In times past, say the 1980s, there had been various attempts by computer nerds, cryptographers, scientists and technologists, to create a decentralized system for transactions and interaction on the internet. Their mantra had always been to create a better world, where there is privacy and absence of interference by centralized authorities. While some might have succeeded in implementing this new era of human interaction, they suffered some setbacks as the system encouraged illicit and criminal activities. Criminals took advantage of the anonymity that this system provides to carry out illegal operations.

Therefore, this new era faced huge condemnation and criticism by the government and its bodies alike. However, these group of scientists and cryptographers never gave up on their goal of ensuring online privacy. They continue to provide new ways and methods to achieve their aim.

Bitcoin is a by-product of this school of thought.

Brief history of Bitcoin.

Bitcoin has a rich history of struggles featuring notable events and serious debates on its adoption. Bitcoin was built on the past history and proposals of its predecessors such as bitgold and B-money. The anonymous founder of Bitcoin, Satoshi Nakamoto only improved on the past cash systems.

There were series of events that led to the development of Bitcoin. The evolution of bitcoin saw the establishment of new businesses and organizations. Sadly, most of them could not live up to the hype. Some of the known participants were even imprisoned.

In its early days, anyone could mine bitcoin. A simple personal computer could mine Bitcoin. As people sought after faster means to solve the complex mathematical calculations and puzzles involved in Bitcoin mining, there was a direct influence on the introduction of new computers and machines. There has been a beautiful succession of computer phases used for mining bitcoin. The recent is the application-specific integrated circuits (ASICs) which are specially designed for bitcoin mining.

However, despite the struggles, bitcoin continues to enjoy global adoption. People are ready to explore the possibilities inherent in a digital and decentralized cash system. This system will provide a way to make purchases and perform transactions that do not reveal the identity of the parties involved.

Objective of Bitcoin

Bitcoin is operated on a decentralized network of computers called nodes or servers. These nodes can be owned by anyone provided they have the financial capability to carry its costs. The following are the objectives of the Bitcoin network:

1. Digital currency: Bitcoin was developed to create a digital currency that is not backed by any real-world entity like gold or local currencies.

   
   

2. Decentralization: It gives freedom over our finances through decentralization. That is, there is no central body or authority in-charge of recording or controlling transactions. All bitcoin transactions are recorded on a blockchain. A blockchain is a public ledger, like an electronic board that contains history of all successful bitcoin transactions.

   
   

3. Anonymity: It provides anonymity for users as transactions on the bitcoin blockchain does not contain information about the real identity of users.

   
   

4. Inflationary monetary policies: Bitcoin was created after 2008 financial crisis and is aimed at protecting our finances against inflationary monetary policies. These policies are concerned with our local currencies and banknotes.

   
   

5. Borderless transactions: Bitcoin was created to allow transactions between two persons from different location in the world, as long as both parties have a bitcoin wallet.

Difference between bitcoin and other local currencies

Below are the differences between local currencies and Bitcoin:

Achievements of Bitcoin

Bitcoin has been able to achieve some of its objectives and introduced significant developments. Some of them includes:

1. Store of value: Bitcoin has succeeded as a store of value. Many investors buy bitcoin, store them, and sell them when the price hikes.

   
   

2. Recognition: Bitcoin has gained an overwhelming recognition as a medium of exchange. It is used for online purchases, transactions, etc. El-Salvador became the first country to adopt Bitcoin as a legal tender.

   
   

3. Growth of new firms: Bitcoin has garnered interest from entrepreneurs. Many companies have started to invest in bitcoin and create services for the bitcoin network. They include mining companies, crypto wallets, etc.

   
   

4. Decentralization: The aim of creating a decentralized currency has been achieved. Bitcoin is not under the control of any central authority thereby reducing abuse of power by these bodies. There are no bank charges.

How is bitcoin mined?

New supplies of bitcoin are mined every 10 minutes. Definitely not from the soil like gold and other natural resources 🌝🌝.

Therefore, how is bitcoin mined?

Understanding bitcoin mining reveals the mechanics of bitcoin. It shows how daily bitcoin transactions contribute to the total supply of bitcoin.

It is complicated, but I'll help you understand by using a simple illustration:

Two friends, John and Mary have a bitcoin wallet. John decides to gift Mary some amount of Bitcoin. John initiates a transaction by sending 0.1BTC to Mary. Before Mary receives the BTC, some processes occur in the background.

Recall that bitcoin runs on a network of servers or computers called nodes. These nodes patiently wait for bitcoin transactions to be initiated. Just as we have with John and Mary, immediately John initiated the transaction, the nodes begin to compete to solve solve some complex mathematical calculations.

The node that completes the calculation the fastest gets a chance to record the transaction as a new block on the public ledger. This is the winning node.

However, a consensus is reached by at least six nodes to ensure the validity of the transaction through a process called proof-of-work, before it's recorded. Finally, the winning node gets rewarded with bitcoin and Mary receives her 0.1BTC gift in her wallet. This is how bitcoin is mined.

But how much BTC does each node get as a reward?

This is where bitcoin halving, and the bitcoin mechanics comes in.

Bitcoin Mechanics

Bitcoin mechanics discusses the rules binding bitcoin mining. These rules are hardcoded and can only be changed by a large consensus. The future of bitcoin depends on these set of rules. They contribute to bitcoin's deflationary nature, that is, preventing unnecessary inflation caused by too much bitcoin in circulation.

