Bitcoin has been in existence since 2008, when Satoshi Nakamoto, the creator of the blockchain network, published the Bitcoin whitepaper. The first-ever Bitcoin block was mined on January 9th, 2009.
Records only show that at this moment, only Satoshi Nakomoto was responsible for writing and maintaining the Bitcoin code. Soon after, Satoshi was joined by computer programmer and developer Hal Finney.
More developers joined as Bitcoin grew in popularity and value, and so far, there are over 100 Bitcoin Core developers responsible for creating and maintaining the open-source software.
How Do Bitcoin developers make money?
Bitcoin is an open-source software publicly available to anyone interested in accessing it. Because of this, there is a perceived minimal financial incentive for developers to work on Bitcoin source code.
This couldn’t be further from the truth. Bitcoin has thrived for the last 12 years it has been in existence mainly because a community of core developers has been incentivized enough to contribute towards the creation and maintenance of the code.
Some developers have contributed to the Bitcoin source code with no monetary compensation simply because they believed in the open monetary system that Bitcoin supported. Others were motivated by the idea of solving challenging problems.
However, a majority of the current Bitcoin developers are being paid to contribute towards the improvement and maintenance of the Bitcoin code.
The developers are publicly known. Some are paid to be part-time developers, while others are full-time developers.
It may seem pointless to an individual to pay someone to do something that does not benefit them. But most of these donors are companies that benefit indirectly from the maintenance of the Bitcoin Core source code.
Here’s a list of some of the leading companies and organizations paying developers to create code for the Bitcoin software:
- Chaincode Labs – funds six full-time developers.
- MIT’s Digital Currency Initiative – has two full-time developers and five blockchain researchers
- DG Lab – funds between two and four dedicated Bitcoin developers
- Square Crypto – a subsidiary of payments company Square Inc; it funds four developers to work on the Rust Lightning Bitcoin layer and offers grants to the Bitcoin community to fund independent Bitcoin developers
- Blockstream – funds a team of eight to work on Bitcoin, including three cryptographers, two full-time Bitcoin Core developers, and three dedicated Lightning developers
- Lightning Labs – a company dedicated to developing the Lightning layer with at least eight dedicated full-time Bitcoin developers working on the open-source Lightning software.
How hard is it to become a bitcoin developer?
It is not a simple task to become a bitcoin developer. Bitcoin or blockchain developers are becoming a highly sought-after breed of developers.
Bitcoin developers (and by extension blockchain developers) can be categorized into two broad categories:
- Core blockchain developers – those who work on the underlying security and infrastructure of the blockchain network, in this case, Bitcoin. Any developer who works on the Bitcoin Core software is regarded as a Core developer. The Bitcoin core client, Bitcoin thick wallet, and the Lightning Network are part of the Bitcoin Core infrastructure.
- Blockchain software developers – these are developers that work on the blockchain ecosystem, including thin/third-party wallets, decentralized applications (dApps), and relevant web applications that depend on the proper functioning of the core software and infrastructure.
In a nutshell, the core developer creates the foundation upon which applications developed by the blockchain software developer are run.
The core developers create the protocol, which is a more complex task than the job of the ecosystem developers.
To become a good Bitcoin developer, you will require the following tools and resources:
- Mental aptitude – becoming a blockchain developer is a tough job, but it is especially so when you are a Bitcoin developer. This is because Bitcoin is the most popular and well-known blockchain. It attracts a lot of attention, support, and criticism. The community is extremely demanding, and every core developer on the platform is known, including who funds their activities.
Bitcoin and the blockchain scene are constantly evolving, and possession of the above resources may not be enough.
Therefore, the last thing to include in your development toolset is the hunger for knowledge to learn and adapt to the changing times constantly.
How do Bitcoin owners make money?
To be clear, there are no Bitcoin owners. Bitcoin is not a company. The software is open-source, created, and maintained by the community. Think of Bitcoin as a network or protocol. It is a tool to be used for value transfer.
