One must be living under a rock if they have not heard about Bitcoin or any other cryptocurrencies in 2021. It has been taking the financial world by storm since its inception. From being an experimental venture to transforming into a digital asset, Bitcoin has traversed quite a path and witnessed many ups and downs. Enthusiasts have many questions, like why was Bitcoin invented in the first place or how was it created? This article answers some of these essential questions.
Bitcoin- what is it?
Bitcoin is a decentralized peer-to-peer consensus payment network. It is entirely digital money without any physical presence. Its white paper source (bitcoin.org) says it is analogous to an existing significant triple entry bookkeeping system. For more information, check out thebitcoincode.io .
How was Bitcoin created (technologically)?
Bitcoin was created based on blockchain technology. We can define it as a distributed ledger technology that facilitates recordkeeping across numerous computers (nodes). It is contrastingly different from the traditional method of record-keeping, where banks store all the data at a central location on a computer server.
As the name suggests, a blockchain ledger is a collection of blocks. Each block contains a specific quantity of information. As one block reaches saturation, the data starts piling up in a new block. To maintain the continuity of information flow, developers establish a connection between these two blocks, thereby forming a chain of connected blocks that we can refer to as a blockchain.
A unique identifier ( 64 digits long cryptographic “hashes”) protects each block. This identifier protects the stored information from any stranger and maintains the block’s placement and positioning along the chain by identifying the previous and the next block.
Who created it and when?
A mystery developer named Satoshi Nakamoto created the first cryptocurrency and called it Bitcoin. He has been able to maintain anonymity to date. No one has any information as to who this man is. A significant fraction of bitcoin enthusiasts believes that this is a group of individuals under the alias of one name.
On January 3, 2009, Satoshi Nakamoto released the Genesis block, or the first block of Bitcoin, which contained 50 bitcoins as a reward. Bitcoin mining commenced on 9th January 2009, and he mined the first block. On 12 January 2009, the first transaction of 10 bitcoins took place between Satoshi Nakamoto and Hal Finney, an early enthusiast.
Since the main aim behind the development of Bitcoin and cryptocurrency was freedom from centralized banking systems that control the entire market, Satoshi Nakamoto removed himself from all forms of involvement with Bitcoin. However, many people believe that he still owns the most significant chunk of bitcoins in circulation.
Why was Bitcoin created?
The registration of the website domain (bitcoin.org) took place on 18th August 2008.
The first block of the Genesis block of Bitcoin contained a hidden message. The message was the headline of that day’s London Times (03/01/2009). The news headline stated that the chancellor was about to sign a bailout for banks a second time that fiscal year.
The message was incorporated to expressly point out the flaws of a centralized financial system. It wanted to prove the fact that public money is not safe as long as centralized authorities have the final say in its circulation. On the other hand, the website handler posted an article on bitcoin.org on 31st October 2008 (a few months prior to its launch), named “Bitcoin: a peer-to-peer electronic cash system,” explaining how Bitcoin works and its advantages over the current banking system.
Conclusion
Something which started as an experimental stand against the constraints of the overall banking system is now a self-sustaining market worth more than a trillion dollars. With the increasing popularity of blockchain technology, hundreds of new cryptocurrencies are getting added into circulation every day. People may continue the debate regarding its viability, but numbers show that one bitcoin is worth more than 68000 US dollars present. However, owing to the volatility of the market, we suggest every reader invest cautiously in cryptocurrencies after doing extensive market research themselves.
