If you are reading this, you probably wonder what is bitcoin, and how does it work? It is the first successful and widespread decentralized digital currency created without a central bank or other authority. It can be transferred directly from user to user. But despite not being a legal tender, bitcoin has triggered crypto-mania and an avalanche of hundreds of other digital coins.
Created in 2009 by the mysterious developer that is hiding his identity behind the pseudonym, Satoshi Nakamoto, bitcoin became the first well-known digital asset that uses cryptography rather than central authorities to act as a medium of exchange. Allegedly, bitcoin was created to absorb many ideas of the cypherpunk (an ideology that advocates the use of cryptography for attaining social and political change) community.
Naturally, there is no physical representation of bitcoin. All information about storage and transactions is kept on a public ledger in the cloud. In this peer-to-peer network, there is no need for intermediaries, like banks, and every transaction is verified by a massive amount of computing power and recorded in public distributed ledger called a blockchain. Bitcoin offers lower transaction fees than most traditional payment systems and, unlike government-issued currencies, is operated by a decentralized authority.
Throughout its relatively short but influential history bitcoin had its ups and downs:
March 2010: The first bitcoin exchange BitcoinMarket.com has seen the light of day;
July 2010: Bitcoin price skyrocketed by 900% in five days ($0.008–$0.08);
April 2011: Bitcoin price reached one US dollar;
June 2011: Bitcoin experienced its first "bubble," the price reached $31.00 followed by a sharp drop;
April 2013: Bitcoin price increased to $266;
February 2013: Coinbase reported selling US$1 million worth of bitcoins in a single month;
February 2014: One of the largest bitcoin exchanges, Mt. Gox, filed for bankruptcy protection in Japan;
February 2015: Number of merchants accepting bitcoin exceeded 100K;
March 2016: Japan recognized bitcoin as having a function similar to fiat money;
December 2017: Bitcoin reached its all-time high of $19,783.06;
2019: Bitcoin's daily transaction volume grew to $20.2 billion, increasing fivefold during the year.
Now, when you know all you need to know about bitcoin's history, you might want to ask, "What is bitcoin mining?". Well, the easy answer would be – mining is a process of creation. When you are mining bitcoins, you are adding transaction records of past transactions to the blockchain and get bitcoins as a reward. This process is essential for confirming and securing transactions to the rest of the network. It is achieved with special computers by solving computational problems that allow "to chain" blocks of transactions together.
Well, hopefully, after this short but consistent introduction into the history of the world's first successful cryptocurrency, you won't have to ask Google again what bitcoin is about.
