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 held responsible for Bitcoin as there is no compilation of a computer scientist by this state prior to the creation of Bitcoin in 2009.
At the time, Satoshi claimed to be a 37 year-old man animate in Tokyo, Japan. The translation of his herald offers enthralling 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 understandably 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 all along a novel. Satoshis’ first make known used American spellings, however, every subsequent herald used British spellings and colloquialisms. His writing timestamps don’t narrowing to any particular time zone.
On the 23rd of April, 2011, Satoshi disappeared from the Internet, telling a developer in an email that he has « moved onto further 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 on 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 upon 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 further digital currencies.
Bitcoin can be purchased on a cryptocurrency row and stored in a crypto wallet and custodian in imitation of Gemini.
Supply
The supply of bitcoin is deterministic and unquestionable 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 concerning the world could achieve consensus subsequent to each extra and agree upon something, even if positive computers were bad actors on the network frustrating to confuse the others.
This consensus mechanism allows the Bitcoin network to agree on which bitcoin transactions are valid, thereby solving the “double-spend” problem and ensuring that one bitcoin isn’t spent higher than once by the thesame person. As a result, it safeguards the integrity of the Bitcoin blockchain, a record of anything bitcoin balances and transactions, without the craving 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 encourage the transactions of the Bitcoin network. The more computer talent a miner brings to bear upon the Bitcoin network, the more likely she or he is to solve the proof of produce a result 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 announce concluded in the Coinflip, Inc. order that bitcoin was legally a “commodity” under the Commodities and Exchange Act.
The as soon as 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 every time a miner successfully writes a additional block to the blockchain (i.e., solves the proof of accomplishment puzzle), that miner shall get a set number of bitcoin called the « block reward. » The Bitcoin protocol sets and adjusts the mining mysteriousness so that miners will be skillful to win the block return roughly all 10 minutes. The block reward is how anything new bitcoin are issued or minted, and how whatever bitcoin in circulation have come into existence.
Every 210,000 blocks — roughly all 4 years — the block reward is shortened by half, an event often referred to as the « the halvening » or “the halving.” When Bitcoin launched in 2009, the initial block reward was 50 bitcoin. On November 25, 2012, the first halvening occured, halving the block compensation 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 acknowledged to happen in May, 2020 and will edit the block return from 12.5 to 6.25 bitcoin.
The block reward will continue to undergo halvings until it reaches 0. This is estimated to happen sometime in the year 2140. At this point in time, there will be a total 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 sum supply reaches 21 million (fixed).
HODL, HODLing, and HODLers
HODL is a slang in the crypto reveal that refers to the stroke of buying and holding bitcoin. The etymology of the term can be traced help 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 upon for dear life.”
HODL has become a prominent internet meme and rallying cry for the Bitcoin community, especially during epoch 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 withhold view towards bitcoin as in contradiction 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 times trades taking into account the broadcast and react to price volatility, which can repercussion in buying tall or selling low. It does, however, require strong conviction and resolve during shout from the rooftops downturns.
HOLDING may also outcome in tax encouragement 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 counsel purposes only).
The HODL strategy appeals to Bitcoin maximalists who allow that bitcoin may ultimately replace fiat currencies. It moreover an important component of “stacking sats,” #stackingsats, or “stacking satoshis,” a popular investment strategy based upon the premise that accumulating even small amounts of bitcoin (a satoshi is the smallest subunit) over epoch will prove to be a vital investment in the long control if bitcoin goes “to the moon!” — a popular express 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 period bitcoin was used to buy 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 hours of daylight now referred to as Bitcoin Pizza Day. Initially, Laslo posted a message titled « Pizza for bitcoins? » on Bitcointalk’s Bitcoin Forum. An 18-year outdated named Jeremy Studivant responded under the handle “Jercos” and the two far along consummated the transaction higher than Internet Relay Chat (IRC). Afterwards, Hanyecz exclaimed: « I just want to relation that I successfully traded 10,000 bitcoins for pizza. Thanks jercos! »
Lalso paid for the two pizzas using bitcoin that he mined subsequent to his personal computer. At the time, the bitcoin that exchanged hands was valued at approximately $30 dollars. Since then, the value of that similar 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 upon May 22, the Bitcoin community commemorates Bitcoin Pizza Day. This historical hours of daylight highlights the deflationary birds of bitcoin and its hoard of value properties.
