What is the Bitcoin cryptocurrency?
Bitcoin is a digital currency that one can buy, sell, and exchange directly without intermediaries such as the Bank. It was released in January 2009 by a person named Satoshi Nakamoto, whose identity is hidden. He unveiled the original bitcoin white paper in 2008 and worked on the original Bitcoin software created next year.
It is made on a comprehensive digital record called a Blockchain. Blockchain is an associated body of data, formed of units called blocks that include information about every transaction, comprising total value, date and time, buyer and seller, and a unique identifying code for each exchange one performs. Entries are strung together in chronological order, developing a digital chain of blocks.
According to Stacey Harris, consultant for Pelicoin, a network of cryptocurrency ATMs, “Once a block is added to the blockchain, it becomes accessible to anyone who wishes to view it, acting as a public ledger of cryptocurrency transactions.”
Bitcoin conforms to the ideas mentioned in a whitepaper and promises minimal transaction fees than traditional online payment mechanisms; unlike government-issued currencies, it is run by a decentralized authority.
Timeline of Bitcoin cryptocurrency
- August 18, 2008 – Registration of the domain name bitcoin.org: Currently, this domain is “Who is Guard Protected”, implying the identity of the person who registered it is not public information.
- October 31, 2008 – A person or a group with the name Satoshi Nakamoto proclaims on the Cryptography Mailing list at metzdowd.com. He says, “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party. This now-famous whitepaper published on bitcoin.org, entitled “Bitcoin: A Peer-to-Peer Electronic Cash System,” would become the Magna Carta for how Bitcoin functions today.
- January 3, 2009 – The first Bitcoin block gets mined, Block 0. It is also called the “genesis block” and includes the text: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks,” which could be evidence that the block was mined on or after that date, and also as proper political announcement.
- January 8, 2009 – The initial version of the bitcoin software is proclaimed on the Cryptography Mailing list.
- January 9, 2009 – Block 1 is mined, and bitcoin mining begins in earnest.
What is Bitcoin mining?
It is the method by which bitcoins are spread into circulation. Usually, mining requires resolving computationally challenging puzzles to find a new block, which is included in the blockchain. Further, it adds and thoroughly checks transaction details across the network. Miners are rewarded with some bitcoins for adding blocks to the blockchain; the reward gets halved every 210,000 blocks. The block reward was 50 new bitcoins in 2009. On May 11, 2020, the third halving took place, bringing the reward for each block discovery below to 6.25 bitcoins.
One can use different hardware to mine bitcoin. However, some yield more rewards than others. Some computer chips are known as Application-Specific Integrated Circuits (ASIC), and more enhanced processing units such as Graphics Processing Units (GPUs) can attain higher rewards. These detailed mining processors are known as “mining rigs.
Bitcoin is one of the initial digital currencies to undertake peer-to-peer technology to make instant payments easier. The independent individuals and companies who own the governing computing power and take part in the bitcoin network – bitcoin “miners” – are in charge of clearing the transactions on the blockchain and are urged by rewards (the release of new bitcoin) and transaction fees spent in bitcoin.
These miners can be considered as the decentralized authority putting into effect the credibility of the bitcoin network. New bitcoin is released to the miners at a fixed but periodically at a lower rate. There is only 21 million bitcoin that can be mined in aggregate. As of January 30, 2021, there is nearly 18,614,806 bitcoin in existence, and 2,385,193 bitcoin is left.