Understanding the Bitcoin [BTC] Whitepaper
Bitcoin is a peer-to-peer token produced and spent digitally.
At the wake of the recession in 2008 due to unsustainable banking policies, Bitcoin introduced the idea of ‘decentralization.’ It is designed to use as a medium of exchange and store of value; it uses cryptography to secure the financial transaction.
A developer or group of developers under the alias – Satoshi Nakamoto created it. The real identity of its creator is still unknown.
Bitcoin WhitePaper Release Date: 31st October 2008. The link to download the Whitepaper is here.
However, before understanding the technicals of ‘How it works’, we need to get acquainted with some important terms:
Decentralization Any transaction requires third-party verification of the sender’s identity and receiver’s address. Banks have set up accounts and passwords on centralized servers to secure and authenticate user data. Whereas, a Decentralization refers to a system, where the validation and security are provided via cryptographic methods. It leads to the formation of a distributed ledger network (DLT) that runs the system.
Cryptocurrencies are a subset of digital currencies that rely on cryptographic techniques to achieve consensus, for example, Bitcoin and ether.
Nodes (Here Miners) are validators in a distributed ledger network.
The Idea and USP
The primary objective behind the development of Bitcoin is to encourage cross-country payment system without the control of any government or central regulatory organization.
The supply of Bitcoin is capped at 21 million, i.e. it is the maximum amount of Bitcoins that can be ever mined.
The rate of generation Bitcoin is capped at 10 minute per block and the rewards for each block halves every four years. Moreover, no counterfeit or duplicate Bitcoins be produced because of its unified ledger.
Hence, no new influx of liquidity or currency can occur on it. Furthermore, instead of inflation, Bitcoin would eventually become a deflationary asset.
The smallest unit of a Bitcoin is Satoshi. It is equivalent to the eighth decimal place 0.00000001. For example, 0.0001 bitcoins is equal to 10,000 sats.
One of the greatest USP of Bitcoin is the anonymity of its creator. The vision, developments, and price of Bitcoin is solely influenced by the community at large.