We first heard about Bitcoins in January 2009. It all started when two programmers registered a new domain name called bitcoin.org in August 2008. A pseudonym called Satoshi Nakamoto released a document, named a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” It is still a mystery about the person or persons behind the creation of Bitcoin and its technology.
The White Paper gives detailed explanations behind the Bitcoin and the technology. The paper gives the reader an idea about the principles of the novel electronic payment system that excludes the need for a central authority or an intermediary. The technology also ensures a secure and faster transaction from anywhere in the world. In other words, this document gives us a picture of a whole new form of currency that runs on the internet.
This technology allows users to send and receive money regardless they know each other or where they live. They can send money back and forth without the support of any third party. With public-key encryption, users can confirm messages, transactions, and data with the help of this system. Anonymity is also a byproduct of this technology but not a primary feature. The World’s first transaction using Bitcoin reported in January 2009, between Satoshi and Hal Finney who was an early crypto enthusiast and a developer.
Bitcoin under the Microscope
We have all heard about uncontrolled fiat supply every day. Unlike fiat, we cannot print or copy Bitcoins. There is a limited supply of Bitcoin in the world. There are only 21 million minable Bitcoins in existence. We will look into mining in the future episodes. The smallest unit one can transfer to another is called a satoshi. Satoshi is one hundred millionth of a Bitcoin (0.00000001). This fractionality enables microtransactions that the so-called traditional fiat cannot do.
Production of the Bitcoins happens in computers all around the world using open software. Coins held in these digital programs called wallets. Bitcoin is the first form of digital currency that we call cryptocurrencies today. When we speak about Bitcoins there are two main outcomes. Bitcoin is the token or unit which acts as a digital currency. The currency stored in a Bitcoin wallet. A string of numbers and letters “17LH1F69Trnx7tzNT13itUa78A1xfvYnhR” represents this wallet helps to identify the digital address to send and receive Bitcoins.
The Bitcoin ledger stores and maintains all the transactional data involves between the computers. The distributed ledger is responsible for maintaining all token balances trading. The said ledgers are usually very large files. With the help of thousands of computers around the world, storing files will happen. With the confirmation of each computer and once the data is stored correctly the Bitcoin network confirms the transaction. There is no call back of transactions once completed. As this process is totally peer-to-peer based there is no regulating body or centralized authority. Decentralization in other words is one of the important characteristics of the Bitcoin network. You can check Bitcoin’s current price by clicking here.
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