Bitcoin (BTC)
Bitcoin (BTC) is recognized as the first decentralized cryptocurrency and payment system, introduced in 2009. It utilizes blockchain technology and was created by an anonymous individual or group under the pseudonym Satoshi Nakamoto. Initially proposed on October 31, 2008, Bitcoin was introduced on a cryptography mailing list and released as open-source software in 2009. It is known for being decentralized, secure, and borderless, enabling users to send and receive digital currency through a peer-to-peer network.
Bitcoin's inception and development
Early beginnings (2008-2013)
| Ticker | BTC |
| Category | Cryptocurrency |
| Website | http://www.bitcoin.org |
| @bitcoin | |
| https://www.reddit.com/r/Bitcoin/ |
Bitcoin was conceptualized by Satoshi Nakamoto, who shared the concept on October 31, 2008, in a paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System." It was implemented as open-source code in January 2009. The first block, known as the "Genesis Block," was mined by Nakamoto on January 3, 2009, with a reward of 50 bitcoins. The first Bitcoin transaction occurred when Nakamoto sent 10 BTC to Hal Finney. Early supporters of Bitcoin included Wei Dai and Nick Szabo, creators of Bitcoin predecessors b-money and bit gold, respectively.
The Mt. Gox exchange hack (2014)
In February 2014, Mt. Gox, one of the largest Bitcoin exchanges, suspended withdrawals due to technical issues. The exchange, which handled approximately 70% of Bitcoin's total supply, eventually filed for bankruptcy protection after reports that 850,000 bitcoins had been stolen. This event highlighted the need for security in cryptocurrency transactions and exchanges.
Further adoption (2015-2022)
From 2015 onwards, Bitcoin saw increased adoption and recognition. Coinbase launched the first regulated Bitcoin exchange in the United States in January 2015. By 2016, major companies like Microsoft and Expedia began accepting Bitcoin. In subsequent years, Bitcoin's presence in the financial landscape grew, with significant peaks in its market capitalization and transaction volumes.
Technical aspects of Bitcoin
Blockchain technology
The blockchain serves as a public ledger that records Bitcoin transactions. It is maintained by a network of nodes running Bitcoin software. Transactions are verified and added to the blockchain, ensuring a secure and transparent record. This distributed database allows for independent verification of ownership and prevents double-spending.
Transactions and fees
Bitcoin transactions require one or more inputs and must carry digital signatures for verification. They can have multiple outputs, allowing for multiple payments in a single transaction. Transaction fees are optional but incentivize miners to process and prioritize transactions. Fees are determined by the transaction's storage size and the number of inputs used.
Mining
Mining is the process of verifying and recording Bitcoin transactions on the blockchain. Miners are rewarded with transaction fees and newly created bitcoins. This process requires solving complex mathematical problems, known as proof of work, which ensures the security and integrity of the blockchain. The difficulty of mining adjusts approximately every two weeks to maintain a consistent block creation time.
Practical aspects of Bitcoin
Wallets
Bitcoin wallets store the digital credentials needed to access and spend bitcoins. There are several types of wallets, including software wallets, online wallets, and hardware wallets. Software wallets can be full clients, which store a local copy of the blockchain, or lightweight clients, which rely on external servers. Hardware wallets provide a secure way to store credentials offline.
Ownership and decentralization
Ownership of bitcoins is determined by the ability to sign transactions with a private key. Without the private key, bitcoins cannot be spent. The Bitcoin network is decentralized, with no central authority controlling it. This decentralization is a core feature of Bitcoin, providing security and resilience.
Bitcoin halving
Bitcoin halving is a programmed event that reduces the block reward by half approximately every four years. The purpose of halving is to control the supply of new bitcoins and create scarcity. The first halving occurred in 2012, reducing the reward from 50 BTC to 25 BTC. Subsequent halvings in 2016 and 2020 further reduced the reward, with the latest halving in 2024 bringing it to 3.125 BTC. This process will continue until the maximum supply of 21 million bitcoins is reached around the year 2140.