BITCOIN

Bitcoin, created in 2008 by the pseudonymous Satoshi Nakamoto, is the first decentralized cryptocurrency. Operating on a peer-to-peer network, it utilizes cryptography and a public distributed ledger, known as the blockchain, for transaction verification without central oversight. Consensus among network nodes is achieved through proof-of-work mining, a computationally intensive process that has raised environmental concerns due to its significant energy consumption.

As of 2022, Bitcoin mining accounted for 0.2% of global greenhouse gas emissions. Initially conceived as a currency, Bitcoin's use began in 2009 with an open-source implementation. In 2021, El Salvador adopted it as legal tender, marking a milestone in its acceptance. However, Bitcoin is currently predominantly viewed as a store of value and investment rather than a medium of exchange or unit of account. Many scholars describe it as an economic bubble due to its price volatility.

The pseudonymous nature of Bitcoin has attracted regulatory attention, leading to bans by some countries concerned about its potential use in criminal activities. The evolving regulatory landscape and the cryptocurrency's dynamic role in financial markets contribute to ongoing discussions about its impact and future.

1) HISTORY

Before Bitcoin, various attempts at digital cash technologies were made, including ecash by David Chaum and Hashcash by Adam Back. Cypherpunks Wei Dai and Nick Szabo proposed concepts like b-money and bit gold in the late 1990s, but early attempts faced issues like centralization, double-spending vulnerability, and susceptibility to Sybil attacks.

• 2008–2009: Creation: Bitcoin was introduced in a white paper by the pseudonymous Satoshi Nakamoto in October 2008, with the bitcoin.org domain registered in August. Nakamoto released the open-source bitcoin software in January 2009, mining the first block, the genesis block, containing a reference to a newspaper headline. Early supporters included Hal Finney, Wei Dai, and Nick Szabo. The first known commercial transaction occurred in 2010 when Laszlo Hanyecz bought pizzas with bitcoins.
• 2010–2012: Early Growth: Nakamoto mined an estimated one million bitcoins before disappearing in 2010. Gavin Andresen took over development. Early users included black markets, with Silk Road being a major adopter, transacting millions in bitcoins.
• 2013–2014: First Regulatory Actions: Regulatory guidelines were established in the U.S. in 2013. Mt. Gox was seized in May 2013, and the FBI seized bitcoins from Silk Road in October. China banned financial institutions from using bitcoin in December 2013, affecting its value.
• 2015–2019: By 2017, there were millions of unique users with cryptocurrency wallets, primarily using bitcoin. The SegWit upgrade and the creation of Bitcoin Cash occurred in 2017. Bitcoin faced challenges like the Chinese trading ban and exchange hacks in 2018.
• 2020–Present: Major companies and institutions started acquiring bitcoin in 2020. In 2021, Bitcoin's market capitalization reached $1 trillion, and the Taproot upgrade was activated. El Salvador adopted Bitcoin as legal tender in September 2021. In 2022, the bitcoin price fell due to issues with Terra USD and the Celsius Network.
• 2023: In 2023, ordinals, non-fungible tokens (NFTs) on the Bitcoin blockchain, went live.

2) GLOBAL VIEW ON BITCOIN

• Global Adoption: Bitcoin has gained recognition and adoption worldwide. While some countries embrace it as a form of payment, others approach it cautiously or have imposed restrictions. Some nations have recognized Bitcoin as legal tender, while others have banned or restricted its use.
• Regulatory Landscape: Regulatory approaches toward Bitcoin vary globally. Some countries have established clear regulatory frameworks for cryptocurrencies, while others are still in the process of developing guidelines. Regulatory developments can impact the use, trading, and acceptance of Bitcoin in different regions.
• Investor and Institutional Interest: Bitcoin has attracted attention from both retail and institutional investors globally. Institutions, including hedge funds and publicly traded companies, have shown increasing interest in holding Bitcoin as part of their investment portfolios.
• Exchanges and Trading: Bitcoin is traded on numerous cryptocurrency exchanges worldwide. These exchanges facilitate the buying, selling, and trading of Bitcoin against various fiat currencies and other cryptocurrencies.
• Blockchain Technology Development: Beyond Bitcoin, the underlying blockchain technology has spurred innovation globally. Many industries are exploring and implementing blockchain solutions for various purposes, such as supply chain management, identity verification, and financial services.
• Global Economic Factors: Economic factors, such as inflation, currency devaluation, and geopolitical uncertainties, can influence global interest in Bitcoin. Some individuals view Bitcoin as a store of value and a hedge against traditional economic risks.
• Bitcoin Mining Distribution: Bitcoin mining operations are distributed globally. While China was historically a significant player in Bitcoin mining, there has been a shift in mining activity to other regions due to regulatory changes in China. Countries like the United States, Russia, and Kazakhstan have seen an increase in mining activities.
• International Discussions and Collaborations: Bitcoin and blockchain technology are topics of international discussions among policymakers, regulators, and financial institutions. There are ongoing efforts to create international standards and guidelines for the cryptocurrency space.

