Introduction to Bitcoin

Bitcoin (BTC) is the original cryptocurrency, introduced in 2009 by an anonymous individual or group known as Satoshi Nakamoto. It was designed as a peer-to-peer digital currency that operates without the need for intermediaries such as banks or governments. Bitcoin pioneered the concept of decentralized, trustless financial transactions through the use of blockchain technology.

The Bitcoin blockchain is a public, immutable ledger that records every transaction ever made. It relies on a Proof-of-Work (PoW) consensus mechanism, which requires participants (miners) to solve complex mathematical puzzles to validate transactions and secure the network.

Bitcoin Supply and Mining

• Maximum Supply: 21 million BTC (hard cap)

• Current Circulating Supply (as of 2025): ~19.7 million BTC

• New BTC Issuance: Halves approximately every 4 years (next halving in 2028)

• Mining: Carried out by specialized computers (ASICs) consuming large amounts of electricity

Bitcoin's fixed supply is often cited as one of its strengths, positioning it as a scarce digital asset often compared to gold ("digital gold").

Transaction Speed and Costs

• Average Confirmation Time: ~10 minutes per block

• Transactions per Second (TPS): ~7 TPS

• Average Transaction Fee (2024): $1 to $30+ depending on network congestion

Compared to modern blockchain platforms, Bitcoin is slow and expensive to use, making it impractical for everyday retail transactions.

Technical Characteristics

• Blockchain Type: Proof-of-Work

• Consensus Algorithm: SHA-256

• Block Size Limit: 1 MB (can increase with SegWit)

• Smart Contract Capability: Very limited (not native)

• Privacy: Pseudonymous, not anonymous

• Upgrades: Difficult and slow due to decentralized governance

Limitations and Emerging Concerns

1. Scalability Issues: Bitcoin's low TPS and long confirmation times limit its capacity to serve as a scalable global payment network.

2. High Energy Consumption: Mining is extremely resource-intensive, often criticized for its environmental impact.

3. Centralization of Mining: Over time, mining has become dominated by large industrial operations in countries with cheap electricity, leading to a decline in decentralization.

4. Lack of Innovation: Due to Bitcoin's conservative governance model, technological innovation (e.g., smart contracts, tokenization, DeFi) is minimal compared to newer chains.

5. Cost-Prohibitive for Small Users: As fees rise and block space remains limited, smaller transactions are often economically unfeasible.

Conclusion

Bitcoin remains relevant and an important part of cryptocurrency history. Its core design has stood the test of time, and its scarcity narrative continues to attract investors seeking an alternative to fiat currency.

However, Bitcoin faces increasing criticism for being technologically outdated, environmentally unsustainable, and less decentralized over time. As blockchain technology evolves, Bitcoin may struggle to maintain relevance beyond its symbolic and speculative value unless it undergoes significant innovation or complements newer, utility-driven networks.