Bitcoin | Cryptocurrency

Bitcoin is a decentralized digital currency proposed in 2008 in a paper authored by someone behind the Satoshi Nakamoto pseudonym . Since then, it has reached a level of adoption unrealized by decades of previously proposed digital currencies. Unlike most previous proposals, Bitcoin does not distribute digital monetary units to users. Instead, a public ledger (called the blockchain) maintains a list of every transaction made by all Bitcoin users since the deployment of the currency in January 2009 when it became fully functional.

                                      

Bitcoin network is an overlay network built upon peer-to-peer broadcasts which carries all information in the network. Through broadcasts, network achieves eventual consensus and information consistency. Generated transactions are continually propagated to neighbor nodes to induce updates, and the block which contains several confirmed transactions are also created and propagated to the entire network. There are a number of nodes distributed all over the world who, in a voluntary way or for profit, participate to the network.

At the beginning, Bitcoin network was designed and has evolved with rules based on the “one CPU, one vote” philosophy which proposed a democratic world-view. Therefore individual users often connected directly to the Bitcoin P2P network. However, as Bitcoin became popular and financially significant, block creating has become the domain of specialized miners. Some miners may run their customized mining client or use special-purpose hardware (e.g. ASIC) in an attempt to have an advantage over other clients. Miners around the world may also organize into “mining pools”, often hiding behind small number of gateway nodes. In addition, exponential growth of transactions is leading to overload of the network because the block size that needs to be processed has reached the originally anticipated limit. These changes inevitably leads to changes in the network topology.

However, although unsure whether it is simply mere speculation or due to the true potential of blockchain technology, Bitcoin has experienced explosive growth in terms of number of users, transactions, value, and interest over the recent couple years. If we compare the starting value of 1 BTC in 2013 (13.48), in 2017 it was 19289.79, it is a 1430 times increase.

                                                          

13.48)