What Is This New Kind of Money and How Was It Created?
This digital form of money was the first to introduce a new way of handling currency—based on free-market principles and largely independent from government control. Its value depends mainly on how much people want it and how much is available. Since its launch in 2009, it has experienced dramatic highs and significant lows.
If you’re wondering what is bitcoin and how it was created, this guide is for you. Here’s a deep dive into the history of Bitcoin and what makes it so popular:
Contents
What is Bitcoin
Bitcoin is the world’s first digital currency. Unlike traditional or fiat currencies, Bitcoin works as a decentralised system. It remains free from the interventions of banks, financial institutions, or even governments. Users who buy and sell Bitcoin maintain their operatives in a digital ledger called blockchain.
How Bitcoin Started
The birth of Bitcoin can be traced all the way back to 1989, when American cryptographer David Chaum proposed the idea of anonymous electronic money. He launched Digicash, but Chaum’s efforts failed to gain much attention.
Fast forward to 2008, an unknown person or persons using the pseudonym of Satoshi Nakamoto published Bitcoin: A Peer-to-Peer Electronic Cash System. In the white paper, Nakamoto wrote about the concept of Bitcoin in simple terms, explaining how it would “allow online payments to be sent directly from one party to another without going through a financial institution.”
In 2009, Bitcoin was officially launched, introducing the world to decentralised digital currency, a concept that would change many industries later on.
Who Actually Developed Bitcoin?
As mentioned earlier, the white paper was published under a pseudonym. Satoshi Nakamoto went to great lengths to hide their identity, which adds to the mystery and allure of Bitcoin. Leading cryptographers like Nick Szabo and the late Hal Finney have been widely speculated to be Nakamoto or the creators of Bitcoin. However, no solid evidence has backed this theory.
Bitcoin’s First Steps
In the first two years of its creation, Bitcoin swiftly moved towards popularity and adoption.
Genesis Block
On January 3, 2009, Nakamoto mined the first Bitcoin block, naming it the Genesis Block.
First Transaction
Later that year, Nakamoto sent 10 BTC to Hal Finney, marking the first Bitcoin transaction.
Bitcoin Pizza Day
On May 22, 2010, a developer and user named Laszlo Hanyecz bought two pizzas with 40,000 Bitcoin. This was the first time Bitcoin was used as a form of payment. Bitcoin enthusiasts celebrate May 22 as Bitcoin Pizza Day.
Nakamoto left the project in 2011 after sending a trove of emails and publishing numerous forum posts about their thoughts and the future of Bitcoin and the digital currency system as a whole.
What Makes Bitcoin Revolutionary?
First things first, Bitcoin operates on a decentralised platform. This means no single entity can ever control the network. Since each Bitcoin is recorded on blockchain, users can verify all the transactions, which solidifies their trust in this digital currency.
Lastly, the digital scarcity of Bitcoin makes it popular among investors and traders. The maximum supply cap of Bitcoin is 21 million coins. Unlike fiat currencies, Bitcoin’s scarcity gives it a hedge against inflation.
