What is Bitcoin?

In the world of digital currencies, Bitcoin is the first cryptocurrency and a trailblazer that often elicits differing viewpoints.

Someone like Warren Buffet could call it “rat poison squared,” yet interestingly, he also makes investments in digital banking that prioritize cryptocurrency.

Bitcoin is an innovative form of “money”—a digital currency that bypasses conventional banks and financial institutions to enable you to handle transactions online autonomously.

It is not regulated by the government or a central bank, like fiat currencies like the US dollar and the British pound, but rather by computer programs that govern its usage and circulation.

“Satoshi Nakamoto,” a mysterious person whose actual identity is still unknown, invented the idea of Bitcoin in 2008. Satoshi Nakamoto, the creator of Bitcoin, received the title “Bitcoin God” for creating the fundamentals of this digital currency.

The phrase ‘Bitcoin’ is certainly familiar to everyone who hasn’t been fully secluded from the outside world by a rock or an endless Netflix binge.

It is largely recognized as the first cryptocurrency.

Whether Satoshi Nakamoto is the true “Bitcoin God” remains a mystery; he might be anybody, a lone genius, a group of intellectuals, or even, more fantastically, a very clever alien.

The verifiable information that we possess is that, on Halloween of 2008, Satoshi Nakamoto published a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System,” which served as the introduction to the world of Bitcoin.

This groundbreaking 12-page paper provided a technical explanation of Bitcoin and an in-depth look at its workings, serving as a blueprint for Nakamoto’s digital creation.

A white paper is a document that the author(s) of a cryptocurrency project writes outlining the technical details of the project’s underlying technology and outlining the project’s goals.

When Bitcoin software version 0.1 was released in early 2009 and distributed on a cryptography mailing list that was hidden from the general public, the network took off.

This software established the rules of the digital world, limiting the total number of Bitcoin coins to 21 million.

“Mining,” a competitive procedure that needs strong computers to solve intricate mathematical riddles, facilitates the production of new bitcoins by rewarding the winner with newly created bitcoins.

About 19 million bitcoins have been produced so far, and the last coin is expected to be found by the year 2140.

Traditional fiat currencies, such as the US dollar, which central banks may create indefinitely, stand in sharp contrast to this preset scarcity. Proponents of Bitcoin contend that the very scarcity of the cryptocurrency is what gives it its value.

Not only did the mysterious Satoshi Nakamoto create Bitcoin, but he also released its source code for everyone to use and improve, paving the way for future collaborative development of the currency.

Software that is open source includes non-proprietary source code. Viewing and editing the source code is open to any developers.

With over a decade of operation, Bitcoin is still strong and allows users to transact with each other globally using the revolutionary cryptocurrency.

When the exchange first started in October 2009, $1 could buy an incredible 1,309 bitcoins!

Not until February 2011 did Bitcoin reach dollar parity, meaning that one bitcoin was worth one dollar.

The value of Bitcoin increased in tandem with its increased legitimacy and acceptance. Bitcoin saw an incredible surge in 2013, rising from $13 to $1,157—a whopping 8,800% increase!

By 2017, Bitcoin had shed the designation of “underground,” starting at $1,000 and rising to almost $20,000 before plunging sharply.

However, Bitcoin has proven to be remarkably resilient.

In November 2021, it set an all-time high, breaking $68,000. 

Amidst this financial storm, Satoshi Nakamoto—the creator of Bitcoin—remains mysterious, holding over 1 million bitcoins.

Despite now being a millionaire on paper, money acquisition was not the purpose driving Nakamoto’s conception of Bitcoin.

You will discover why Bitcoin was created in the next lesson.