Bitcoin was introduced to the public in 2009 by an anonymous developer or group of developers using the name Satoshi Nakamoto.It has since become the most well-known cryptocurrency in the world. Its popularity has inspired the development of many other cryptocurrencies. These competitors either attempt to replace it as a payment system or are used as utility or security tokens in other blockchains and emerging financial technologies.
Learn more about the cryptocurrency that started it all—the history behind it, how it works, how to get it, and what it can be used for.
- Launched in 2009, Bitcoin is the world's largest cryptocurrency by market capitalization.
- Unlike fiat currency, Bitcoin is created, distributed, traded, and stored using a decentralized ledger system known as a blockchain.
- Bitcoin and its ledger are secured by proof-of-work (PoW) consensus, which is also the "mining" process that introduces new bitcoins into the system.
- Bitcoin can be purchased via various cryptocurrency exchanges.
- Bitcoin's history as a store of value has been turbulent; it has gone through several boom and bust cycles over its relatively short lifespan.
- As the first decentralized virtual currency to meet widespread popularity and success, Bitcoin has inspired a host of other cryptocurrencies in its wake.
Understanding Bitcoin
In August 2008, the domain name Bitcoin.org was registered. Today, at least, this domain is WhoisGuard Protected, meaning the identity of the person who registered it is not public information.
In October 2008, a person or group using the false name Satoshi Nakamoto announced the Cryptography Mailing List at metzdowd.com: "I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party." This now-famous white paper published on Bitcoin.org, entitled "Bitcoin: A Peer-to-Peer Electronic Cash System," would become the Magna Carta for how Bitcoin operates today.
Bitcoin's Blockchain Technology
Cryptocurrencies are part of a blockchain and the network required to power it. A blockchain is a distributed ledger, a shared database that stores data. Data within the blockchain is secured by encryption methods.
When a transaction takes place on the blockchain, information from the previous block is copied to a new block with the new data, encrypted, and the transaction is verified by validators—called miners—in the network. When a transaction is verified, a new block is opened, and a Bitcoin is created and given as a reward to the miner(s) who verified the data within the block—they are then free to use it, hold it, or sell it.
Transactions are placed into a queue to be validated by miners within the network. Miners in the Bitcoin blockchain network all attempt to verify the same transaction simultaneously. The mining software and hardware work to solve the nonce, a four-byte number included in the block header that miners are attempting to solve.
The block header is hashed, or randomly regenerated by a miner repeatedly until it meets a target number specified by the blockchain. The block header is "solved," and a new block is created for more transactions to be encrypted and verified.
How to Mine Bitcoin
A variety of hardware and software can be used to mine Bitcoin. When Bitcoin was first released, it was possible to mine it competitively on a personal computer; however, as it became more popular, more miners joined the network, which lowered the chances of being the one to solve the hash. You can still use your personal computer as a miner if it has newer hardware, but the chances of solving a hash individually are minuscule.
This is because you're competing with a network of miners that generate around 220 quintillion hashes (220 exa hashes) per second. Machines, called Application Specific Integrated Circuits (ASICs), have been built specifically for mining can generate around 255 trillion hashes per second. In contrast, a computer with the latest hardware hashes around 100 mega hashes per second (100 million).
How to Mine Bitcoin
A variety of hardware and software can be used to mine Bitcoin. When Bitcoin was first released, it was possible to mine it competitively on a personal computer; however, as it became more popular, more miners joined the network, which lowered the chances of being the one to solve the hash. You can still use your personal computer as a miner if it has newer hardware, but the chances of solving a hash individually are minuscule.
This is because you're competing with a network of miners that generate around 220 quintillion hashes (220 exa hashes) per second. Machines, called Application Specific Integrated Circuits (ASICs), have been built specifically for mining—can generate around 255 trillion hashes per second. In contrast, a computer with the latest hardware hashes around 100 mega hashes per second (100 million).
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