Bitcoin introduction
About Bitcoin
The world’s first cryptocurrency, Bitcoin is stored and exchanged securely on the internet through a digital ledger known as a blockchain. Bitcoins are divisible into smaller units known as satoshis — each satoshi is worth 0.00000001 bitcoin.
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How does Bitcoin work?
Bitcoin was created by Satoshi Nakamoto, a pseudonymous person or team who outlined the technology in a 2008 white paper. It’s a simple concept: bitcoin is digital money that allows for secure peer-to-peer transactions on the Internet.
The invention of Bitcoin was a breakthrough in cryptography. Bitcoin’s key innovation was the blockchain — a piece of software that acts like a ledger, logging every transaction ever made using bitcoin. Unlike a bank’s ledger, the Bitcoin blockchain is distributed and verified across a network of computers. No company, country, or third party is in control of it. And anyone can become part of that network.
Bitcoin is based on encryption, making it extremely secure and universally accessible. Creating a “bank account” on the global Bitcoin network generates an extremely long password a.k.a. a “private key” that is impossible for anyone else to guess. Anyone, anywhere with Internet access can receive, send, and hold Bitcoin using the public version of their key (i.e. the version of their private key that can be freely shared in order to securely receive funds).
There will only ever be 21 million BTC. Bitcoin is digital money that cannot be inflated or manipulated by any individual, company, government, or central bank.
Bitcoin is highly divisible. You can hold, send, or receive fractions of a BTC. The smallest unit, i.e. 0.000 000 01 BTC, is called a “satoshi” or “sat.” As bitcoin’s value has risen, its easy divisibility has become a key attribute.
What is Bitcoin mining?
Bitcoin is often considered to be a “store of value” like gold, and like gold, new bitcoins are created by “mining” (up to a maximum 21 million coins).
Bitcoin mining is the process by which thousands of computers around the world compete to record and verify transactions on the network. These specialized computers known as ‘mining rigs’ perform the equations required to verify and record a new transaction.
In the early days, a typical desktop PC was powerful enough to participate, which allowed pretty much anyone who was curious to try their hand at mining. These days, however, the computers required are massive, specialized, and often owned by businesses or large numbers of individuals pooling their resources. As of October 2021, Cambridge University researchers estimate that U.S.-based miners maintain the highest percentage of global mining by country.
Who created Bitcoin?
The principles behind Bitcoin first appeared in a white paper published online in late 2008 by a person or group going by the name Satoshi Nakamoto.