What is Bitcoin? The Ultimate Guide

CONTENTS:

1. What is Bitcoin?
2. Understanding Bitcoin
   • A Brief History of Digital Currencies
   • The Rise of the CypherPunks
   • What is the Double-Spending Problem?
   • The 2008 Catalyst – The Rise and Fall of Empires
   • Bitcoin Mechanics: How does Bitcoin work?
3. Bitcoin Use Cases
   • Bitcoin Metheoric Adoption
4. Bitcoin Challenges
   • The Scalability Problem
   • The Bitcoin Energy Problem
5. Should I Invest in Bitcoin?
6. FAQs
   • Is Bitcoin Legal?
   • Is Bitcoin a Scam?
   • Is Bitcoin a Bubble?
   • How do I Purchase Bitcoin?
   • When Bitcoin Was First Used?
   • What is the Difference between Money and Currency?
   • What is the Difference between Bitcoin and bitcoin?

1. What is Bitcoin?

Bitcoin is the mother of all cryptocurrencies. Although Bitcoin is the first successful and “widely” adopted virtual currency, it was not the first. Early experiments like eCash, eGold, HashCash, b-money, and Bit Gold, among others, paved the way for Bitcoin, which will be remembered as the first cryptocurrency ever invented. 

Bitcoin was launched in 2009 by an anonymous cypherpunk known as Satoshi Nakamoto. The CypherPunks believed that the internet would soon become a battleground for human freedom. 

“We the Cypherpunks are dedicated to building anonymous systems. We are defending our privacy with cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money.”

CypherPunk Manifesto, 1993

CypherPunks experimented with several methods to create a digital sovereign economy with a digitally native form of money. But they all run into an “unsolvable” technical problem: the double-spending problem. Until Satoshi came to the scene: 

“Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It’s completely decentralized with no server or central authority.”

Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.”

To achieve huge success, Bitcoin needed a catalyst. The 2008 Global Catastrophe, the greatest crisis since the Great Depression, served as such. In 2008, billions of dollars were printed to bail out banks, institutional corruption was exposed, and a whole generation (millennials) will never enjoy the same quality of life as their parents (by traditional means). This was the perfect timing. Bitcoin symbolized hope. Bitcoin allows us to build a new financial system from the ground up, free of government and institutional control.

But how exactly does Bitcoin work? Bitcoin uses DLT (distributed ledger technology) to power a massive ledger (blockchain) that records transactions without the need for a third party, cryptography to secure them, and a consensus mechanism known as proof-of-work (mining) to validate and add them to the ledger. Bitcoin allows money to be transferred via the internet without the need for a central bank.

Bitcoin use cases range from being a store of value (because of its limited supply) to an excellent investment vehicle for generating wealth and diversifying your portfolio to a payment platform for remittances and international transfers that are faster and less expensive. 

Bitcoin along with Ethereum is at the forefront of cryptocurrency adoption, which is accelerating at twice the rate of the internet, the greatest technology ever invented.

However, with success comes challenges, and two of the biggest downsides of Bitcoin are scalability and energy efficiency. Bitcoin, as it stands now, is unlikely to be used for everyday transactions (anything can happen, though).

Despite its limitations, Bitcoin offers massive advantages like decentralization, censorship-resistance, security (cryptography), pseudo(anonymity) & transparency, and is a perfect candidate to become a store of value.  

Bitcoin is the first cryptocurrency and has been in existence for over ten years. Despite its significant volatility, scalability, and energy challenges, we believe Bitcoin should be included in any portfolio. Bitcoin has withstood the test of time and is showing promising signals as a store of value (digital gold).

However, as the adage goes “an ounce of prevention is worth a pound of cure.” Never invest money that you can’t afford to lose. 

If you want a more detailed explanation of the fascinating first cryptocurrency, keep on reading.

2. Understanding Bitcoin

What is the origin of Bitcoin? What problem does it solve? How does Bitcoin work? What is the secret of its success? etc.

In this section, we will answer all these questions simply.

