The Key Bitcoin Facts – All In One Place
Getting up to speed with Bitcoin can be head-bangingly difficult at first. This article has been designed to take an absolute beginner from zero understanding, to having a decent grasp of the critical Bitcoin facts. No prior knowledge assumed.
1. Bitcoin Is An Alternative Form Of Money
The first of the Bitcoin facts to know is that Bitcoin is a new type of money. Some would even go so far as to say “new and improved”. Even though Bitcoin is not issued by banks or governments, it can still act as money, so long as buyers and sellers are willing to use it as such. Bitcoin is portable, divisible, and can function as a unit of account and store of value. Therefore, Bitcoin can fulfill all the functions that ‘normal’ money does – but with some additional important advantages.
2. Bitcoin Was The First Crypto
Bitcoin went live on January 3rd, 2009, at the height of the global financial crisis. At first, not many people paid too much attention – not even the members of the hard-core cryptography group that it was released to. But over the next few years, people realized the true Bitcoin facts: it represented a real breakthrough versus earlier attempts to create digital money. Worldwide attention and notoriety soon followed.
3. But, Bitcoin Is Not The Only Crypto
Bitcoin may be the largest crypto (and that doesn’t look like changing any time soon), but the initial innovation has spawned hundreds of imitators, including Ripple, Litecoin, Bitcoin Cash and Ethereum. Each are different in their own way. Many were inspired to improve upon certain shortcomings of Bitcoin, or create entirely new uses that Bitcoin was never designed for. No-one can really definitively say which is the best cryptocurrency – all have their strengths and weaknesses.
4. Nobody Knows The True Identity Of Bitcoin’s Creator
The founder of Bitcoin is known to the world only as “Satoshi Nakamoto”. Despite vigorous attempts to track down Nakamoto, the world still really has no idea of his (or her, or their) real identity. As a skilled cryptographer, Nakamoto proved highly adept at covering his tracks – all of his emails were encrypted, and contain absolutely no identifying information.
5. New Bitcoin Is Generated Every 10 Minutes
Every 10 minutes, transactions are gathered together and submitted to the permanent Blockchain ledger (a record of who ‘owns’ Bitcoin). Only one computer every 10 minutes gets the right to “write” the transactions to the blockchain, and it’s a very competitive contest go get to be that one computer, because whichever computer writes the 10 minute “block” of transaction “wins” a reward of newly-issued Bitcoin. This process, known as cryptocurrency mining, also uses a lot of electricity (see this article on Bitcoin energy use for more).
6. Bitcoin Is Decentralized
Unlike a bank, which stores all of its data on a centralized server, the Bitcoin network is completely decentralized – a bit like BitTorrent, or the Internet itself. If a computer is removed from the Bitcoin network, it doesn’t matter to the survival of the Bitcoin network. It’s decentralized nature is one of the key Bitcoin facts which makes it highly immune to attempts to shut it down. The fact that there is no single point of failure also enhances the network’s security.
7. Bitcoin Accounts Are Known As “Wallets”
The easiest way to think of where Bitcoin is held is to draw an analogy with a bank account. Bank accounts are a record of how much money a person has. Similarly, a crypto wallet has the record of how much Bitcoin is stored there. The cryptocurrency wallet can come in many different forms, including paper wallets, software wallets, and hardware wallets – each with different levels of convenience and security.
8. If Wallet Access Is Lost, The Bitcoin Is Gone Forever
One of the essential differences between a wallets and bank accounts is the fact that a user needs to be responsible for their own crypto security. If you lose your password or account number, a bank will help you to recover access. With banking, your funds aren’t at risk through losing this information. But with Bitcoin, if you lose all copies of your wallet access, your Bitcoin is gone and there is nothing you can do to recover it. The Bitcoin facts are: users need to be responsible for creating their own backups and fail-safe mechanisms.
9. Bitcoin Has Been Used For Illegal Activity
There are many cryptocurrency pros and cons. One feature inherent in Bitcoin is anonymity – as in, Bitcoin wallets carry no identifying information. While the Bitcoin facts are that it is used for many legitimate uses, anonymity has also naturally attracted criminals who use Bitcoin to transact in drugs, weapons and other contraband. The website Silk Road was the most famous case of brazen law-breaking, until it was eventually shut down by the FBI in 2013.
10. Bitcoin Was Once Worth Less Than $1
While it may seem incredible today, in the beginning, single Bitcoins were once worth mere pennies. It took 10,000 Bitcoin to purchase a couple of Papa Johns pizzas in May 2010. Today, those same 10,000 Bitcoin would be worth tens of millions of dollars.
11. Bitcoin Has An Ambiguous Legal Status
The existing body of law is not setup for Bitcoin. Various governments around the world have variously tried to declare it as being a commodity, a currency, something that doesn’t require regulation at all, something that requires its own set of regulation, or declared outright illegal. Bitcoin is just more proof (as if we needed any) that innovation moves faster than regulation.
12. Very Big Companies Accept Bitcoin
Some have decried Bitcoin as a mere “funny money”, only accepted only by nerds and techno-geeks. But increasingly, Bitcoin is moving into the mainstream. Some highly credible companies now accept Bitcoin as payment, including Microsoft, overstock.com, Expedia and Dell.
13. Bitcoin Transactions Cannot Be Reversed
Another one of the critical Bitcoin facts to understand is that Bitcoin payments, once made, are permanent. You can’t reverse them like you can reverse a credit card. Think of it as like physical cash – once it’s handed over, it’s in the possession of the bearer.
14. The Bitcoin Network Is The World’s Most Powerful Computer
The total computer power that is dedicated to Bitcoin is easily larger than any competitor – including large research universities, Google, and even the US government. Bitcoin’s network has grown to such levels thanks to the incentives afforded by free market capitalism. The Bitcoin facts are that anyone can start crypto mining, without needing permission to do so.
15. There Will Only Ever Be 21 Million Bitcoin
The Bitcoin software has been designed to only ever bring 21,000,000 Bitcoin into existence – a mark which will be reached somewhere around the year 2140. This is one of those super-important Bitcoin facts which gives it a distinct edge over government-issued money: Bitcoin has scarcity, whereas there is nothing stopping governments from printing ever more of their currency, devaluing existing savings.