Bitcoin Cryptocurrency Introduction

Bitcoin Cryptocurrency Introduction

History

The first Bitcoin protocol and proof of concept was published in a Whitepaper in 2009 by a shadowy individual or group under the pseudonym Satoshi Nakamoto. Eventually Nakamoto, who remained mysterious, left the project in late 2010. Other developers took over and the Bitcoin community has since grown exponentially. While Satoshi Nakamoto’s real identity remains shrouded in mystery, it is on record that he communicated extensively in Bitcoin’s early days. Let us speculate on questions like when he started working on Bitcoin, to what extent he was inspired by similar ideas and what was the motivation for bitcoin.

First Creation

It is believed that Satoshi started coding Bitcoin around May 2007. He is said to have registered the domain bitcoin.org in August 2008. Around that time, he started sending emails to a few individuals he thought might be interested in the idea of bitcoins. In October 2008, he publicly published a white paper that dwelt on the Bitcoin protocol, and released the BTC code as well. Then he stayed in contact for about two years, during which he interacted actively in forums, communicated with several developers and later he also submitted patches to the initial code. He maintained the source code along with other developers, tackling issues as they happened. By December 2010, as others had slowly taken over, he quietly left the scene.

Bitcoin For everyone

No person, company or organization is in control of Bitcoin: it’s a decentralized digital currency that’s powered by a huge, distributed network of computers. As such, when you own Bitcoin, only you have access to your funds. You’ll typically send, receive and store it using a secure digital wallet app which you can download for free. It’s really important to remember that, since no bank or other financial intermediary ever has access to your wallet app, you’re in charge of keeping it secure.

Bitcoin transactions

The computers powering the Bitcoin network continually process and verify the latest transactions as people send and receive Bitcoin. These transactions are publicly recorded on a global digital ledger called “the blockchain” Each time a new list of transactions (called a “block”) is added to the blockchain, every previous Bitcoin transaction is repeatedly acknowledged by the network. This is known as “confirmations” and, the greater the number of confirmations a transaction has, the more secure it becomes. You can check how many times a transaction has been made by searching for the transaction ID (called a TXID) in any block explorer.

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Reward and cost per transaction

Assuming that one bitcoin is worth $400, the reward of 25 bitcoins per block is worth around $10,000, ignoring negligible amount of transaction fees. Taking average number of transactions per second as 2, and the number of transactions per block as 1200, the reward per transaction works out to $8.33. It is found that the cost of electricity consumed in mining is close to the reward which makes mining bitcoins not so profitable. The basic problem of mining as of now, is the 1 MB limit on block size which makes it possible to have at most only 10 transactions per second.

Confirmation of a transaction

A transaction is considered to have received n confirmations if it has been published in a block in the block chain, and n-1 more blocks have also been added. A transaction is normally considered “confirmed” once it has six confirmations. Newly created Bitcoins are considered confirmed after they have received about a hundred confirmations.

Bitcoin and Store Money

You can use your Bitcoin just like regular money. Transactions are sent and received directly between one person and another—be it for personal or business purposes. You can also choose to store your money as Bitcoin. If you’re storing larger amounts, consider purchasing a hardware wallet to add an extra layer of security to your storage.

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