Bitcoin is the world’s first cryptocurrency and blockchain.
Bitcoin was first described in a white paper published by Satoshi Nakamoto in October, 2008. Nakamoto is believed to be a nom de plume for the individual or group answerable for Bitcoin as there is no sticker album of a computer scientist by this make known prior to the introduction of Bitcoin in 2009.
At the time, Satoshi claimed to be a 37 year-old man active in Tokyo, Japan. The translation of his declare offers fascinating insights: satoshi means “clear-thinking” or “wise,” naka means “inside” or “relationship,” and moto means “the origin” or “the foundation.” Taken together, it could be translated as “thinking helpfully inside the foundation.”
Satoshi continued to update the Bitcoin source code until 2010 and wrote hundreds of blog posts in flawless English totalling 80,000 words, roughly the length of a novel. Satoshis’ first proclaim used American spellings, however, every subsequent proclaim used British spellings and colloquialisms. His writing timestamps don’t lessening to any particular become old zone.
On the 23rd of April, 2011, Satoshi disappeared from the Internet, telling a developer in an email that he has « moved onto new things. » Whoever Satoshi is, he is considered a polymath who possesses extensive knowledge with exaltation to computer programming, economics, cryptography, and peer-to-peer networking.
Bitcoin was born during the 2008 Financial Crisis. To commemorate this moment in time, Satoshi embedded a Times of London newspaper headline into the metadata of the first block of the Bitcoin blockchain, known as the Genesis Block. It reads: “The Times 03/Jan/2009 Chancellor upon brink of second bailout for banks.”
Token
Bitcoin (with a lowercase “b”) or BTC is the digital asset token of the Bitcoin network (Bitcoin gone a capital “B”). All BTC balances and transactions are recorded on the Bitcoin blockchain. The smallest subunit of BTC is the “satoshi,” which is named after Bitcoin’s pseudonymous creator, Satoshi Nakamoto. One satoshi is equal to 10-8 BTC or one hundred-millionth of a BTC (0.00000001 bitcoin). Bitcoin can be bought and sold for fiat currency or other digital currencies.
Bitcoin can be purchased on a cryptocurrency quarrel and stored in a crypto wallet and custodian similar to Gemini.
Supply
The supply of bitcoin is deterministic and unchangeable at 21 million BTC. The supply schedule is embedded in the Bitcoin protocol.
Bitcoin Mining
Satoshi’s major breakthrough was solving the The Byzantine Generals’ Problem. The Bitcoin mining algorithm that Satoshi proposed in the Bitcoin white paper demonstrated how a network of computers not far off from the world could reach consensus behind each extra and agree on something, even if certain computers were bad actors on the network bothersome to confuse the others.
This consensus mechanism allows the Bitcoin network to agree upon which bitcoin transactions are valid, thereby solving the “double-spend” problem and ensuring that one bitcoin isn’t spent over once by the thesame person. As a result, it safeguards the integrity of the Bitcoin blockchain, a book of all bitcoin balances and transactions, without the need for a trusted third party.
Bitcoin’s consensus mechanism uses a proof of work algorithm. Specifically, miners must solve math puzzles using the SHA-256 hash algorithm of the Secure Hash Algorithm 2 (SHA-2) family. By committing computational capacity towards solving the Bitcoin mining algorithm, miners audit and assert the transactions of the Bitcoin network. The more computer faculty a miner brings to bear on the Bitcoin network, the more likely she or he is to solve the proof of feign algorithm and win the bitcoin that the network rewards to the miner who writes the newest block to the Bitcoin blockchain.
Characteristics
Bitcoin is often called “digital gold” because its traits next to resemble those of gold. In 2015, a U.S. Federal rule concluded in the Coinflip, Inc. order that bitcoin was legally a “commodity” under the Commodities and Exchange Act.
The behind table offers a comparison amid bitcoin and gold:
Bitcoin Halving or Halvening
The supply schedule of bitcoin is deflationary. This schedule — embedded in the Bitcoin protocol — dictates that all time a miner successfully writes a extra block to the blockchain (i.e., solves the proof of pretense puzzle), that miner shall get a set number of bitcoin called the « block reward. » The Bitcoin protocol sets and adjusts the mining difficulty so that miners will be competent to win the block return roughly every 10 minutes. The block recompense is how everything new bitcoin are issued or minted, and how everything bitcoin in circulation have come into existence.