A Brief History of Digital Currencies

Although Bitcoin is the first successful and “widely” adopted virtual currency, it was not the first. In truth, Bitcoin is just the most recent experiment in a long line of attempts to supplement or replace traditional money.

eCash (1990): David Chaum, the cypherpunk founder, suggested the concept of digital cash (eCash) in a research paper in 1982 [1]. In 1989, he founded DigiCash, an electronic cash startup that revolutionized payments methods by making them anonymous. Chaum is a digital privacy pioneer who established the framework for the development of public-key cryptography, which is now employed by blockchain technology. However, eCash was centralized and required banks to operate as trusted third parties. DigiCash declared bankruptcy in 1998.

eGold (1996): In 1996, Dr. Douglas Jackson and Barry K. Downey launched eGold, the first extensively used internet money. eGold users could buy chunks or “shares” of gold (eGold) that were backed by real gold bullion as well as make instant transfers to other e-gold accounts. eGold was purely digital in nature, with transactions being 100% irreversible. eGold grew to more than 5 million user accounts before the US Government shut it down in 2008 because of legal issues (they were arrested for money laundering), security issues that allowed hackers to steal customer money, and new US legislation (Patriot Act in 2001) that freeze gold holdings. 

HashCash (1997): In 1997, Adam Back (along with Naor and Dwork) [2] pioneered the proof-of-work (consensus mechanism) that Bitcoin uses as the mining algorithm to validate transactions. Hashcash was originally designed to prevent email spam and later proposed by Hal Finney (RPOW), Wei Dai (B-Money), and Nick Szabo (Bit Gold) as a way of minting coins in digital currencies.

B-Money (1998): Despite the fact that it was never officially launched, computer scientist Wei Dai presented an early idea for an “anonymous, distributed electronic payment system” that Satoshi Nakamoto referred to in the Bitcoin Whitepaper [3]. In November 1998, it was posted to the cypherpunks mailing list [4]. Dai talked about how the Hashcash proof-of-work function could be used to create money and introduced two ways to keep a ledger (PoW and PoS).

Bit Gold (1998): In 1998, another cypherpunk, Nick Szabo, suggested Bit Gold [5], a decentralized digital currency that attempted to create “digital gold” while improving its security properties. Bit gold was never implemented but shares near-identical similarities with Bitcoin, such as the use of encryption and the proof-of-work (PoW) consensus mechanism to accomplish decentralization and secure money transfers without the need for a third party. However, the Bit gold concept did not solve the issue of double-spending and was particularly vulnerable to “cheating” (Sybil attacks). To prevent double-spending, Bitcoin incorporated block confirmations. Many individuals believe that the anonymous bitcoin founder is Nick Szabo.

Beenz and Flooz (1998): Beenz.com (1998) and Flooz (1999) both offered the opportunity to earn virtual cash (Beenz or Flooz) for performing online tasks such as visiting particular websites or shopping online. You might then use your Beenz or Flooz to buy online goods and services. Beenz and Flooz both attempted to establish themselves as “the web’s currency” for usage among internet merchants. Both Beenz and Flooz never attracted much of a user base and closed their doors in 2001.

QQ Coins (2002): Tencent, a very successful Chinese internet service provider developed its own internal virtual currency, called Q Coins which can be used to buy virtual products and services like storage space, virtual pets, and online gaming avatars. At some time, more than 100 million Chinese began utilizing Q Coins, generating a trading volume in Q coins of several billion yuan per year until the Chinese government (like with Bitcoin) prohibited them

Linden Dollars – L$ (2003): The Linden Dollar is the virtual currency of Second Life, one of the most prominent online virtual worlds. Second Life is a multimedia online platform that allows users to create an avatar and live a second life in an online virtual environment. Linden Lab created Second Life and its unique currency in 2003. Users can buy Linden Dollars with real-world currency and engage in online economies within the Second Life virtual world. However, the Second Life virtual investment bank went bankrupt in 2007, and it has been a shell of its former glory ever since.

Facebook Credits (2009): Facebook began experimenting with its own digital currency, Facebook Credits, in 2009, which could be used to pay for in-game products and services on the Facebook website. Facebook Credits were introduced in 2011, with users able to exchange 10 Facebook Credits for one US dollar. However, Facebook Credits didn’t get any traction and Facebook kill the project in 2012. 

Other currencies worth mentioning include Dexit, eCache, InternetCash, Pecunix, and WebMoney. There is a common thread among those virtual currencies: they were all failures until…

Bitcoin (2009): In 2009, an anonymous developer called Satoshi Nakamoto published the Bitcoin whitepaper, titled “Bitcoin: A Peer-to-Peer Electronic Cash System.”

