Bitcoin is a digital currency that was created in 2009 by a person or group of people under the pseudonym Satoshi Nakamoto. It is really just software. A set of digital protocols and processes, ones and zeros, that represent virtual money created through cryptography, the science of code making and code breaking.
It is a peer to peer version of electronic cash, which means payments can be sent online from one party to another without having to go through a financial institution. Getting rid of this trusted third party (the bank) means it is operated by a decentralized authority (the people) and can lowers transaction costs.
Bitcoins are not physical. They exist as the collection of processing power from computers around the world that runs Bitcoin’s code. Their balance is kept on a public ledger, the blockchain, that everyone has access to and that is verified by massive amounts of computing power and many different individual sources. It is on this decentralized ledger where Bitcoin is created, distributed, and traded. Bitcoin’s success has inspired many other ventures using blockchain technology.
Each block in the blockchain is a collect of transactions that everyone can see. Because these transactions are transparent to every computer (or node) running the blockchain no one can cheat the system. A person operating in bad faith would need to control 51% of the computing power that makes up Bitcoin. An attack like this is extremely unlikely seeing as how Bitcoin has more than 47,000 nodes as of May, 2020. This number continues to grow as more people and companies enter this space.
Bitcoin mining is how new Bitcoins are released into circulation. Mining requires the solving of difficult computational puzzles that reveal a new block (a series of transactions) which is then added to the blockchain.
Mining adds and verifies transaction records across the network. For adding blocks to the blockchain, miners, those that participate in the Bitcoin network and have the computing power that the blockchain is maintained and verified by, are rewarded in transaction fees paid in Bitcoin and the release of new Bitcoin. This reward is halved every 210,000 blocks. In 2009 when Bitcoin began the reward for a new block was 50 new bitcoins. Today it is down to 6.25 bitcoins.
Balances of Bitcoin are kept using “keys”. A key is a long string of numbers and letters linked through the mathematical encryption algorithm that was used to create them. There is a public and private “key” for every transaction. The public “key” is comparable to an address where others can send Bitcoin. The private “key” is like a PIN or password, used to authorize Bitcoin transactions and is meant to be kept secret.
One Bitcoin is divisible to eight decimal places, or 100 millionths of a Bitcoin. This unit is referred to as a Satoshi. It’s possible Bitcoin could be made divisible by more decimal places if there is the necessity and participating miner accept the change.
A Brief History of the Beginning of Bitcoin
Aug 18, 2008 – The domain name bitcoin.org is registered
Oct 31, 2008 – The person or group using the pseudonym Satoshi Nakomoto places an announcement at metzdowd.com on the Cryptograph Mailing List.
“I’ve been working on a new electronic cash system that’s fully peer to peer, with no trusted third party.”
The Whitepaper Bitcoin: A Peer to Peer Electronic Cash System is released as well. This explains how bitcoin works.
Jan 3, 2009 – The first Bitcoin block is mined. Block 0, or The Genesis Block contains the text “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
Jan 8, 2009 – The first version of Bitcoin software is published on the Cryptograph Mailing List
Jan 9, 2009 – Block 1 is mined.
Why is Satoshi Anonymous?
Most likely to avoid attention. The potential disruption of fiat currency could result in law suits from governments. Also, in 2009, 32,489 blocks were mined, with a payout of 1,624,500 BTC. That would be worth over 93 billion USD today. Assuming Satoshi and maybe a few others did the majority of that mining, that kind of money is reason enough not to want anyone to know your name, or your address.
Bitcoin is an digital currency or cryptocurrency based on mathematical truths.
Digital, but also scarce.
Read source code and understan
digital currency and computer software.
shared code that creates a global payment network using computers or miners connected to the internet. Bitcoins are virtual currency, digital money, created, stored and exchanged on that network.
created by math
open source means anyone can use it an no one can control it.
shared info is verified.
Founder: Satoshi N
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