Bitcoin's First Decade: What Awaits the Birthday Coin?
CryptoBit News Today2 min read
On October 31, 2008, an unknown person under the name Satoshi Nakamoto published the Bitcoin white paper, proposing a decentralized digital currency that would work without central authorities or banks. The PDF proposal outlined a method for mining a limited amount of virtual currency over a peer-to-peer network without relying on banks, governments, or other central authorities.
10 Years of Bitcoin
Professor Emin Gün Sirer of Cornell University credits Nakamoto for a major breakthrough: building a way to ensure trust among network users without gatekeepers. Every Bitcoin transaction is cryptographically signed and added to a public ledger called the blockchain. The distributed network ledger makes double-spending impossible, and anyone can join the Bitcoin network by downloading the software and the blockchain.
However, Nakamoto's involvement with Bitcoin was short-lived. The network's rise took place largely without Nakamoto, who departed the internet in late 2010 and left the software with early collaborators.
Bitcoin's Scalability and Volatility Challenges
While Bitcoin has achieved tremendous success, it still grapples with notable challenges. Scalability problems cap Bitcoin at an estimated maximum of seven transactions per second, making it impractical for widespread small payments.
During periods of high traffic, network fees fluctuate wildly, having peaked at an average of $55 per transaction in December 2017 as average confirmation times surpassed 11,000 minutes. Alongside its throughput constraints, the network has faced heavy criticism over its energy use, with one report comparing its carbon footprint to that of an entire small country.
In addition, the cryptocurrency has been at the forefront of a year-long downturn across the crypto market.
Bitcoin as a Decentralized Store of Value
Despite its price volatility and scalability challenges, Bitcoin is receiving recognition as a decentralized store of value. In hyperinflation-ridden economies like Venezuela, national currency inflation serves as a catalyst for these unique attributes of Bitcoin. Trading volumes for Bitcoin in Venezuela have reached record levels.
For many people in conflict-affected areas such as Iran, Turkey, and Palestine, Bitcoin serves as the sole method to invest abroad or purchase items online. Rather than serving as everyday cash, Bitcoin has primarily earned acclaim for resisting censorship and acting as a store of value.
To speed up throughput, the project is evaluating an off-chain solution called the Lightning Network to move the majority of transactions off the blockchain. A decade after the release of its white paper on October 31, 2008, Bitcoin is still far from mature, but it remains the leader in the crypto space and the killer application of blockchain technology.
