A few words about how Bitcoin works
Bitcoin made possible for everyone to transact without the need of any third party. This is achieved with the bitcoin’s peer-to-peer network and the revolutionary Proof of Work model.
Transactions are verified by network nodes through cryptography and are recorded in a public distributed ledger which is called “blockchain“.
Bitcoins are created as a reward for those who “work” for the support of its network in a process known as mining (Proof of Work model).
These digital coins can be exchanged for other currencies, products, and services.
The Bitcoin invention is considered by many people as one of the most important modern ones. Maybe the most important after the internet.
If you wish to see a detailed introduction on how Bitcoin and cryptocurrencies brought the revolution on transactions, without the need of any third trusted parties, like the Banks, you can visit the respective section of our encyclopedia by clicking here.
Who founded Bitcoin?
Bitcoin’s founder is uknown but the group behind its launch used the name “Satoshi Nakamoto”.
Its open source code is publicly available from the time of its launch. The coin became very popular with more than 5 millions people estimated to use it by 2017 according to a research by the University of Cambridge.
Reactions to the Bitcoin’s success
Bitcoin has been targeted by countries’ governments and elites around the world that criticized it for a supposed use in illegal transactions.
Other groups have been sceptical against Bitcoin because of its high electricity consumption, price volatility, and thefts from exchanges.
However , virtually nothing could stop it as it kept enjoying more and more popularity. In the end, Bitcoin begun to be used even as an investment, although several regulatory agencies have issued investor alerts against it.
Bitcoin and some problems seeking solution
The great success of the Bitcoin and the blockchain technology resulted to the launch of other cryptocurrencies. Some of them followed the fundamental rules that Bitcoin had introduced and their developers tried to just fix the shortcomings that the original Bitcoin had. The most important of these are :
– The scalability issues of Bitcoin as its block time and size offer a limited number of transactions per second that is not always enough to cover the high demand.
– The high fees issue because of Bitcoin’s high valuation and low supply. Especially for the high priority transactions during a peak time.
– The difficult non integer long prices (like 0.00345323 BTC) that came as a result of Bitcoin’s high valuation and low supply of coins.
– The lack of any privacy option for people who prefer to not publicly been tracked for every purchase they make.
– The ASICs problem. These specialized mining devices created a monopoly in the network by “big players” who owned them. Thereby putting out of competition all the common people who have a simple PC with a mediocre GPU. This was not supposed to happen with the original Bitcoin idea , as its success came by the support of the global Community and not by just a small elite group’s support.
– The security issue for possible and potentially dangerous attacks in the bitcoin network.
The wave of other cryptocurrencies
A few cryptocurrencies truly offered solutions to some of the above issues.
For example Litecoin offered an alternative of lower fees because of its higher supply and faster block times.
Digibyte offered a network with dramatically increased scalability, lowered fees and great safety.
BitcoinZ : one of the most pure projects
1) Much higher transaction speed and future forks only for increased scalability
2) higher coin supply for easier integer prices
3) ultra low, next to zero, fees
4) ASIC resistant algo in order to widen the number of “smaller” miners participating in its network. It achieved this way to distribute meaningful coin rewards to more common people (decentralization in the coin distribution).
6) Increased security with the ZeuZ code upgrade and plans for future improvements as well.
Countless scams after the Bitcoin’s success
Unfortunately, the new cryptocurrency projects that tried to offer an alternative network in order to face any weaknesses of the original Bitcoin, are extremely few.
Among them there were countless projects which had no reason of existence at all. Their only target was to make their founders rich. These projects are still launched every day because there are people who ignore the dangers and keep investing to them.
Their developers tried to exploit the positive momentum of the new digital assets of course just to make money.
Most usual scam techniques
Most of the deceiving Project’s founders implemented scam tactics like:
– Big premine , thereby acquiring the lion’s share of their coin’s supply
– Instamine periods before releasing the project to the public, with the same result as above
– ICO sales with flashy ads trying to sell tokens that sometimes were not even ready to work.
– Huge founder’s taxes with questionable transparency of the funds’ usage
– Projects that were launched by companies which fully controlled their networks and the coin distribution. At the same time they presented their coins as a Decentralized Cryptocurrency despite the fact that they used a completely centralized approach in every level.
– Projects that had fast, unfair halving plans for their mining rewards.
In some cases, new scam cryptocurrencies combined more than one of the aforementioned techniques. This way, many people were left with useless digital assets after scam exits. All these happen while a few people gaine extreme wealth by their fraudulent activity.
The cryptocurrency world was filled with countless abandoned projects that gave a bad name to the whole “cryptocurrency industry”.
A real shame that hurts the extremely few pure cryptocurrencies. Those that have a truly noble cause and an original cryptocurrency approach with their very fundamental rules leaving no space for speculative activity.