It's crucial to stay informed about the latest developments in the regulatory landscape, market trends, and technological advancements, as they can have a significant impact on Bitcoin's global presence and acceptance.

3) BITCOIN IN CONTEXT OF NEPAL

The regulatory environment for cryptocurrencies, including Bitcoin, in Nepal has been somewhat restrictive. Please note that regulations and attitudes toward cryptocurrencies can change, and it's essential to check for the latest updates from official sources.

Here are some key points regarding Bitcoin in the context of Nepal:

• Legal Status: The legal status of Bitcoin in Nepal has been unclear, and the government has not officially recognized it as legal tender. The central bank of Nepal, Nepal Rastra Bank (NRB), issued a notice in 2017 explicitly prohibiting the use of Bitcoin and other cryptocurrencies.
• Ban on Transactions: The NRB's notice in 2017 explicitly stated that all transactions related to buying, selling, trading, and using cryptocurrencies were prohibited. This created a challenging environment for individuals and businesses involved in cryptocurrency activities.
• Mining and Trading: The notice from the central bank also discouraged any form of involvement in the mining and trading of cryptocurrencies. As a result, the cryptocurrency ecosystem in Nepal faced significant challenges due to regulatory restrictions.
• Cautionary Approach: The regulatory stance in Nepal has been cautious and concerned about potential risks associated with cryptocurrencies, including money laundering and the use of digital assets for illegal activities.
• Community Activity: Despite the regulatory challenges, there has been some level of interest and activity within the cryptocurrency community in Nepal. However, participants often need to navigate regulatory uncertainties.

Bitcoin has had a remarkable journey since its creation in 2009. It emerged as a decentralized digital currency with the vision of providing a peer-to-peer electronic cash system. Over the years, Bitcoin has experienced significant milestones and challenges, shaping its position in the global financial landscape. Here are some key takeaways:

• Decentralization and Blockchain: Bitcoin introduced the concept of decentralization, utilizing blockchain technology to enable secure and transparent transactions without the need for a central authority. The blockchain serves as a decentralized ledger, recording all transactions in a tamper-resistant manner.
• Limited Supply and Scarcity: With a capped supply of 21 million coins, Bitcoin is designed to be a deflationary asset, mirroring the scarcity of precious metals like gold. This scarcity has contributed to its appeal as a store of value.
• Global Impact: Bitcoin's influence extends globally, with varying degrees of acceptance and regulation in different countries. It has attracted attention from both individual and institutional investors, leading to increased adoption and integration into the traditional financial system.
• Volatility and Market Dynamics: Bitcoin's price has exhibited significant volatility, influenced by factors such as market demand, regulatory developments, macroeconomic trends, and technological advancements. This volatility has presented both opportunities and challenges for investors.
• Technological Innovation: Beyond its role as a digital currency, Bitcoin's underlying blockchain technology has spurred innovation in various industries. The principles of decentralization and transparency have inspired the development of numerous blockchain applications.
• Regulatory Landscape: Regulatory approaches to Bitcoin vary globally, ranging from acceptance and recognition to caution and restrictions. Ongoing discussions and developments in regulatory frameworks continue to shape the environment for cryptocurrencies.
• Community Engagement: Bitcoin has fostered a vibrant global community of developers, miners, investors, and enthusiasts. The community actively contributes to the ongoing development, improvement, and promotion of Bitcoin and its ecosystem.