In four words or less: Digital Gold
Bitcoin (BTC) is a new form of money that is completely digital and runs on a global network called a blockchain. Instead of being controlled by a bank or government, the Bitcoin network is decentralised, peer-to-peer and powered by its users.
What problem does Bitcoin solve:
Fiat or government issued currency is a poor store of value. The global financial system is inefficient and ripe for disruption. Everyone should be able to control their own money and participate in the global economy.
Properties of Bitcoin:
- Bitcoin has a limited supply. Only 21 million bitcoins will ever exist
- There is no way to counterfeit / create more of it
- Bitcoin is divisible to 8 decimal places or $0.0000001. A single unit is called a Satoshi. 100,000,000 Satoshi = 1 BTC
- Bitcoin is digital and can be sent to anyone, anywhere in the world
- No single authority has control over Bitcoin. This makes the network very secure as there is no single point that can be attacked
Adoption and penetration:
Bitcoin is the first and best known cryptocurrency. This gives it first mover advantage and strong network effects. You can use Bitcoin to pay for goods with Microsoft, Overstock, Expedia and Virgin Galactic. Fun fact: There are an estimated 35 million millionaires in the world. There will only ever be 21 million bitcoins. This means there will never be enough bitcoins in existence for every millionaire in the world to own even a single one. While most people have heard of Bitcoin, it’s estimated that approximately 20 million people or less than 1% of the earth’s population own bitcoin. Most own very small amounts.
Management and governance:
No single authority controls Bitcoin. A small group of developers contribute to maintaining Bitcoin’s code. No changes can be made without consensus.
Risks and limitations:
The Bitcoin network is only capable of processing a maximum of seven transactions per second (Visa can process 24,000 per second). Bitcoin must scale to be successful.Second Layer solutions to this such as The Lightning Network are in development and show early promise. Despite being in existence for nearly ten years Bitcoin is still an emerging technology. Further development and adoption is needed to secure a potentially very bright future.
Competition: Bitcoin Cash, Ethereum, Monero