Bitcoin is a digital currency that operates on a decentralised, peer-to-peer network. 
As an invention, it is similar to email. Both exist as simple protocols, or sets of rules. The invention of email allowed us to send each other information. The Bitcoin network allows us to send value to each other. 
Importantly, Bitcoin makes it possible to send value without needing a third party. This is what makes it different from traditional banks, or apps like Revolut. 
Bitcoin was invented in 2009 when the Bitcoin whitepaper was published by an individual or group under the pseudonym Satoshi Nakamoto. This paper set out the framework for the first decentralised Peer-to-Peer Electronic Cash System. 
https://Bitcoin.org/Bitcoin.pdf 
Satoshi Nakamoto didn’t come up with the entirety of the Bitcoin network we see today. Satoshi built on top of the ideas developed by researchers, developers, and cypherpunks over the preceding decades. Bitcoin is open source and as such developers have built further upon Satoshi’s creation since its inception. 


Examples of these innovations include: 
i) Developments in the use of cryptography, in particular the development of public key cryptography to secure communications and transactions in the 40 years previous to 2009. 
ii) David Chaum first proposed the concept of digital cash, or electronic payments systems in the 1980’s.  
iii) The cypherpunk movement of the 1990’s was focused on the use of cryptography to protect privacy and free speech on the internet. Cypherpunks developed ideas such as anonymous digital cash and decentralised networks which then influenced the invention of Bitcoin. 
iv) In 1997 Hashcash was invented by Adam Back. This was a proof of work system the was designed to combat spam emails. The concept of proof-of-work was adapted by Satoshi Nakamoto for use in the Bitcoin Network. 
No one. 
Bitcoin is a set of rules (a protocol). Bitcoin is run by a decentralised network of users that work together to maintain the integrity of these rules. 
Like the internet, it is run on open source technology, meaning that anyone, anywhere can participate. 
No individual or group has control. Any changes to Bitcoin’s rules must be agreed upon by the network's participants, and consensus must be reached before any changes are implemented.
Now you understand the meme about the Bitcoin CEO: 
The importance of decentralisation: 
Decentralisation removes the need for trusting a central authority to oversee transactions, typically done by a bank. Transactions are verified and recorded on a decentralised ledger (or a blockchain). 
Decentralisation provides security for the blockchain. The network is secured by thousands of nodes around the world. This eliminates concerns about a single point of failure, and allows for a fixed monetary policy. 
Decentralisation creates an opportunity for the millions of ‘unbanked’ people in the world to use it as a financial service. As Bitcoin is simply open source code that anyone, anywhere can access.
Bitcoin has many rules. These are the most important ones: 
i) As mentioned above, Bitcoin is decentralised. It is not controlled by any central authority. 
ii) The total supply of Bitcoin is fixed at 21 million. No more Bitcoin will be produced after 21 million. 
iii) One Bitcoin is equal to 100 million Satoshis. This means that there are 100,000,000 Satoshis in one Bitcoin. 
The use of Satoshis as a unit of measurement is particularly useful when dealing with very small amounts of Bitcoin. For example, if you were to send someone 0.0001 Bitcoin, you would be sending them 10,000 Satoshis.
iv)Mining: Bitcoin is created through a process known as mining, which involves guessing numerical combinations using specialised hardware.
v) Proof-of-Work: Bitcoin uses a sybil mechanism known as proof-of-work to help protect the network and immutability of Bitcoin’s ledger, in harmony with thousands of nodes dotted around the globe. In short, this is the fancy name for the mining process mentioned above.
vi) Transaction validation: All transactions on the Bitcoin network must be validated by nodes before they are confirmed and added to the blockchain.
vii) Immutable record: The blockchain is a decentralised ledger that records all Bitcoin transactions. Once a transaction is confirmed and added to the blockchain, it is permanent and cannot be altered.
viii) Pseudonymous Transactions: Bitcoin transactions are pseudonymous, which means that users' identities are not directly tied to their transactions. However, Bitcoin transactions can be traced through the blockchain.
The protocol is constantly evolving, and changes and updates can be made through a consensus-driven process.
The Bitcoin Lightning Network is a second layer payment protocol. It was built on top of Bitcoin to enhance Bitcoin’s ability to send and receive payments instantly, and with lower fees than those associated with Bitcoin transactions. 
As the Lightning Network works on top of the Bitcoin blockchain, it benefits from the security of the blockchain. It uses a system of payment channels, which are private channels created between two users.
Crucially, the Lightning Network works to rescue the congestion on the blockchain, speed up transaction times and reduce fees. Users can send and receive Bitcoin in real time. As shown by Joe Hall in this video below where he compares the speed of a lightning Bolt card versus a visa card: 
 
