What is The History of Bitcoin: Super Easy Explanation

What is The History of Bitcoin: Super Easy Explanation



What is The History of Bitcoin: Super Easy Explanation
– https://blockgeeks.com/

We’ll start at the very beginning by understanding the history of blockchain.

The very first blockchain in the world was Bitcoin. An anonymous person or group known as Satoshi Nakamoto published a document in an online cryptography forum in November 2008 and revealed the first details of how it would work, describing it as a “peer-to-peer electronic cash system”. The whitepaper is available today at bitcoin.org/bitcoin.pdf. It allows any 2 people to pseudonymously send money to each other no matter where they are in the world. It is a borderless currency. The main benefit of Bitcoin is that it does not require any centralized authority or institution to operate. This is in contrast to today’s centralized financial systems that depend on the existence of a central bank or government to mint money. If for any reason the central authority were to shutdown, the money would become worthless. In a decentralized system like Bitcoin, there is no central authority and the system can continue to operate as long as there are members in its peer-to-peer network.

The goal of the whitepaper was to describe how the different parts of the Bitcoin protocol would operate and be kept secure. A new type of database, called a blockchain, would keep track of a single history of all Bitcoin transactions and it would be maintained by everyone in the network. The database would be publicly available for anyone to view and inspect, and anyone can download a copy of the same database. This provides data redundancy and makes sure the data is never lost, but also provides a way for anyone to verify the transactions in the database themselves. A block in the database just stores a sequence of transactions, and a sequence of blocks is called a blockchain. Each block is identified by an incrementing number and a unique Sha-256 hash. The hash for a block is calculated using the transactions inside it, as well as the previous block’s hash, which forms a chain of hashes. The data in the blocks is secured using a cryptographic algorithm called proof-of-work, which also keeps all members of the network and the database in sync to prevent double-spending. In this context, preventing double-spending means preventing anyone from spending money they dont have. Proof-of-work is used to generate new blocks for the database, also known as mining, and the reward for mining a new block is given to the miner by creating new Bitcoins in the system. This is the only way new Bitcoins can be created. Anyone on the network can be a miner and a new block is mined roughly every 10 minutes, which includes the latest set of verified transactions.

The first release for Bitcoin was version 0.1 written in C++ by Satoshi and published on SourceForge in January 2009 under the open-source MIT license. Anyone could download the source code and run it to join the network, also known as becoming a node in the network. This is the original version 0.1 source code written by Satoshi. We can see the hard-coded genesis block, which is the very first block in the chain. The hash for the block can be verified by using any Bitcoin blockchain explorer. Let’s copy and paste this hash into the blockchain explorer available at blockchain.info. We can see that this hash is for block number 0, and that it has only one transaction in it which is the mining reward, and the reward amount of 50 Bitcoin was given to this Bitcoin address. We can also see this 50 Bitcoin reward for the genesis block in the original source code. The genesis block is a special case needed to start the blockchain and is the only block that is hard-coded, whereas every subsequent block is calculated using proof-of-work. Satoshi’s motivation for creating Bitcoin is revealed in the piece of data he included in the genesis block: a newspaper headline from The Times that read ‘Chancellor on brink of second bailout for banks’. The date of the newspaper is proof that the genesis block was created on or after Jan 3 2009.

Satoshi developed the source code mostly himself up until mid-2010, when he handed it off to the open-source community. It is now maintained under the project called Bitcoin Core. The software is currently at version 0.15.1 and is available for download at bitcoin.org. This is still the most popular Bitcoin client, and its estimated that there are over 10 thousand nodes running the Bitcoin network today using various clients. Satoshi disappeared from public view in late 2010, his identity still unknown to this day. The only way someone could prove that they are Satoshi is by using the same encryption keys used when posting the original whitepaper in the online cryptography forum.

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