Bitcoin and blockchain

Bitcoin and blockchain

Bitcoin was introduced in 2008 by an individual or group under the pseudonym Satoshi Nakamoto through the whitepaper Bitcoin: A Peer-to-Peer Electronic Cash System (Bitcoin Whitepaper). Prompted by the 2008 financial crisis, Nakamoto envisioned a decentralized digital currency that enables peer-to-peer transactions without intermediaries like banks. Bitcoin's design emphasizes trustlessness, transparency, and resistance to censorship, offering an alternative to centralized financial systems.

The genesis block of Bitcoin was mined on January 3, 2009, marking the birth of the first blockchain. This block contained a message: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks," referencing a headline from The Times newspaper and embedding a timestamp that proved the block couldn't have been created before that date.

How Bitcoin Works

Proof of Work (PoW)

Miners solve complex mathematical puzzles to validate transactions and add blocks to the blockchain, earning bitcoins and transaction fees. This process secures the network but is energy-intensive.

Block Structure

Each block includes a header (with the previous block's hash, timestamp, Merkle root, and nonce) and a list of transactions.

Transaction Verification

Nodes verify transactions by checking digital signatures and ensuring inputs are unspent, preventing double-spending.

Key Milestones in Bitcoin Development

  • 2009: Bitcoin network launched with the mining of the genesis block
  • 2010: First real-world Bitcoin transaction (10,000 BTC for two pizzas)
  • 2011: Bitcoin reaches parity with the US dollar
  • 2013: Bitcoin price surges past $1,000 for the first time
  • 2014: Major exchanges like Mt. Gox collapse, testing Bitcoin's resilience
  • 2017: Bitcoin experiences a massive bull run, reaching nearly $20,000
  • 2020: Institutional adoption begins with companies like MicroStrategy and Square investing in Bitcoin
  • 2021: El Salvador adopts Bitcoin as legal tender, the first country to do so
  • 2022: Bitcoin withstands market turmoil amidst global economic uncertainty
  • 2023: Continued institutional adoption and infrastructure development
  • 2024: Spot Bitcoin ETFs approved in the United States