The origin of Bitcoin is shrouded in mystery. We know the concept of Bitcoin was first released to the world in October 2008 via a white paper and that this white paper was written by Satoshi Nakamoto. However, no one knows who Satoshi Nakamoto is. He could be one person or a group of people. There have been investigations trying to find Nakamoto, but there have been no confirmations yet.
A few months later, on January 3, 2009, the Bitcoin system explained in Satoshi’s white paper came to life. The first Bitcoins in existence were released to the world in the first block, the Genesis Block (it’s where our blog’s name comes from as well). A block is a file that has a recording of all recent Bitcoin transactions. Each block is appended to the previous history of blocks. All of these blocks together form what is called the blockchain. Think of the blockchain as a ledger of every Bitcoin transaction to ever happen. Bitcoin Block Explorer provides real-time information about the current transactions on Bitcoin and allows you to explore the entire Blockchain.
In our current world, nearly all currencies (US Dollar, Euro, Yen, etc.) are controlled by a central bank. In these currencies – called fiat currencies – the government controls when and how many units of money to release to the overall money supply. Bitcoin is designed around the idea that the money supply does not need to be decided by these central banks and governments.
With Bitcoin, there is an algorithm that defines how much currency will be created and the rate of creation. For the first 4 years of its existence, 50 new Bitcoins were created roughly every 10 minutes. After 4 years, that rate will be halved (1st 4 years = 50 coins/10 minutes, 2nd 4 years = 25 coins/10 minutes, 3rd 4 years = 12.5 coins/10 minutes, and so on). This decaying rate of Bitcoin creation yields a maximum of 21,000,000 Bitcoins.
As interest in Bitcoin has spread, more and more inventions revolving about Bitcoin have been imagined and created. One of the most important creations was an online Bitcoin exchange (Mt Gox , Bitfloor ) where you can exchange established world currencies (US Dollar, Euro, Yen, etc.) for Bitcoins and vice versa. Think of this as a currency exchange booth at the airport that you use when you travel overseas. In Bitcoin’s case, the exchange is online and it is used to exchange well-known currencies (USD, Euro, Yen, etc.) into Bitcoins or to trade your Bitcoins in for USD, Euro, Yen, etc.
The number of retailers that accept Bitcoins has been growing steadily; the most notable of these retailers, as of the writing of this post, is WordPress and Reddit. As Bitcoin grows in popularity, more and more retailers will accept Bitcoins.
The Bitcoin protocol is well established, so the rules for Bitcoin creation and payment transactions will not change much, however, there is much opportunity for development outside of this protocol. The developments by third-party Bitcoin businesses is where the majority of the innovation will come from. As of this writing, there are many companies creating new and innovative ways to use and exchange Bitcoins, such as Bitcoin wallets on your cell phones and Bitcoin ATMs (where you can can deposit USD, Euro, Yen, etc. into the machine and your wallet is credited with Bitcoins and also withdraw Bitcoins from your wallet and exchange them for the local currency). These innovations are only scratching the surface of the potential of Bitcoin.
Bitcoin is still in its very early stages of existence and no one knows what the future will hold. We, here at The Genesis Block, will be updating our audience with Bitcoin’s history as it is happening in real-time. It is a very exciting time for Bitcoin and we hope to enjoy the ride with you.