Who created Bitcoin and when? Who received the first transaction, and what actually happened in El Salvador in September 2021? This and a lot more in the following video! Hit the thumbs up button and don’t forget to subscribe.
Bitcoin is the first cryptocurrency ever made, and also a digital decentralized currency that you can use to buy, sell, and exchange directly – without an intermediary, like a bank.
Decentralization is the process of shifting control from one main group to several smaller Ines. For example, a decentralization of a government gives more power to individual states, rather than concentrating it at a federal level. In a blockchain, decentralization refers to a transfer of control and decision-making from a centralized entity, like an individual, organization, or group, to a distributed network.
However, researchers have begun to see a trend, with Bitcoin beginning to move toward centralization, as it becomes increasingly common for intermediaries to be used for buying and selling, and also for people who store large sums of Bitcoins to join together in large groups, to minimize variations in their income. Researchers also believe that parts of the bitcoin ecosystem are controlled by a small set of entities, which is a development that could threaten the decentralization.
Every Bitcoin transaction that’s ever been made, exists on a public ledger accessible to everyone, making transactions hard to reverse and difficult to fake. Bitcoins aren’t backed by the government or any issuing institution, and there’s nothing to guarantee their value besides the proof baked in the heart of the system. Anton Mozgovoy, co-founder & CEO of the digital financial service company Holyheld, states the following: “The reason why digital currency is worth money, is simply that we, as people, decide it has value, just like when it comes to gold”.
The creator of Bitcoin, Satoshi Nakamoto, which is a fictitious name, registered the domain bitcoin.org in august 2008, and originally described the need for, quote, ”an electronic payment system based on cryptographic proof instead of trust”. The identity of Bitcoin’s creator is still unknown, and to this day, no-one knows who Satoshi Nakamoto is, or even if it is a single person or a group of several people. In January 2009, the Bitcoin network was created, and the first transaction took place about a week later, and was after that, launched to the public. Since then, the digital currency has risen dramatically in value. Today, there are more than 19 million coins in circulation.
The network Bitcoin is built on, is a so-called peer-to-peer network, and has no central servers. There is also no central storage, but anyone can store bitcoin on their computer. Further, there are no individual administrators, and the ledger is maintained by a network of equally privileged miners. Anyone who wants to create a bitcoin address, equivalent to a bank account, can do so without having to approve anything. It’s the same with sending and receiving a transaction, anyone who wants to, can. All that is needed is for the network to confirm that the transaction is legitimate.
Bitcoin is built on a distributed digital record, called a blockchain, which is a linked body of data, made up of units called blocks. These blocks contain information about each transaction, including date and time, total value, buyer and seller, and a unique identifying code for each exchange. So entries strung together in chronological order create a digital chain of blocks.
Stacey Harris, consultant for Pelicoin, a network of cryptocurrency ATMs, states the following: “Once a block is added to the blockchain, it becomes accessible to anyone who wishes to view it, acting as a public ledger of cryptocurrency transactions”.
A blockchain is decentralized, which means it’s not controlled by an organization. “It’s like a Google Doc that anyone can work on,” says Buchi Okoro, CEO and co-founder of African cryptocurrency exchange Quidax. “Nobody owns it, but anyone who has a link can contribute to it. And as different people update it, your copy also gets updated.”
While the idea that anyone can edit the blockchain might sound risky, it’s actually what makes Bitcoin trustworthy and secure. For a transaction block to be added to the Bitcoin blockchain, it must be verified by the majority of all Bitcoin holders, and the unique codes used to recognize users’ wallets and transactions must conform to the right encryption pattern.
These codes are long, random numbers, making them incredibly difficult to produce fraudulently. The level of statistical randomness in blockchain verification codes, which are needed for every transaction, greatly reduces the risk anyone can make fraudulent Bitcoin transactions.