In his own words: 

“Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It’s completely decentralized with no server or central authority. – Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.”

Let’s dive deep into his words

The Rise of the CypherPunks

Before delving into Satoshi Nakamoto’s words, it’s vital to understand why Bitcoin and other cryptocurrencies exist in the first place. Nobody knows who Satoshi Nakamoto is, except that he was a member of a movement founded in the 1990s by David Chaum. The CypherPunks.

The original CypherPunks met in 1992 in San Francisco, CA that led to the creation of the CypherPunk Manifesto, published by Eric Hughes on March 9, 1993. 

An extract from the Manifesto: 

“We cannot expect governments, corporations, or other large, faceless organizations to grant us privacy out of their beneficence…

We must defend our own privacy if we expect to have any. We must come together and create systems which allow anonymous transactions to take place. People have been defending their own privacy for centuries with whispers, darkness, envelopes, closed doors, secret handshakes, and couriers. The technologies of the past did not allow for strong privacy, but electronic technologies do.

We the Cypherpunks are dedicated to building anonymous systems. We are defending our privacy with cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money.

Cypherpunks write code. We know that someone has to write software to defend privacy, and since we can’t get privacy unless we all do, we’re going to write it. We know that software can’t be destroyed and that a widely dispersed system can’t be shut down.”

Eric Hughes, 1993

The cypherpunks are united in their belief that the internet would soon become a battlefield for human freedom. They understood that encryption alone would not be enough to liberate cyberspace. A fully digital sovereign economy would be needed. In other words, a digitally native form of money.

Easier said than done. To create digital money we run into a technical problem: The double-spending problem. 

What is the Double-Spending Problem?

“Double-spending” means that the same units of a currency can be spent twice. In other words, “digital counterfeiting.”

Imagine you have a digital $1 bill. A digital $1 bill, contrary to a physical one is essentially a digital file (information). What is preventing you to copy and paste that file, store copies, and using the same $1 bill for multiple purchases? How could we know is the “real” one?

The way that early digital currencies solved that problem was through a central organization in charge of verifying the transactions (ledger) and ensuring none spent that money twice. In exchange, you gave the third party complete control over the monetary system. In other words, it was centralized. 

When you give someone control of the money supply, you offer them great power. With power comes corruption (Wells Fargo’s scandal), mismanagement (2008 citizen-funded bank bailouts), control (2013 Crypriot bail-in which billions of euros were confiscated to save the banking system), and fragility (single point of failure, bankruptcies, a target for both hackers and government litigations, etc).  

What was needed was a decentralized system that solved the double-spending problem. A decentralized system enforced and validated by cryptography that could not be hacked, targeted by any government (via litigation), or destroyed by human error.

The 2008 Catalyst – The Rise and Fall of Empires

To comprehend the context in which Bitcoin was born, we must recollect one of history’s most devastating disasters, the 2008 financial crisis. Massive bank bailouts (in the billions of dollars), massive institutional corruption, excessive monetary debasement, and the loss of an entire generation that will never have the same standard of life as their parents (by traditional means), the Millennials (the biggest supporters). This is a perfect time to launch a cryptocurrency like Bitcoin, a new form of wealth free of institutional intervention.

In the article “What is cryptocurrency?” we looked at the history of money, from barter to the current fiat monetary system, in which currencies are only backed by the government’s word (and can print as much as they want) rather than scarce commodities like gold or silver.

Here is a pervasive pattern that has persisted throughout history: 

We cannot put our money in the hands of governments, institutions, or private individuals.

Governments must finance their operations to win wars, pay debts, and bail out banks. In general, they have two ways:

• Taxation: Governments raise taxes and directly transfers money from citizens into its coffers. Extremely unpopular.
• Printing Money (Seigniorage): A subtle way to transfer money to the government is by inflating prices and devaluating the currency, citizens now need more money to buy the same things and chase the same real assets. 

Governments choose the latter. Here is a nice graph of the dollar purchasing power since 1913. 

Not a single fiat currency system has ever survived throughout history; in fact, civilizations that reach that stage are on the verge of collapse.

