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What is Bitcoin (BTC)?
B itcoin (BTC) is the first currency based on cryptography functional and that has opened a world of possibilities. The idea of this cryptocurrency is born from other existing and less known elements, such as HashCash and DigiCash, combined with a peer-to-peer (PXNUMXP) network.
I would be surprised if in 10 years we will not use electronic currency in some way, now that we know a way to do it that inevitably is not going to fall apart when the trusted third party.
- Satoshi Nakamoto, January 17, 2009
Bitcoin's initial proposal
With the creation of Bitcoin, Nakamoto sought to correct different problems of DigiCash, a project created by David Chaum. One of those problems was the double spending or use the same amount of tokens twice without registering in the first use. The problem had been presented in other decentralized currency proposals and could not be resolved in any way. As a result, most of the digital currency options were centralized.
However, Nakamoto devised a plan to resolve this. His plan was to use the proof of work (PoW) and blocks that encompass a certain amount of transactions. With these two pieces, he seeks to create a chain of blocks that are related to each other. The concept began the blockchain or blockchain technology.
In a first instance the idea of Nakamoto was the use of Bitcoin in small niches. Especially in adult content web pages where privacy is sought, in reward systems, for making donations or even as a means of payment in different games.
It could start in a narrow niche like reward points, donation tokens, in-game currency, or micropayments for adult sites.
- Satoshi Nakamoto, January 17, 2009.
Bitcoin security and mining
To offer security Bitcoin is based on the SHA-256 cryptographic algorithm for information encryption (or the transactions in this case). The information is verified by working with processors called mining is..
The Bitcoin mining process seeks to perform a series of complex mathematical calculations that are used to validate transactions. These calculations demand enormous computing power that has evolved over time. In principle, a simple computer could carry them out without problems, but nowadays specialized equipment is necessary for the task. This is because the mining difficulty Bitcoin has increased exponentially since its inception until today.
Due to the complexity of the work, the miners receive a compensate for the validation and creation of each block. This is delivered in the form of bitcoins depending on the amount of work contributed.
Issuance of new bitcoins and units of account
Another particular of Bitcoin is its issue. The maximum emission of Bitcoin cannot exceed 21 million bitcoins (BTC). In addition, Bitcoin has the ability to subdivide to eight decimal places. In this way, a unit (1 bitcoin) can be divided into up to 100.000.000 smaller units. These units are called "satoshis", Which is equivalent to 0.00000001 BTC.
But coin issuance in Bitcoin it is handled by a delicate algorithm. First of all, each block in Bitcoin is generated approximately every 10 minutes. That is, every 10 minutes miners have to include a series of transactions, solve the block's cryptographic riddle and transmit it to the network. The miner who manages to solve the riddle receives a reward that is the one that allows introducing new coins to the market.
In principle, Bitcoin did this at the rate of 50 BTC per validated block, but currently it does it at 12,5 BTC per block. This is because the reward halves every 210.000 blocks, due to a process known as halving. Halving's task is to control Bitcoin's inflation and turn it into a deflationary emission.
The birth of Bitcoin
The first reference to Bitcoin was presented on 31 October 2008 on the Crypto Mailing List. Satoshi Nakamoto defined the idea of Bitcoin (BTC) as a cryptocurrency that had the ability to prevent double spending on a peer-to-peer network, there will be no central bank or other trusted parties, participants can be anonymous and it would be based on HashCash-style proof of work. The proof-of-work is used to prevent double spending and to enter the market of new coins that will be progressively released as compensation for the work done.
El January 9, 2009 the first version of the Bitcoin software appears: version 0.1.0. According to Nakamoto himself, it is an alpha version and completely experimental.
The first updates of the Bitcoin software
The version XNUMX was released on December XNUMX, XNUMX and is a simple update that corrects the communication problems of the nodes , which after a while disappear from the network.
The update of the version 0.2 Bitcoin, published on December 16, 2009, added significant improvements to the software, allowing, among other things, the automatic start of startup so that the software can run in the background automatically. In addition, a compatible client for Windows is launched and a client for Linux is added. Additionally, Nakamoto implements for this software the multiprocessor support for the generation of new currencies and proxy support for its use in the Tor network.
Although it is not a software update or an implementation, May 17, 2010 is very important for Bitcoin (BTC)
This is the date that Laszlo Hayneck made the first bitcoin payment for a good or service. Hayneck bought two pizzas at the popular American chain Papa John's and paid 10.000 BTC for them (then they were worth $ 0.003). Since then every year the event is commemorated as Bitcoin Pizza Day.
Bitcoin Pizza Day - The day that Bitcoin showed its power
On May 22, 2010, an event took place that marked the life of Laszlo Hanyecz. Laszlo was a renowned bitcoiner he wrote days before in the forum of Bitcointalk a little wish: "buy two large pizzas with 10.000 BTC as a payment method ”.
At that time, Bitcoin it was a very little known technology. However, Laszlo's offer sparked many people's interest, after all it was $ 41 that Laszlo was paying in bitcoins. If 10.000 BTC in 2010 only had the value of $ 41, and currently exceeds $ 90 million. These were the most expensive pizzas in the world, but Laszlo was able to enjoy them with his family and demonstrate one thing: Bitcoin had enormous potential to show the world.
Follow the development of Bitcoin
The version XNUMX was released on June XNUMX, XNUMX and implemented some important new features such as transaction filtering, hash calculation acceleration by XNUMX%, a mining power performance viewer and a version for Mac OS X developed by Laszlo Hayneck.
These are the most important updates of that early times, but there have been many more. We are currently in version 0.16.1 of the Bitcoin Core client, the base software for Bitcoin.
Among the recent updates of Bitcoin highlights the one of the past August 24, 2017, when the activation of Segregated Witness, also known as followed. It is a solution for the scalability of Bitcoin and its complete implementation within the software of Bitcoin Core It has been in version 0.16.0, offering full SegWit support for wallets and user interfaces.
During the early days of Bitcoin, a thread was established in the Bitcointalk forum that referred to this new cryptocurrency as the majority of stocks. Nakamoto replied on August 27, 2010 in this regard quite forcefully:
“Bitcoins have no dividends or potential future dividends, so they are not like stocks. They are more like a collectible or product "
Since then, the evolution of BTC has continued to rise as the flagship project of blockchain technology, transforming the world and battling a host of myths and FUD of those who do not understand this technology.