However, the token used for the value transfer is also called bitcoin. The bitcoin cryptocurrency can be owned, and its ownership can be transferred from one wallet to another.
In this case, bitcoin owners don’t make money; they use it as money. The asset’s value does appreciate over time as it has been witnessed over the past 12 years, meaning that anyone who has been holding the bitcoin asset has reaped gains by just holding it in their possession.
Can a Bitcoin crash?
Yes, Bitcoin can crash. In fact, Bitcoin has crashed multiple times over the last decade and managed to recover and rise to new highs.
Below is a rundown of all Bitcoin crashes since 2012. The crashes represent steep falls in the Bitcoin price of at least 35%.
- 2012, Jan 12-27 (16 days) – Bitcoin fell 48.6% from $7.40 to $3.80
- 2012, Aug 17-19 (3 days) – Bitcoin fell 56.7% from $16.40 to $7.10
- 2013, Apr 10-12 (3 days) – Bitcoin fell 82.7% from $260 to $45
- 2013, Nov 19 (same day) – Bitcoin fell 50% from $755 to $378
- 2013, Nov to 2015 Jan (~400 days) – Bitcoin fell 87% from $1,160 to $150
- 2017, Jun 12 to July 16 (35 days) – Bitcoin fell 38.6% from $2,980 to $1,830
- 2017, Sep 2-15 (14 days) – Bitcoin fell 40% from ~$5,000 to ~$3000
- 2017, Dec 17 to 2018, Dec 15 (12 months) – Bitcoin fell 84% from $19,700 to $3,100
Can you invest $100 in Bitcoin?
Yes, you can invest $100 in Bitcoin. You can invest any amount of money in Bitcoin that you want.
In fact, you can even invest as little as $1. However, Bitcoin charges a network or transaction fee, which varies according to the Bitcoin network traffic.
The more transactions being processed, the higher the transaction fees charged. This is so because the fees paid for transaction confirmation are determined by the users.
Whenever there are more transactions to be processed, the users will typically pay more to have their transaction confirmed sooner, increasing the average network fee.
The average transaction fee has been on an upward trend for a long time and is currently at about $14. It wouldn’t make sense to invest less than the amount it costs to invest.
Additionally, depending on which payment method you use, you may be limited as to the minimum amount you can invest in Bitcoin.
How to buy and store Bitcoin?
There are several ways to buy Bitcoin. Whichever you choose will depend on the following factors:
- Your location – your geographical location will influence the kind of services you have access to, and this will determine how you buy your Bitcoin. For instance, Bitcoin ATMs are not available in every country, and there are some popular crypto exchanges such as Coinbase that do not operate in all jurisdictions.
- Available payment method – how you intend to pay for your purchase is important as this will also determine which method you choose. If you want to use cash, you are limited to in-person trades or Bitcoin ATMs. If you use debit cards, some brokers may not support this method.
- Amount to invest – large investments in Bitcoin will require that you use OTC (over-the-counter) markets while smaller ones can be executed through brokers such as Coinbase.
Now that we understand which factors will determine which methods to use when buying Bitcoin, let’s highlight the most common methods.
- Credit/debit card
- Peer to peer (P2P)
- OTC markets
- Bank deposits
- Wire transfers
- Bitcoin ATMs
Some Bitcoin brokers offer a mix of these payment methods, while others only offer one.
Once you buy some Bitcoin, you will need to store them securely and safely. There are two ways to do that – using hot or cold wallets.
Hot wallets are crypto wallets that are connected to the internet. They include mobile, desktop, and web wallets such as exchange wallets.
Cold wallets are any storage devices or methods that ensure the assets are kept offline away from any remote access. They are the safest way to store your Bitcoin, and they include hardware and paper wallets.
Both cold and hot storage wallets have their merits and drawbacks, and one method may work better than the other. It all depends on your goals.
Bitcoin is an excellent alternative to traditional assets. You can invest as little as you can or a much as possible.
Either way, you will be exposed to the new economy, and you will learn a lot along the way. Hopefully, you will take the time to learn about the asset.