The capacity of the Lightning Network is critical to its success. Higher capacity increases it’s efficiency and reliability, this enables greater usability and adoption. Consistent increases in capacity will enable the network to handle the scale of transactions needed for widespread adoption. See below a history of Lightning’s capacity, and a chronology of important events:
Since its inception in 2018, the lightning network has seen impressive growth. A measure of this is the number of nodes on the network. As of February 2023, there are over 84,000 active channels on the network, with around 12,000 online nodes. This shows a pattern of increasing decentralisation.
‘Mining’ is the process by which new Bitcoin is created approximately every ten minutes. See below a simple outlines of this process: 
i) Transactions are sent across the Bitcoin network, pools collect these into a ‘block’. 
ii) Miners then compete to guess a numerical combination. This ‘guessing’ requires computational power. The first miner to guess the numerical combination is rewarded with an amount of Bitcoin, this is currently 6.25 Bitcoin. 
iii) Once the numerical combination is guessed, the block is then finalised and added to the blockchain. The blockchain is a decentralised ledger of all Bitcoin transactions. This process is called ‘proof of work’. 
iv) As more miners join the network, the difficulty of guessing the numerical combination increases, this is called the ‘difficulty adjustment’. This network adjustment aims to offset the increase in computational power and keeps block production at approximately every ten minutes. This ensures the distribution of new Bitcoin remains steady and consistent over time.

 
See below a useful analogy to give an understanding of how mining works:
i) A lottery: Bitcoin mining can also be compared to participating in a lottery. Miners compete to guess as many numerical combinations as possible. The more computational power a miner has, the more tickets it is essentially buying and the greater statistical chance they have of winning the lottery. However, very much like a lottery, buying the most tickets doesn’t always guarantee a win, it is still in essence a statistical based ‘game of chance’. 
ii) A computer game: Bitcoin mining can be thought of as a computer game where miners use their computing power to compete with each other to solve a numerical combination. The game is designed to become more difficult as more people join in.
A mining pool is formed when a group of miners combine their computing power to increase the probability of winning a block and earning Bitcoin. When a miner in the pool successfully finds a new block, the reward is distributed among all the miners in the pool based on their hashrate contribution or ‘guesses’. One may be wondering why can’t we as humans ‘guess’? For context, a 104TH S19j Pro is firing 104 trillion guesses a second, so while theoretically possible, we cannot keep up with these specialised machines. 
At Scilling, we advise our clients on what mining pool may best suit their mining setup. 
Bitcoin distinguishes itself from everything other cryptocurrencies due to  the key characteristics of its network. As discussed above, it has no governing body. It started and grew organically. The network is entirely open-source, and participants can easily run a node for validation. Bitcoin’s supply is perfectly inelastic (fixed). There will only ever be 21 million Bitcoin. 

‘Crypto’ is a blanket term covering a broad spectrum of diverse digital assets. Crucially, these assets don’t have the same levels of security as Bitcoin. They can be controlled by a small number of people, typically founders, who can manipulate price and supply. 
This is how Gary Gensler of the US’s SEC explained how Bitcoin differs from the rest of ‘crypto’ in an interview with NY Magazine in February 2023: 
"Everything other than Bitcoin, Gensler told me, "you can find a website, you can find a group of entrepreneurs, they might set up their legal entities in a tax haven offshore, they might have a foundation, they might lawyer it up to try to arbitrage and make it hard jurisdictionally or so forth." In other words, there are people behind these cryptocurrencies using a variety of complex and legally opaque mechanisms, but at the most basic level, they are trying to promote their tokens and entice investors. (Source)
These are: 
  • The Bitcoin network has a clear separation between nodes and miners
  • It has millions of miners distributed around the globe
  • It has thousands of decentralised nodes validating that the blocks have been built correctly

Global Map of Bitcoin Miners:


Global Map of reachable Bitcoin nodes: 

