For many, bitcoin is a hard technology to understand.Even after reading tons of texts, watching numerous videos online and attending every bitcoin event near you, you may remain confused.And the technical details are not the only complicated aspect.Since 2009, a highly complex ecosystem has grown around the cryptocurrency and added to its difficulty, especially for the newbie.Indeed, it is still common to bump into people who think bitcoin is a company, when it’s actually a worldwide protocol like the internet.This post provides a map of bitcoin and after reading it, you should be able to understand the critical parts of the cryptocurrency’s ecosystem better.The foundation of bitcoin is a piece of software that users install to connect to the peer-to-peer network.This code, known as the bitcoin core software, defines the rules and terms of the interactions between the computers in the network.It also guides the building of consensus about the state of the distributed ledger on which bitcoin transactions are recorded.

Satoshi Nakamoto, the founder of bitcoin, wrote the first version of the core software.He ensured that it was open source so anyone could contribute to it and edit it to meet emerging needs.Indeed, if you have the skills, you could propose changes to improve the code.However, for the changes to become part of the core software, a majority of nodes in the network must install them.Those who write and edit the software are known as core developers.They form a critical component of the ecosystem, because without them, the protocol would fail to overcome emerging challenges and needs.Who pays the core developers?Many core developers work as volunteers.However, some receive payment from private bitcoin companies such as BitPay, a payment processor, and Blockstream, a blockchain solutions company.Nonprofit bitcoin advocacy organisations such as , and MIT (DCI) also raise funds to pay core developers.While bitcoin is a peer-to-peer payment platform, it requires hardware and software resources and computer power to process transactions.

Miners—including individuals, groups and companies—provide this computer power to process consensus on the state of the public ledger.In exchange for the resources they offer the network, miners receive mining rewards—new bitcoins the protocol stipulates to be released every ten minutes, as well as fees attached to transactions by users.Similar to bitcoin code development, mining is open to anyone.No gatekeeper gives permission.The protocol itself is designed to disincentives bad actors.As a miner, you incur the costs of hardware and electricity.In addition, the network will only accept your input if you play by the rules.If you try to game the system, the network ignores you, and you don’t receive rewards.Only some of the computers on the network work to build consensus on the state of the shared ledger.Others propagate transactions to those involved in the actual mining.Computers in this category are known as nodes.Indeed, all computers in the network are nodes.However, the term “node” in the bitcoin ecosystem is often used to describe a computer that passes data to others without processing it.

Unlike miners, nodes do not receive rewards or payment of any kind.No one can set them up to generate revenue, but because they perform an important function, private companies, individuals and nonprofit organisations donate them to the network.litecoins minen 2014Some altcoins, such as Dash, include nodes in the sharing of their mining reward to incentivise people to set them up.litecoin and nvidiaBitcoin, on the other hand, benefits from the fact that many entities, such as exchanges, install nodes to help process their own transactions, but end up serving the entire community.ethereum cost per transactionYou could acquire bitcoin by mining it, receiving it as gift or by selling goods and services in exchange for it.now accepting litecoin

However, the most common way people acquire it is through buying it.Bitcoin exchanges facilitate this process, as well as the process of selling.Exchanges have gone from being ad hoc entities to being companies registered and regulated under the law.ethereum mixEven when regulated, they can have different business models.bitcoin sweepSome buy and sell directly to clients and others act as market platforms to match buyers and sellers.For the most part, exchanges are online platforms, but some are going offline..au, enabling people to buy Bitcoin over the counter at a newsagency, with cash.All exchanges are private, third party businesses and therefore charge a fee for every transaction they facilitate.While exchanges are good places for buying and selling, they aren’t meant to be used for long-term storage.Bitcoin you intend to keep should be moved off the exchange to a separate wallet where you hold the keys.

Bitcoin wallets are applications that hold a user’s private keys, which authorise the user to move the bitcoins assigned to the corresponding public key on the blockchain.The first wallets were open-source software, which the user downloaded along with the entire blockchain.They weren’t facilitated by a third-party service provider.The most popular wallets today, however, are those created by third-party service providers.They are more popular because they don’t require users to download the entire blockchain.They are also easy to use for people who are not tech savvy.Dozens of companies provide bitcoin wallets in the form of mobile applications, web applications and hardware devices.Bitcoin’s price volatility has become an opportunity to buy low and sell high for a profit.Platforms with relevant trading tools facilitate this activity.These platforms are a critical part of the ecosystem because many people use bitcoin for speculation purposes.Since bitcoin isn’t bound by international boundaries, these platforms have found it easy to serve the global market.

Users can buy and sell bitcoins and other cryptocurrencies through Bitcoin ATMs, or BTMs, which are modeled after the automatic teller machines (ATMs) of banks.BTMs eliminate the problem of finding payment methods that allow bitcoin transactions.Several companies are building networks that support BTM services in cities and towns around the world.BTMs could even enable the infrastructure necessary for mass bitcoin adoption.Payment processors are companies that help merchants offer customers the opportunity to pay in bitcoin, while at the same time protecting the merchants from the volatility of the cryptocurrency.The payment processors accept bitcoin on behalf of the merchant.They exchange the cryptocurrency for fiat and send the money directly to the merchant’s bank account in real time.Since cryptocurrencies can be used anywhere, payment processors make it easier for merchants to ship to other parts of the world where traditional online payment methods don’t work.Startups building solutions around bitcoin face similar challenges, such as finding it difficult to register or open a business bank account.

To counter this, they have formed trade associations that speak before regulators on their behalf.The United Kingdom has the (UKDCA) and Australia has the (ADCCA).Similar bodies are found in other countries around the world.These trade associations also represent companies that use the blockchain, the technology underlying bitcoin.Over time, nonprofit advocacy groups have formed.They do research and educate policy makers on bitcoin, as well as engage in the process of drafting laws that may impact the cryptocurrency.The most prominent of these advocacy groups are the Bitcoin Foundation and Coin Center, both of which have been involved in the development of bitcoin-friendly policy around the world.Bitcoin is being slowly embraced by the academic world.Universities are starting to offer courses on the technology.Others have set up centres to support its growth, such as MIT Media Lab’s Digital Currency Initiative (DCI), which to support bitcoin core developers.Professors have also taken an interest in the cryptocurrency.