Note: We are not implying (as your favorite crypto guru would) that the US Dollar will vanish and be replaced by Bitcoin. We argue that we are at a tipping point in a paradigm shift in which everything is going digital and the current financial system is unsustainable. The old ways of doing things are giving way to the new.

You don’t have to trust us, see what billionaire investor and founder of Bridgewater Associates, Ray Dalio says in the Changing World Order: The New Paradigm.

Or you can trust my grandmother:

“Son, in the good old days I could get a coffee for 0.05 cents (1950), equivalent in purchasing power to about 0.58 cents today (2022)”

Bitcoin Mechanics – How does Bitcoin Work?

Unlike traditional fiat currencies, Bitcoin is run by thousands of computers distributed around the world. Bitcoin, at its core, is a transparent public ledger with no central authority. 

Granny: “ehhh?” 

Ok, ok let’s simplify things a little:

If we want to send money to my grandmother through traditional banking, a bank or central authority records the transaction in a centralized ledger managed by the bank, which is not transparent and is stored on the bank’s computer.

On the contrary, if we want to use bitcoin technology, it is the equivalent of first writing the transaction on a sheet of paper (that everyone can see). When my grandmother goes to send those same funds to uncle Paco, uncle Paco can see that my grandmother actually has the funds. 

This sheet is a blockchain, which is a type of database that has numerous copies stored on the devices of its network participants (peer-to-peer). When I send money to my granny, it is broadcasted directly to the peer-to-peer network. In order to add new information and reach consensus between participants, Bitcoin uses a consensus mechanism called mining (proof-of-work). Miners (special nodes solving complicated math puzzles) then compete to add and verify new information (blocks of transactions). 

Data can only be added; once added, it is extremely difficult to change or erase.

As its essential building blocks, Bitcoin uses:

• Peer-to-peer network (Decentralization): Nodes (computers running the software) review transactions and enforce software’s rules. 
• Cryptography: Like b-money and BitGold proposals, Bitcoin uses public-key cryptography for identity (authenticate the sender). Wallet software assigns both a public key (for deposits and authentification) and a private key (a private password to access your funds and prove the ownership of these). Bitcoin also uses cryptographic hash functions to validate transaction blocks (block signature) and chain them together in a chain of blocks (blockchain).
• Consensus Mechanism (Proof-of-work/Mining): Both b-money and BitGold proposed Hashcash proof-of-work (PoW) to mint new coins. Bitcoin also uses proof-of-work (mining) to update the blockchain, add block confirmations, and chained new transactions (blocks) together with a “fingerprint” (hash) to prevent double-spending.
• Finite supply: Bitcoin is set at 21 million bitcoins; this is the maximum number of bitcoins that will ever exist. To keep the supply limited, the number of BTC released in each block is slashed in half every four years. This event is known as the halving (or halvening). This makes Bitcoin a potential store of value. 

3. Bitcoin Use Cases

We consider Bitcoin as the first “payment cryptocurrency” designed to be used as “digital cash”, medium of exchange (currency), and money (store of value). 

Here are some of its primary uses:

1. Store of value
   
   
   • Bitcoin has the potential to become a store of value. Bitcoin has currency attributes, but its main source of value (similar to precious metals like gold) is its limited supply and increasing demand. The key distinction between currency and money is that the latter possesses all of the properties of the former while also retaining its worth over time (store of value).
     
     
2. Investment vehicle:
   
   
   • Wealth Creation: Traditional markets provide fewer chances for millennials and future generations to accumulate wealth (asset price inflation). Bitcoin, and cryptocurrencies in general, represent an enormous opportunity for younger generations.
   • Diversification: Even if you don’t buy the narrative, many renowned investors like Raoul Pal, Paul Tudor Jones or George Soros see Bitcoin as a completely new asset class similarly important as Gold, Equities, Currencies, or Real Estate. Bitcoin is relatively uncorrelated to all other asset classes [6]. 
     

