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 a.k.a. for the individual or group blamed for Bitcoin as there is no scrap book of a computer scientist by this publish prior to the commencement of Bitcoin in 2009.
At the time, Satoshi claimed to be a 37 year-old man active in Tokyo, Japan. The translation of his broadcast offers appealing 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 usefully 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 proclaim used British spellings and colloquialisms. His writing timestamps don’t dwindling 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 other things. » Whoever Satoshi is, he is considered a polymath who possesses extensive knowledge with reverence 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 later than 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 new digital currencies.
Bitcoin can be purchased on a cryptocurrency clash and stored in a crypto billfold and custodian next Gemini.
Supply
The supply of bitcoin is deterministic and truth 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 vis-а-vis the world could attain consensus when each supplementary and agree on something, even if clear computers were bad actors on the network maddening 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 beyond once by the similar person. As a result, it safeguards the integrity of the Bitcoin blockchain, a record of all bitcoin balances and transactions, without the dependence 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 aptitude 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 put it on 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 find concluded in the Coinflip, Inc. order that bitcoin was legally a “commodity” under the Commodities and Exchange Act.
The with 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 supplementary block to the blockchain (i.e., solves the proof of act out puzzle), that miner shall receive a set number of bitcoin called the « block reward. » The Bitcoin protocol sets and adjusts the mining mysteriousness so that miners will be dexterous to win the block reward roughly all 10 minutes. The block reward is how whatever new bitcoin are issued or minted, and how whatever bitcoin in circulation have come into existence.
Every 210,000 blocks — roughly every 4 years — the block reward is reduced by half, an thing often referred to as the « the halvening » or “the halving.” When Bitcoin launched in 2009, the initial block return 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 recompense from 25 to 12.5 bitcoin. The third halvening is received to happen in May, 2020 and will condense the block return 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 reduction 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 sum supply reaches 21 million (fixed).
HODL, HODLing, and HODLers
HODL is a slang in the crypto proclaim that refers to the raid of buying and holding bitcoin. The etymology of the term can be traced help to a misspelling of the word “hold” in a publication 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 grow old of tall volatility and large price declines. Those who HODL are called HODLers and are said to be HODLing. The basic principle at the back HODLing is to accept a long term purchase and maintain view towards bitcoin as contrary to a short-term one that involves trading in and out of bitcoin on a daily, weekly, or monthly basis. HODLING avoids having to correctly grow old trades later the spread around and react to price volatility, which can consequences in buying tall or selling low. It does, however, require strong conviction and resolve during make public downturns.
HOLDING may also upshot in tax help 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 assistance purposes only).
The HODL strategy appeals to Bitcoin maximalists who give a complimentary response 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 on the premise that accumulating even little amounts of bitcoin (a satoshi is the smallest subunit) over epoch will prove to be a critical investment in the long govern if bitcoin goes “to the moon!” — a popular space 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 mature 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 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 forward-looking consummated the transaction on peak of Internet Relay Chat (IRC). Afterwards, Hanyecz exclaimed: « I just desire to version that I successfully traded 10,000 bitcoins for pizza. Thanks jercos! »
Lalso paid for the two pizzas using bitcoin that he mined similar 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 expensive pizza ever purchased in the world. Every year on May 22, the Bitcoin community commemorates Bitcoin Pizza Day. This historical day highlights the deflationary plants of bitcoin and its buildup of value properties.
