What is Bitcoin? Is Bitcoin a piece of Data which eventually became Digital Money or perhaps, Digital Gold.

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What is bitcoin, is bitcoin digital gold?

With the invention of Computers and Internet, digital transformation was inevitable. Scientists and Researchers started to realise the potential of data and everything around Data Economy. They started to wonder What if data couldn’t be copied? What if there were such a thing as a unique piece of data and what if data could be transmitted from user to user. In short, what if there was an audit trail of data? Based on several research papers a group of people or an individual under a crazy name “Satoshi Nakamoto” realised that this data could be used as digital cash.

Although, there were other types of digital currencies Bitcoin was totally different. The idea of Digital Currency could be found in archives of 70’s when people started to work on mainstreaming the WWW which we perhaps call Internet. Crazy entrepreneurs in the valley like Peter Thiel and Musk with PayPal actually invented the concept of Digital Cash. The idea as we know today was pretty simple to move money around Internet by mapping it via Email addresses. But, off course these things had several challenges because Govt wouldn’t accept anything which possessed threat to existing system. To, all those who don’t know people in the 70’s fought “for the freedom of Information” which eventually became WWW (World Wide Web) or perhaps internet. Internet was already in used by Governments in the form of “Arpanet” for internal communication primarily among the defence forces. 

Similarly Bitcoin is “Freedom of Money” and was the first to implement cryptographic techniques for anonymity, scalability, privacy, security and transparency. The objective was pretty simple enabling People to move Money directly from A to B without any commissions/middlemen because these payment gateway processors charged such hefty commissions just for the infrastructure they provided. Eventually this whole revolution transformed into Community and today it is a Cult like Internet Revolution of 90’s. So, what why Bitcoin is important to the Internet economy and what it means to our financial system.

If we see Bitcoin is pretty much based on simple foundations such as ledgers ( book keeping practice which has been in existence for thousands of years), consensys ( rules and regulations for governing the transactions ) , mining ( this is what makes gold valuable because there’s tremendous amount of resources goes into just producing 1 ounce of pure gold), distributed computing ( decentralisation to avoid single point of failure ) and cryptography ( lock and key to keep transactions safe and secured). This all combination led to an amazing technology “Blockchain” thus making Bitcoin one of the marvellous use cases for Blockchain. In just 10 years, it became a revolution, a religion and cult for the Internet Community. So the real question What is Bitcoin?

Bitcoin is also known as BTC is which can be described as Digital Currency Network which operates on P2P ( Peer 2 Peer Network) just like your Torrents. It is purely on Internet which is maintained by an open source community of developers called “Bitcoin Core” who contribute to this open source Network. In other words they act like catalysts for maintaining and upgrading the technology. It is not controlled by single entity unlike your money is controlled by banks but rather distributed across network of computers called nodes who are responsible for maintaining the ledgers and these catalysts for contributing computational infrastructure are awarded with Bitcoins. Unlike Gold where nobody knows how much gold/oil exists amazing thing is Bitcoins are capped at 21 million and last bitcoin will be mined in 2140 which is locked in the computer nodes. You might think that I can put more computers and get all of the Bitcoins (which you can do it with Gold BTW by investing in more resources like human capital, machinery etc) but, its protected by network difficulty. The more computers you try to put in getting Bitcoins it eventually becomes more and more difficult because this network difficulty has certain other mechanisms like halving. To understand more about halving lets understand Bitcoin’s amazing Economics:

  1. Every person contributing to the network gets awarded with bitcoins which gets distributed proportionately to the computational power or resources provided to the network. Meaning its totally fair and governed by computation codes unlike a traditional scenario where manipulation could take place Hahaha.
  2. Every 10 mins Bitcoin Block is produced ( Blocks contains the data of the transactions primarily Senders, receivers addresses along with obvious information like no of bitcoins.
  3. To protect the transactions Bitcoin Network is protected by cryptography ( lock & key) and job of miners is to solve the cryptographic puzzles in the form of mathematical equations this is where the computational power plays a key role to maintain the network as it gets bigger. Every transactions require cryptography which in turn consumes tremendous amount of computational power.
  4. Now, halving effects are super interesting which actually makes Bitcoin Digital Gold. 2008; every 10 mins block is produced and 50 bitcoins are generated as block rewards piece of bitcoin $0.01, 2012; block reward gets reduced to 25, bitcoin price at All time high, 2016; block rewards get reduced to 12.5, bitcoin around $600 and 2020; block rewards getting reduced to 6.25 and Bitcoin trading around $10000 as on today, 2024; Block rewards getting further reduced to 3.12333 making it more scarce.
  5. Since, bitcoin price is going up it has attracted lot of miners because you could make money just by putting machine to work, its literally like a FED in your pocket but it is backed by principles of technology along with principles of economics.

Bitcoin is very highly volatile and has crashed significantly lot of times challenging the hopes and believes of people investing, holding and trading bitcoin. But these volatility has proved always that Bitcoin is stronger than before and is inevitable, it is a game of accumulation where tourists just invest with a greed following the hype circle and exit thinking its worthless. Remember, every investor thought the same about Internet Revolution but as Steve Jobs said “People who are crazy enough to think that they can change the world are the ones who has actually Do” and they did it. This post is for all my friends since Bitcoin Bull Cycle is near and lot of might get in just in greed to make money. Always, remember it’s a cult and freedom, if you believe in freedom of money invest in Bitcoin otherwise you might just end up loosing like everybody else. I know you might have many doubts best way to learn is self learn and google about it. The other best way is to reach out to me and I would be happy to chat.

In nutshell, Bitcoin is hope to people in Africa, South American countries where local fiat money is worthless every moment and Bitcoin is access to Global Economy. The Government and concentration of power in these Countries has led to such a mess where lives of Billions of People are screwed, who don’t have access to basic financial infrastructure and Bitcoin is like global gateway enabling them to easily hedge money against global currencies since Bitcoin is traded 24*7 around the world across multiple currencies. We have just crossed the early stages and entered into growth phase where Bitcoin is blitzscaling as a global asset class. Bitcoin has all properties of money which is scarce, divisible, portable and secured.

PS: If you are interested and want to know more about Blockchain you can sign up for our free Blockchain webinars by Indian Blockchain Institute and subscribe to our Youtube Channel for some cool Blockchain content. You can also follow Snapperbuzz “Bloomberg for Blockchain and Crypto World”.

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