What is Bitcoin?
Depends on who you ask. If it’s Warren Buffet, he’d say it’s “probably rat poison squared“. (But then invests in a digital bank that focuses on crypto.) 🤔
Unless you’ve been living under a rock or never leave your sofa and just binge-watch Netflix shows all day long, you’ve probably heard of bitcoin.
Bitcoin is known as the original cryptocurrency.
The first of its kind.
Bitcoin is a new kind of “money”, a digital currency that’s designed to let you store, send, and receive “money” online without any banks or other financial institutions.
Unlike fiat currencies, such as the U.S. dollar or the British pound, Bitcoin is not controlled by any central bank or government. Instead, rules that govern its use and supply are controlled by software.
In 2008, Bitcoin was created by a mysterious person calling himself, “Satoshi Nakamoto”.
To this day, his true identity remains anonymous. Nobody knows (at least publicly) who Satoshi Nakamoto is.
Since he’s the creator of Bitcoin, I also like to call Satoshi Nakamoto the “Bitcoin God”.
The Bitcoin God could be a man, woman, group of people or even a highly intelligent space alien. Nobody knows!
What we do know is that on Halloween (October 31) in 2008, Satoshi Nakamoto published a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”.
It was a 12-page summary of the Bitcoin God’s creation. The white paper provided a technical overview of Bitcoin and described how it would all work operationally.
A white paper is a document written by a creator(s) of a crypto project that explains the project’s purpose and provides technical information regarding its underlying technology.
In early January 2009, the first version of Bitcoin software, version 0.1, was released on an obscure mailing list.
The software controls the creation and use of bitcoins and imposes a fixed supply of 21 million. Bitcoins are created through a process called “mining” which now involves specialized computers competing to win a number-guessing game where the winning “miner” is rewarded with brand new bitcoins.About 19 million of those have been created (or “mined”) so far with the last bitcoin expected to be mined in 2140.
Bitcoin’s fixed supply is in contrast to traditional fiat currencies, such as the U.S. dollar, which can be created at will and in unlimited quantities by central banks.
Bitcoin devotees believe that since there is a limit on the number of bitcoins that will ever exist, this scarcity is where Bitcoin gets its value.
Satoshi Nakamoto made Bitcoin’s source code open to the public and encouraged others to continue developing Bitcoin.
Open source software means the source code is not proprietary. Any developer can view the source code and modify it.
Over time, the original source code was then refined by other software developers, many of whom worked on a voluntary basis similar to the volunteers that write and edit the pages of Wikipedia.
In late April 2011, Satoshi Nakamoto sent one of the software developers a brief email saying, “Yo! I’m out! ✌️”
Just kidding, The real message was, “I’ve moved on to other things.” And then he disappeared, never to be heard from again.
And the rest is history.
Wait. What? He/she/they/it just bounced?!
Yep.
Satoshi Nakamoto ghosted the Bitcoin community! 👻
I don’t know how it feels to be ghosted but I’m sure some of y’all do and I’m sure it feels horrible.
But it’s all good though, the disappearance of its creator wasn’t fatal to Bitcoin.
After more than a decade, Bitcoin continues to run strong, allowing users from around the world to transact in bitcoins with each other.
The first known exchange rate for bitcoin was in October 2009. With $1, you could buy 1,309 bitcoins! 😱
It wasn’t until February 2011 when the price of bitcoin reached parity with the U.S. dollar, where $1 = 1 bitcoin.⚖️
As confidence in Bitcoin grew, so did the demand for the cryptocurrency, which increased its price.
In 2013, bitcoin went from $13 to $1,157! A gain of 8,800%!
In 2017, probably when Bitcoin finally lost its status as an “underground” currency, started the year at $1,000 and almost hit $20,000…before crashing hard.
But Bitcoin has proven that it’s hard to kill.
In November 2021, bitcoin’s price reached an all-time high at over $68,000. 🚀
What’s crazy is that Satoshi Nakamoto still owns over 1 million bitcoins! But while the Bitcoin God is now a bazillionaire, becoming rich wasn’t the reason for creating Bitcoin.
In the next lesson, you’ll learn the actual reasons why Bitcoin was made.