3. Payment Platform (Currency):
   
   
   • Remittances & international transfers: Remittances and foreign transactions are two of its most effective use cases. Many foreign workers use Bitcoin to send money to their families back home faster and at a lower cost.
   • Banking the Unbanked: Today, in many locations of the world, access to a trustworthy banking system is not always possible. According to the World Bank [7], 1.7 Billion people don’t have access to a bank account. However, many have access to mobile phones. 
   • Merchants (lower fees): Merchants who accept Bitcoin save significantly on processing fees and minimize the risk of charge-backs. 
   • Buying goods and services: As cryptocurrency adoption increases, more businesses are accepting it. Bitcoin can be used to purchase anything from cars to technology and ecommerce products to jewelry and insurance.
   • Day-to-day transactions: Some predict that Bitcoin will be used in everyday transactions. El Salvador, for example, bet on this concept by becoming the first country to make Bitcoin legal tender on September 7, 2021. We believe this is unlikely due to its fundamental features, but in the crypto realm, anything can happen.
     

Bitcoin Metheoric Adoption

For something to store value, people must recognize and acknowledge its value, but is bitcoin being adopted?

Interestingly enough, the price of bitcoin seems to be following a very similar trajectory as the fastest technology ever invented, The Internet. Bitcoin 2022 is equivalent to the Internet in 1998.

Bitcoin 2022 = Internet 1998

The price of Bitcoin might be a bit misleading, we can look at Glassnode (on-chain analysis company), which shows the number of new addresses joining the bitcoin network. There are approximately 560K new addresses connecting to the bitcoin network every day. 

Despite the fact that Bitcoin is primarily driven by speculation, here are a few statistics:

• There are over 100 million owners of Bitcoin – Crypto.com (2021)
• 28,617 businesses worldwide accept bitcoin – coinmap.org (Jan 2022)
• 265,128 bitcoin transactions went through today – Ycharts (Jan 25 2022) 
• There are 35,000 bitcoin ATMs around the world – CoinATMRadar (Jan 2022)
• Around 13 major national companies accept bitcoin payments – Fundera (2021)

4. Bitcoin Challenges

But not all are rainbows and sunshine. Bitcoin has two major issues

The Scalability Problem

Despite being the most commonly used cryptocurrency to date, Bitcoin has multiple challenges, one of the most significant of these is scalability.

Scalability is a measure of a system’s capacity to expand to meet rising demand without sacrificing its core functionality. 

As the Bitcoin network has turned exponential, it has slowed tremendously (due to its design), transactions take longer to process, and fees can skyrocket (miners are incentivized by fees to add transactions to the blockchain, if there are a lot of transactions waiting, they prioritize transactions with higher fees). 

Bitcoin can only manage about 7 transactions per second, but Visa and Mastercard can handle 1,700 and 5,000 transactions per second, respectively.

Bitcoin must be fast (and stable) in order to serve as a day-to-day payment system without losing its decentralized power.  

To solve that problem a new promising technology is being tested on top of it, the Lightning Network. To alleviate congestion on the Bitcoin Blockchain, the Lightning Network enables users to route transactions over off-chain channels.

The Lightning Network uses smart contract functionality to scale the number of transactions (1,000,000 per second), making them faster (near-instant) and more efficient (at little to no cost)

The Lightning Network adoption has risen to over 72k open payment channels, according to Glassnode [8]. 

But, again, this solution is far from perfect. For example, in order to use the network, users must meet specific requirements, such as having a lightning node. 

Only time will tell!

The Bitcoin Energy Problem

The other issue that Bitcoin brings up is what we call “The Bitcoin Energy Problem.” Proof-of-work (PoW), or mining, is an electricity-intensive consensus mechanism used by Bitcoin and the majority of the early altcoins. To add blocks to the blockchain, miners need to use computer power to solve a cryptographic puzzle. 

Many studies have highlighted the issue with Bitcoin mining, which is particularly inefficient and power-hungry when accounting for the blockchain’s low transaction efficiency.

According to Alex de Vries: 

“The Bitcoin [BTC] network can be estimated to consume at least 2.55 gigawatts of electricity currently, and potentially 7.67 gigawatts in the future, making it comparable with countries such as Ireland (3.1 gigawatts) and Austria (8.2 gigawatts). Economic models tell us that Bitcoin’s electricity consumption will gravitate toward the latter number.”

Alex de Vries. [9]

However, in the recent U.S. Crypto congressional hearing, Brian Brooks, chief executive officer of Bitfury Group (Bitcoin mining services) answered [10].  

“This is because the expense involved in taking over 51 percent of the network’s computing power – the threshold necessary to rewrite blocks of transactions on the blockchain – would be prohibitively expensive. As a result, the Bitcoin blockchain has never been hacked and no bitcoin have ever been counterfeited.”