Every 210,000 blocks — roughly every 4 years — the block recompense is abbreviated by half, an issue often referred to as the « the halvening » or “the halving.” When Bitcoin launched in 2009, the initial block recompense was 50 bitcoin. On November 25, 2012, the first halvening occured, halving the block reward from 50 to 25 bitcoin. On July 10, 2016, the second halvening occured, halving the block compensation from 25 to 12.5 bitcoin. The third halvening is time-honored to happen in May, 2020 and will abbreviate the block reward from 12.5 to 6.25 bitcoin.
The block return will continue to undergo halvings until it reaches 0. This is estimated to happen sometime in the year 2140. At this dwindling in time, there will be a sum of 21 million bitcoin in circulation.
BITCOIN SUPPLY SCHEDULE
Total Supply
21 million by 2140 (approx.)
Block Reward
Every 10 minutes (approx.)
Halving event
Every 4 years (aprrox.) Every 210,000 blocks until total supply reaches 21 million (fixed).
HODL, HODLing, and HODLers
HODL is a slang in the crypto song that refers to the court case of buying and holding bitcoin. The etymology of the term can be traced incite to a misspelling of the word “hold” in a statement posted to Bitcointalk’s Bitcoin Forum in 2013 and titled I AM HODLING. Some, however, have incorrectly assumed that the word is an acronym for the phrase “hold on for dear life.”
HODL has become a prominent internet meme and rallying cry for the Bitcoin community, especially during grow old of high volatility and large price declines. Those who HODL are called HODLers and are said to be HODLing. The basic principle astern HODLing is to take a long term buy and maintain view towards bitcoin as touching a short-term one that involves trading in and out of bitcoin on a daily, weekly, or monthly basis. HODLING avoids having to correctly mature trades taking into consideration the publicize and react to price volatility, which can consequences in buying high or selling low. It does, however, require strong conviction and resolve during make known downturns.
HOLDING may also result in tax advance related to capital asset treatment per IRS Virtual Currency Guidance (Please Note: nothing contained herein should be considered or construed as tax advice of any kind. This content is provided for opinion purposes only).
The HODL strategy appeals to Bitcoin maximalists who agree to that bitcoin may ultimately replace fiat currencies. It as a consequence an important component of “stacking sats,” #stackingsats, or “stacking satoshis,” a popular investment strategy based on the premise that accumulating even small amounts of bitcoin (a satoshi is the smallest subunit) over grow old will prove to be a indispensable investment in the long run if bitcoin goes “to the moon!” — a popular look metaphor and trope used by bitcoiners to describe bitcoin price appreciation.
The Bitcoin Pizza and Bitcoin Pizza Day
The bitcoin pizza refers to the first grow old bitcoin was used to buy a real good. On May 22, 2010, a programmer in Florida named Laslo Hanyecz (now referred to as the “Bitcoin Pizza Guy”) purchased two Papa John’s pizzas for 10,000 bitcoin; a hours of daylight now referred to as Bitcoin Pizza Day. Initially, Laslo posted a declaration titled « Pizza for bitcoins? » on Bitcointalk’s Bitcoin Forum. An 18-year out of date named Jeremy Studivant responded under the handle “Jercos” and the two difficult consummated the transaction higher than Internet Relay Chat (IRC). Afterwards, Hanyecz exclaimed: « I just want to story that I successfully traded 10,000 bitcoins for pizza. Thanks jercos! »
Lalso paid for the two pizzas using bitcoin that he mined when his personal computer. At the time, the bitcoin that exchanged hands was valued at approximately $30 dollars. Since then, the value of that thesame amount of bitcoin has grown exponentially (worth over $90 million dollars as of May 22, 2020), making this the most expensive pizza ever purchased in the world. Every year upon May 22, the Bitcoin community commemorates Bitcoin Pizza Day. This historical daylight highlights the deflationary birds of bitcoin and its deposit of value properties.
