What is Bitcoin & History
Bitcoin is a peer-to-peer electronic cash system. Put simply, Bitcoin is the world’s original digital money, however it shares many similarities with gold. The most striking resemblance is that it is a tangible asset that can be used as a short or long-term investment vehicle. Bitcoin can also increasingly be used to pay for goods and services, with a growing number of countries worldwide starting to adopt it as legal tender.
Why did Bitcoin start and who created it?
There are a growing number of questions online about Bitcoin, but the most common is why it started and who founded the concept. There has always been an air of mystery surrounding Bitcoin. This is due largely to its pseudonymous creator, Satoshi Nakamoto, who has never been pictured or seen. In 2008, Mr Nakamoto submitted a whitepaper outlining his vision for Bitcoin titled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’.
Nakamoto’s proposal was said to have been discovered by video game developer Hal Finney, who spoke publicly about his excitement about the idea of a decentralised digital currency. Who knows whether it was coincidence or not, but just a few months later, the first Bitcoin block was mined on 3rd January 2009, which kicked-off the concept of Bitcoin mining that we will discuss in more detail later in this guide.
What does Bitcoin aim to achieve? How does it work?
In its purest form, Bitcoin was designed to be decentralised currency, operating without the oversight of a central bank or overarching administrator. Bitcoin’s consensus network was also designed to create a common, shared public ledger that was immune to human error and manipulation from cyber-criminals.
The first step for any new Bitcoin user is to find a good Bitcoin wallet. Secondly, the wallet needs to be funded; this can be done by buying Bitcoin or by receiving Bitcoin from another Bitcoin wallet.
Bitcoin payments are called transactions. A transaction is a transfer of value between Bitcoin wallets that gets registered on the public ledger in the Bitcoin blockchain. The balances of Bitcoin wallets update automatically after every transaction.
Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing mathematical proof they have derived from the owner of the Bitcoin wallet. The signature also prevents the transaction from being altered by a cyber-criminal once it has been issued.