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 blamed for Bitcoin as there is no collection of a computer scientist by this name prior to the start of Bitcoin in 2009.
At the time, Satoshi claimed to be a 37 year-old man animated in Tokyo, Japan. The translation of his publish 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 by the side of a novel. Satoshis’ first read out used American spellings, however, every subsequent broadcast used British spellings and colloquialisms. His writing timestamps don’t lessening to any particular era zone.
On the 23rd of April, 2011, Satoshi disappeared from the Internet, telling a developer in an email that he has « moved onto additional things. » Whoever Satoshi is, he is considered a polymath who possesses extensive knowledge with worship 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 as soon as 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 upon a cryptocurrency row and stored in a crypto billfold and custodian in the expose of Gemini.
Supply
The supply of bitcoin is deterministic and resolved 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 around the world could reach consensus later each other and agree on something, even if sure computers were bad actors on the network infuriating 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 on culmination of once by the similar person. As a result, it safeguards the integrity of the Bitcoin blockchain, a stamp album of everything 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 capability towards solving the Bitcoin mining algorithm, miners audit and establish 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 play a role 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 contiguously resemble those of gold. In 2015, a U.S. Federal judge concluded in the Coinflip, Inc. order that bitcoin was legally a “commodity” under the Commodities and Exchange Act.
The gone table offers a comparison along with 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 measure puzzle), that miner shall get a set number of bitcoin called the « block reward. » The Bitcoin protocol sets and adjusts the mining profundity so that miners will be competent to win the block reward roughly all 10 minutes. The block recompense is how anything new bitcoin are issued or minted, and how all bitcoin in circulation have come into existence.
Every 210,000 blocks — roughly all 4 years — the block reward is edited by half, an matter 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 reward 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 standard to happen in May, 2020 and will cut the block compensation 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 lessening 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 space that refers to the raid of buying and holding bitcoin. The etymology of the term can be traced back 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 epoch of tall volatility and large price declines. Those who HODL are called HODLers and are said to be HODLing. The basic principle behind HODLing is to take a long term purchase and withhold view towards bitcoin as counter 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 epoch trades considering the shout from the rooftops and react to price volatility, which can consequences in buying high or selling low. It does, however, require strong conviction and resolve during publicize downturns.
HOLDING may also repercussion in tax abet 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 tolerate that bitcoin may ultimately replace fiat currencies. It furthermore 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 become old will prove to be a vital investment in the long rule if bitcoin goes “to the moon!” — a popular aerate 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 time bitcoin was used to purchase 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 daylight now referred to as Bitcoin Pizza Day. Initially, Laslo posted a publication titled « Pizza for bitcoins? » on Bitcointalk’s Bitcoin Forum. An 18-year obsolescent named Jeremy Studivant responded under the handle “Jercos” and the two well along consummated the transaction over Internet Relay Chat (IRC). Afterwards, Hanyecz exclaimed: « I just want to report that I successfully traded 10,000 bitcoins for pizza. Thanks jercos! »
Lalso paid for the two pizzas using bitcoin that he mined in the circulate of 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 upon May 22, the Bitcoin community commemorates Bitcoin Pizza Day. This historical day highlights the deflationary birds of bitcoin and its accretion of value properties.
