Bitcoin is a cryptocurrency and a payment system, first proposed by an anonymous person or group of people under the name Satoshi Nakamoto in 2008.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services.
As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.
Bitcoin has been criticized for its use in illegal transactions, its high electricity consumption, price volatility, thefts from exchanges, and the possibility that bitcoin is an economic bubble.
A few economists have suggested that bitcoin may be a good investment if it continues to appreciate in value against other currencies.
What Are the Tokenomics of Bitcoin?
The tokenomics of Bitcoin are fairly simple. The total supply of bitcoins is capped at 21 million.
The number of bitcoins in circulation is currently around 18 million, with the remaining 3 million yet to be mined. The mining process will continue until the 21 millionth bitcoin is mined, at which point no more new bitcoins will be created.
The tokenomics of Bitcoin are designed to incentivize miners to continue verifying and processing transactions on the network even as the rewards they receive for doing so diminish over time. This is because each new block mined results in a 12.5 BTC reward being divided among the miners who helped solve the mathematical problem that led to its discovery.
This reward is halved every 210,000 blocks mined – or roughly every four years – until it reaches zero. At that point, transaction fees will be the only incentive for miners to continue verifying transactions on the network.