own? 

You own the ability to transact on the Bitcoin blockchain. 

 

What is on Bitcoin’s roadmap? 

Bitcoin does not have a roadmap. Developers can work on Bugs, write code, and review other people’s code for the Bitcoin blockchain.

On top of that, there are many different projects being built on top of the Bitcoin blockchain. One of the more spoken about projects is the Lightening Network. It is attempting to enable lightning-fast bitcoin transitions with next to no fees on the Bitcoin blockchain.

 

What risks does Bitcoin have? 

A 51% attack 

This is when more than 50% of the miners who control more than 50% of the networks hash rate. If successful, the rogue miners could block or reverse transactions and spend the same BTC again. 

As of July 2022, would be 51% attacks would need 101 EH/s of hashing power. To execute, attackers would need 396,000 ASIC miners at a cost of over US$8 billion.

 

ESG or the green movement

Bitcoin’s PoW mining process requires expensive, energy-intensive computers, making it seem unfriendly towards the environment. 

A misunderstood reality is inexpensive energy is needed to ensure profitable mining. Miners situate themselves as close to inexpensive energy as possible. On top of that, they would be consuming excess energy entering the grid at any given time. 

Some consider mining storing excess energy vs. wasting it.

 

Government Regulation

In China, mining or holding cryptocurrency is illegal. And India has put a 30% tax on crypto transactions. 

In many other countries, institutions are searching for clarity around cryptocurrency regulation.  

Market manipulation

Like traditional markets, Bitcoin is subject to pump and dumps, wash trading, spoofing, stop hunting, and spreading false rumours. 

Distinct to crypto, “whales” create buy and sell walls to influence the perception of the market. 

Scaling

Currently, Bitcoin processes 3 transactions per second (TPS). And one block takes 10 minutes to process. Visa processes 65,000 TPS. 

In order for Bitcoin to become a viable payment solution it will need to faster and less expensive than credit card transactions.

Volatility

Also, Bitcoin and other cryptocurrencies continue to be volatile, detracting some investors.

Any of these risks could affect BTC’s price.

 

BTC Tokenomics

BTC ticker: $BTC

Whitepaper

Max Supply: 21,000,000

Total Supply: 19,144,718

Circulating Supply: 19,144,718

Market Cap: CA$484,830,536,437

Fully Diluted Market Cap: CA$531,788,411,623

Price: CA$25,323

ATH: CA$90,255

TPS (Transactions per second): 3 (average)

Developer Activity: High

TVL (Total Value Locked): US$103.42 million

Total Staked: Not applicable

 

Crypto Asset Statement - Bitcoin (BTC)

 

*as of September 8th, 2022 at 10:00AM ET

Get live BTC price data

Explore and compare the price of BTC with the other popular digital currencies we offer on Bitbuy.ca/prices.

More guides

How to Stake Crypto in Canada
How to Earn Crypto Staking Rewards in Canada
How Many People Own Cryptocurrency?