Bitcoin Halving.

The first set of nodes got 50 BTC as reward in 2009. The second set got 25 BTC. The reward keeps getting halved every 4 years. The current reward stands at 6.25 BTC per block and is expected to be 3.125 this year. This algorithm is hardcoded in the bitcoin blockchain. In essence, this would help to accomplish the goal of a fixed supply limit of Bitcoin.

Fixed supply limit

According to the bitcoin blockchain the total supply of Bitcoin would be capped at 21 million. This goal is estimated to be accomplished by 2140. As surprising as it may sound, the total supply of bitcoin is not up to 21 million.

Mining difficulty

Each bitcoin transaction is added to a pool of unconfirmed transactions. The nodes compete and the winning node adds the transaction as a new block. Each block is added to the blockchain approximately every 10 minutes.

The latest super computers for bitcoin mining are the ASICs. If by chance there is any improvement in the computing power of these computers, the bitcoin blockchain would also adjust its difficulty level automatically. Thereby ensuring that new blocks are added within the 10 minutes window.

The easiest way to mine Bitcoin

You must be wondering, "since bitcoin mining is such a complex process, how can I mine bitcoin?". The complexity and hardware maintenance cost of mining bitcoin is what turns most people off.

What if I told you, you could mine bitcoin without having to deal with hardware maintenance?

There are intermediaries that handle the complex part of bitcoin mining while you sit back and watch your balance grow. Beware as most of these companies are scammers. I’ve had a fair share of experience with them. Fortunately, I never got scammed.

Almost like they all follow the same template. When you register with them, you are presented with a dashboard that reads how your bitcoin is mined. Once it’s time to withdraw, they ask you to deposit a specific sum of BTC before you can withdraw your balance.

One of the few trusted intermediaries is GoMining. They operate 9 data centres/miners with thousands of Bitcoin mined and successful payouts to customers.

However, there is a catch!

Role of NFTs and Liquid Bitcoin Hash rate in bitcoin mining

NFTs also known as Non-Fungible Tokens, are digital assets that represent ownership or serve as proof of authenticity of a specific piece of content. NFTs uses the blockchain technology in its operations.

Liquid Bitcoin hashrate (LBH) on the other hand refer to the computational power or speed at which Liquid Network validate transactions and secure the Liquid Sidechain. It is a measure of the network’s capacity, similar to the hashrate in the main Bitcoin blockchain.

On GoMining, NFTs can now be used to own a portion of the mining power of machines used in mining Bitcoin. You can easily purchase an NFT for a type of mining machine. This represents your ownership, and the right to a share of the Bitcoin mined using the machine. The NFTs represent the LBH and they allow holders to mine Bitcoin every day. They can be bought or sold.

For example, if you purchase an NFT for a mining machine. They help you mine bitcoin every day. You only need to pay electricity fees to keep them mining BTC for you. The quantity of Bitcoin mined depends on the efficiency of the machine whose NFT you are holding. These NFTs can be bought or sold.

Pool mining vs Solo mining.

In the traditional mining, there are two types of mining: Pool and Solo mining.

Solo mining involves mining on your own with your machine, while Pool mining involves joining resources to participate in the bitcoin mining process.

This feature is also available on the GoMining platform where you can decide to buy NFTs and mine on your own or pool resources with a group of people while you participate in games, contests etc as a group. With a strong and effective pool, you can earn 10 times more than when you mine alone.

Criticisms against Bitcoin

While Bitcoin is adopted by many as the future of finance, there are claims that question its sustainability. Some of these claims include:

1. Volatility: Bitcoin is highly volatile. It has a history of price fluctuations. While the current price of Bitcoin stands at $42,000+, this figure can significantly increase overnight or otherwise.

   
   

   I have a friend who is into cryptocurrency. He is the reason why I’m up to date with the latest news in the crypto space. One night he predicted that the price of Bitcoin would rise the following morning. We pondered over it but ended up doing nothing about it. The next morning, the price of Bitcoin indeed rise. It hurt so badly knowing we could have benefited from this opportunity. But remember it’s not guaranteed. What if it we took action, and the market turned against us?

2. Energy consumption: Bitcoin mining requires high computational powers thereby consuming power. This could have serious environmental impact.

   
   

3. Security: The Bitcoin network itself is secured. It uses cryptographic methods to transfer Bitcoin. However, it has no power over organizations that offer services such as Bitcoin wallets to people. There are cases where some of these companies got hacke, with people's Bitcoin stolen.

Conclusion: Future of Bitcoin

As with most investments, the future of Bitcoin is uncertain. However, it is an interesting space to explore. With the surge of new cryptocurrencies in the market and recent trends, it is obvious that this decentralized cash system has come to stay. Most of these cryptocurrencies offer more scalability and sustainability and is a threat to Bitcoin as the king of all cryptocurrencies.

I have a strong intuition that the environmental impact of the Bitcoin network can be and would be looked into. Moreover, Bitcoin didn't become a million-dollar industry overnight. It scaled through obstacles to become the king of crypto.

My advice is to make wise and informed decisions when investing in Bitcoin. Especially for those who buy to withhold.