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 pseudonym for the individual or group liable for Bitcoin as there is no autograph album of a computer scientist by this publicize prior to the inauguration of Bitcoin in 2009.
At the time, Satoshi claimed to be a 37 year-old man living in Tokyo, Japan. The translation of his proclaim offers interesting 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 conveniently 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 next to a novel. Satoshis’ first proclaim used American spellings, however, every subsequent post used British spellings and colloquialisms. His writing timestamps don’t tapering off to any particular grow 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 respect 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 taking into consideration 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 new digital currencies.
Bitcoin can be purchased on a cryptocurrency difference of opinion and stored in a crypto wallet and custodian as soon as Gemini.
Supply
The supply of bitcoin is deterministic and unconditional 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 almost the world could reach consensus once each further and agree upon something, even if positive 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 higher than once by the same person. As a result, it safeguards the integrity of the Bitcoin blockchain, a compilation of everything 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 capability 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 upon the Bitcoin network, the more likely she or he is to solve the proof of play 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 nearby resemble those of gold. In 2015, a U.S. Federal deem concluded in the Coinflip, Inc. order that bitcoin was legally a “commodity” under the Commodities and Exchange Act.
The in imitation of table offers a comparison in the middle of 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 other block to the blockchain (i.e., solves the proof of produce a result puzzle), that miner shall receive a set number of bitcoin called the « block reward. » The Bitcoin protocol sets and adjusts the mining complexity so that miners will be skilled to win the block reward roughly every 10 minutes. The block reward is how all new bitcoin are issued or minted, and how anything bitcoin in circulation have come into existence.
Every 210,000 blocks — roughly every 4 years — the block compensation is abbreviated by half, an business 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 recompense from 50 to 25 bitcoin. On July 10, 2016, the second halvening occured, halving the block return from 25 to 12.5 bitcoin. The third halvening is usual to happen in May, 2020 and will abbreviate the block recompense from 12.5 to 6.25 bitcoin.
The block compensation 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 space that refers to the warfare of buying and holding bitcoin. The etymology of the term can be traced put occurring to to a misspelling of the word “hold” in a pronouncement 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 mature of high volatility and large price declines. Those who HODL are called HODLers and are said to be HODLing. The basic principle at the rear HODLing is to take a long term purchase and support view towards bitcoin as critical of a short-term one that involves trading in and out of bitcoin upon a daily, weekly, or monthly basis. HODLING avoids having to correctly mature trades like the puff and react to price volatility, which can consequences in buying high or selling low. It does, however, require mighty conviction and resolve during broadcast downturns.
HOLDING may also result in tax bolster 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 guidance purposes only).
The HODL strategy appeals to Bitcoin maximalists who acknowledge that bitcoin may ultimately replace fiat currencies. It as well as an important component of “stacking sats,” #stackingsats, or “stacking satoshis,” a popular investment strategy based upon the premise that accumulating even little amounts of bitcoin (a satoshi is the smallest subunit) over times will prove to be a vital investment in the long govern if bitcoin goes “to the moon!” — a popular vent 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 get older bitcoin was used to purchase a genuine 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 day now referred to as Bitcoin Pizza Day. Initially, Laslo posted a pronouncement titled « Pizza for bitcoins? » on Bitcointalk’s Bitcoin Forum. An 18-year old named Jeremy Studivant responded under the handle “Jercos” and the two innovative consummated the transaction over Internet Relay Chat (IRC). Afterwards, Hanyecz exclaimed: « I just want to version that I successfully traded 10,000 bitcoins for pizza. Thanks jercos! »
Lalso paid for the two pizzas using bitcoin that he mined bearing in mind 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 costly pizza ever purchased in the world. Every year on May 22, the Bitcoin community commemorates Bitcoin Pizza Day. This historical day highlights the deflationary nature of bitcoin and its increase of value properties.
