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 CD 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 perky in Tokyo, Japan. The translation of his state 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 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 alongside a novel. Satoshis’ first post used American spellings, however, every subsequent make known 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 new things. » Whoever Satoshi is, he is considered a polymath who possesses extensive knowledge with esteem 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 in the same way as 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 additional digital currencies.
Bitcoin can be purchased on a cryptocurrency difference of opinion and stored in a crypto wallet and custodian next Gemini.
Supply
The supply of bitcoin is deterministic and final 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 just about the world could accomplish consensus in imitation of each supplementary and agree on something, even if certain computers were bad actors on the network irritating 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 top of once by the same person. As a result, it safeguards the integrity of the Bitcoin blockchain, a sticker album 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 capacity towards solving the Bitcoin mining algorithm, miners audit and assert the transactions of the Bitcoin network. The more computer skill a miner brings to bear on 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 closely resemble those of gold. In 2015, a U.S. Federal pronounce concluded in the Coinflip, Inc. order that bitcoin was legally a “commodity” under the Commodities and Exchange Act.
The taking into consideration table offers a comparison amongst 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 extra block to the blockchain (i.e., solves the proof of accomplish 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 able to win the block reward roughly all 10 minutes. The block return 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 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 reward 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 normal to happen in May, 2020 and will edit the block return from 12.5 to 6.25 bitcoin.
The block recompense 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 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 total supply reaches 21 million (fixed).
HODL, HODLing, and HODLers
HODL is a slang in the crypto vent that refers to the prosecution of buying and holding bitcoin. The etymology of the term can be traced urge on to a misspelling of the word “hold” in a notice 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 times 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 hold view towards bitcoin as counter to a short-term one that involves trading in and out of bitcoin upon a daily, weekly, or monthly basis. HODLING avoids having to correctly become old trades bearing in mind the shout out and react to price volatility, which can upshot in buying high or selling low. It does, however, require mighty conviction and resolve during market downturns.
HOLDING may also repercussion 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 guidance purposes only).
The HODL strategy appeals to Bitcoin maximalists who give a favorable response 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 period will prove to be a valuable investment in the long govern if bitcoin goes “to the moon!” — a popular tell 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 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 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 antiquated named Jeremy Studivant responded under the handle “Jercos” and the two far along consummated the transaction more than Internet Relay Chat (IRC). Afterwards, Hanyecz exclaimed: « I just want to savings account that I successfully traded 10,000 bitcoins for pizza. Thanks jercos! »
Lalso paid for the two pizzas using bitcoin that he mined later his personal computer. At the time, the bitcoin that exchanged hands was valued at approximately $30 dollars. Since then, the value of that same 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 hours of daylight highlights the deflationary nature of bitcoin and its store of value properties.
