What is Bitcoin?
Bitcoin is a peer-to-peer, permissionless blockchain that pioneered a way to independently create, manage and validate digital money. Bitcoin was introduced to the public in Oct-2008 with the release of a whitepaper, authored by the pseudonymous Satoshi Nakamoto. The Bitcoin network went live in Jan-2009 when the genesis block was mined. The network utilizes a proof-of-work sybil resistance mechanism and public-key encryption in order to create an immutable ledger of digital transactions.
What is BTC?
BTC is the native cryptocurrency of the Bitcoin network, and acts as the network’s medium of exchange and unit of account. BTC supply is capped at a maximum of 21 million coins. By solving complex cryptographic problems, Bitcoin miners verify the validity of transactions within a given block and are rewarded with newly minted BTC. These rewards are referred to as a block reward, and are cut in half every 210k blocks mined (~every 4 years).
Background – The Start Of A New Era
Bitcoin, the cryptocurrency that kicked off a trillion-dollar industry, is slowly becoming a mainstream asset. Anonymous founder Satoshi Nakamoto founded Bitcoin in response to the unprecedented bailout of financial institutions in 2008. Satoshi believed we needed a digital, self-sovereign currency outside anyone’s control. Satoshi initially released Bitcoin to a small community of anarchists, cypherpunks, and libertarians on a cryptography forum, where they quickly adopted it and saw its potential.
Initially, as a permissionless monetary system, illicit entities and those cut out from the traditional financial systems used Bitcoin. Silk Road users famously used Bitcoin to buy and sell drugs and black market weapons early in Bitcoin’s life. Since those early days, however, more and more people have understood Bitcoin as digital gold, native internet money, or a Swiss bank account in your pocket. Bitcoin has evolved past its more illicit past, and many now see it as an essential part of any portfolio.
However, many institutions, investors, and individuals are unable or unwilling to invest in Bitcoin due to challenges around custody or other regulations. For many, it’s the same story as gold. Few investors want to custody and secure $10M in gold. As such, many large capital allocators require some sort of traditional investment vehicle for their BTC exposure – like an ETF.
