Bitcoin

What is Bitcoin?

A bitcoin is a type of cryptocurrency, which itself is a form of electronic money. It operates on a decentralized blockchain platform as a digital currency, that has no requirement for a central bank or a single network administrator. It can be sent between its users on bitcoin’s Peer-To-Peer network, without the requirement of an intermediary party.

Transactions on the bitcoin network are validated by the network nodes through methods of cryptography and are then recorded in the blockchain itself.

Bitcoin was created by an unknown entity that went by the pseudonym, Satoshi Nakamoto. Nakamoto initially released the first Bitcoin software, which itself, was the first created piece of blockchain technology. The release was carried out in 2009.

Bitcoins are generated through a rewards process, which is called mining and can be exchanged with other currencies.

The domain name of bitcoin.org was first registered by Satoshi Nakamoto on the 18th of August 2008. Then, on the 31st of October 2008, a link was published on a cryptography mailing list, to the whitepaper that Nakamoto had created. The whitepaper was titled Bitcoin: A Peer-To-Peer Electronic Cash System.

Then, when Nakamoto mined the first block in the entire bitcoin chain (referred to as the Genesis Block) in January 2009, the bitcoin network had been created.

Nakamoto is currently estimated to have successfully mined over one-million bitcoins as of 2010, before their eventual disappearance. Nakamoto handed over control of bitcoin to a man named Gavin Andresen. Andresen then wanted to decentralize control of the network  This created a lot of controversy surrounding which direction blockchain would take.

The first time Bitcoin was ever used to purchase an item, is thought to have been when a programmer called Laszlo Hanyecz purchased two pizzas from the chain, Papa John’s for a value of over 10,000 bitcoins.

Since this time, bitcoin has grown massively to be the most valued cryptocurrency on the market.

The blockchain platform for bitcoin is a decentralized, public ledger that creates records of bitcoins being transacted. This is arranged into a continuous chain of blocks, that would carry on from the newest block, back to the Genesis Block. A vast array of nodes which keep copies of the entire blockchain and are mainly responsible for the upkeep of the bitcoin blockchain.

The nodes on the bitcoin network can validate these transactions and then add them to their copy of the ledger, then the updated ledger is broadcast to all other nodes, which update to the new information. A group of newly accepted transactions (a block) is normally validated every ten minutes on the blockchain. This is then published to all of the nodes, without the need for a central authority to authorize this.

This process means that the bitcoin software can account for when bitcoins are being spent and the wallets that they are being transferred to. This functionality was a solution to the long-standing problem of double-spending.

There is a protocol within the bitcoin blockchain’s code that limited the number of bitcoins that could be mined to twenty-one-million. This means once the last block has been mined, the only way rewards could be generated from record keeping would be by receiving transaction fees.

 

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