Bitcoin creator(s) Satoshi Nakamoto, designed it to have a maximum supply of 21 million Bitcoin. This is hardcoded into the Bitcoin protocol. The reason for the limit is to prevent inflation, to give Bitcoin scarcity and to allow value to grow over time. 
The rate of Bitcoin production is programmed to decrease over time. Every four years, the number of Bitcoins that can be rewarded in a block reward is cut in half. This event is known as the ‘halving’. The last having occurred in May 2020, when the reward for mining new Bitcoins went from 12.5 BTC to 6.25. The next Bitcoin is estimated to occur in May 2024 when the block reward will be reduced to 3.125 BTC. 
See the halving schedule below: 
Once all 21 million Bitcoins have been mined in 2140, the only way to obtain Bitcoin will be to buy them from someone who already owns them. At this point, Bitcoin miners will be able to generate revenue from processing transaction fees and securing the network. 
The ‘halving’ event every 4 years (as explained above) has historically been followed by a period of increased price volatility and upward price movements. The reduced supply of bitcoin has to date coincided with a growing demand from investors and users. The Bitcoin price is famously volatile. It can change by percentages from day to day and week to week.
These are exchanges and ‘crypto’ related businesses. As mentioned above, Bitcoin is not controlled by any entity, its running is not affected by these organisations. Transactions are processed and miners are rewarded regardless of turmoil in the larger ‘crypto’ ecosystem. 
However, as a piece of technology Bitcoin is still misunderstood, for the general public Bitcoin and the ‘crypto’ industry are seen as the same. Therefore, Bitcoin in the public consciousness has endured reputational damage due to the collapse of these businesses. 
At Scilling, we are always keen to communicate the difference between Bitcoin and the rest of the crypto industry. 


Bitcoin adoption has been growing globally over the past decade.  According to Chainalysis, the number of global cryptocurrency users rose from 35 million in 2018 to 101 million in 2020. While the industry operates in bull and bear market cycles, the trend we see is that bear markets don’t wipe out the adoption made during bull markets.
See below some of the best applications of Bitcoin: 
i) Financial Services - Bitcoin can be used as a solution for people who are unbanked or underbanked. Bitcoin does not require users to have a bank account or credit history to participate. Anyone with an internet connection and a phone or computer can use Bitcoin to send and receive money. 
This has implications for the developing world where, according to the World Bank, an estimated 1.7 billion adults have no access to formal financial services. This represents 22% of the global population. 
ii) Online Shopping - many e-commerce sites now accept Bitcoin as a payment method. In particular, Bitcoin can be used when buying products internationally. This removes the need to deal with exchange rates and transaction fees. 
iii) International money transfer - Bitcoin is increasingly seen as a secure, frictionless and cheap way to transfer money around the world. This provides a valuable option for people working away from home, and sending money back to families in countries with limited access to financial services. According to the World Bank, the size of the global remittance market in 2020 was an estimated $702 billion USD. Bitcoin can be used as a payment network to make this process more seamless. 
iv) Investment - Bitcoin is seen by many as an investment. Proponents cite it’s limited supply cap along with the security of it’s network  as reasons to see it as a hedge against fiat currency debasement and economic instability. 
v) Micropayments - Bitcoin can be used to make small payments, such as for online content or services. This can be particularly useful for creators or service providers who want to monetize their content without having to rely on traditional payment methods.
Examples of innovative uses of Bitcoin Mining around the world:  

Anaerobic Digestion in Armagh

Scilling has worked with Tom Cambell in Northern Ireland, to allow him to mine Bitcoin from excess energy generated in his Anaerobic Digestion (AD) plant. The process of using an AD plant to generate energy is hugely effective at reducing agricultural methane output.  Mitigating methane has been described by the UN's Environmental Programme as the strongest lever we have to reduce carbon dioxide. Setting up an AD plant requires a large capital expenditure. Bitcoin mining can act as the first customer to get these facilities started. Source

Hydroelectric Power in Virunga National Park, Democratic Republic of Congo

In the Virunga National Park in the Congo, they face many challenges, one of these is from poachers looking to capture some of their rare animals. Fortunately, they have abundant hydroelectric power, previously in such a disconnected area, it was difficult to put this to use. However, they are now using this stranded power to mine Bitcoin, this has helped to generate funds which are being put to use to keep up the maintenance of the park and pay for security to protect the animals. Source

Gridless

Gridless, based in Africa, uses Bitcoin mining to work with renewable, rural, mini-grid energy generators to monetize the full capacity of their output as a buyer of last resort. They also serve as an anchor tenant for new energy generation creation. Source