Brian Brooks

To address this issue, the majority of altcoins employ alternative consensus mechanisms like proof-of-stake (PoS) or delegated proof of stake (DPoS), which does not require the use of computational power. 

Currently, however, there is a trade-off between efficiency and security (robustness). We must give up some security to make cryptocurrencies more efficient. Proof-of-work is more secure than proof-of-stake, but it is slower and consumes more energy.

The question we should ask here is what is the purpose of the cryptocurrency we are investigating, if the priority is efficiency then we should see technology that enhances efficiency and vice versa. 

5. Should I Invest in Bitcoin?

Bitcoin has been in existence for more than ten years and is the first cryptocurrency ever created. Despite its significant volatility, scalability, and energy issues, we believe Bitcoin has stood the test of time and show promising signs as a store of value (“digital gold”). We are more skeptical of the likelihood of it becoming a currency for everyday transactions.

Bitcoin is on the verge of institutional adoption, which will be the final litmus test for Bitcoin. Companies, hedge funds, investors, and even governments are all jumping on the Bitcoin and cryptocurrency bandwagon.

This is a cryptocurrency that everyone should have on their portfolio (especially if you are new to the space). The following are Bitcoin’s upsides and downsides:

6. FAQs

Is Bitcoin Legal?

Bitcoin is legal in the U.S., Japan, the U.K., and most other developed countries. 

According to a 2021 summary report by the Law Library of Congress, countries like China, Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh have all banned cryptocurrency in general. Forty-two other countries, including Bolivia, Ecuador, and Turkey have implicitly banned digital currencies by restricting their usage.  

Is Bitcoin a Scam?

Bitcoin has been in existence for nearly a decade and has shown to be resistant to forks (cryptocurrencies built from Bitcoin’s code), attacks, and other problems. Anyone can download and examine the code because it is open source. Bitcoin’s blockchain has never been hacked, and no counterfeit money has ever been issued on the network. Of course, hacks in centralized third parties such as exchanges or wallets have been documented, but not in Bitcoin itself.

Is Bitcoin a Bubble?

The current cryptocurrency landscape is comparable to the internet in 1998, and Altcoins lag much further behind. It is usual to observe large price spikes and decreases in the early phases of a new technology until the technology is widely adopted. As the saying goes, with great opportunity comes great risk.

There have been several Bitcoin bubbles that have burst (2011, 2013, 2017, and current 2022 corrections). Right now, we do not recommend to put more money than you can afford to lose. 

As Tim Enneking, managing director of Digital Capital Management, said: “You’re a fool if you don’t invest in crypto assets … (but) “you’re also a fool if you invest too much.”

How do I purchase Bitcoin?

1. Get a Bitcoin wallet
2. Find a Bitcoin exchange
3. Sign up and verify your identity by following the steps
4. Deposit funds at the exchange (by bank transfer, credit card, etc.)
5. Swap your money for Bitcoin
6. Secure your Bitcoin: Withdraw the Bitcoins to your wallet

When bitcoin was first used? 

In May 2010, Jeremy Sturdivant sold two Papa John’s pizzas for 10,000 BTC to programmer Laszlo Hanyecz. This is the first “real-world” transaction that has been documented. Back then, 1BTC was worth $41, those tokens would be worth $360 million today. 

To commemorate the occasion, the Bitcoin community celebrates Bitcoin Pizza Day on May 22nd.

What is the difference between Money and Currency?

Something to be considered Currency must be a medium of exchange (can be used to exchange goods and services), a unit of account (a standard numerical unit of measurement of market value), portable (people can carry money with them and transfer it to others), durable (an item must be able to withstand being used repeatedly), divisible (can be divided into smaller units of value) and fungible (one unit have the same value as another, they are interchangeable). 

Here lies the flaw in our existing fiat monetary system. Something to be considered Money must possess all of the properties of a currency while also serving as a store of value (it must maintain its value over time). Fiat money is not money; it is simply currency that loses value over time. 

What is the difference between Bitcoin and bitcoin? 

They are used interchangeably but if we want to be more precise, Bitcoin with a capital B is referred to when discussing the Bitcoin network, protocol, or system. bitcoin with a small b is referred to the currency unit, bitcoin.