This is one article in a collection of 52 articles published weekly throughout 2023 on the basics of Bitcoin. The series is intended for people unfamiliar with Bitcoin or people wishing to enhance their understanding of the fundamentals that underpin the technology. Please contact us, if you have any questions or comments.
This is the first installment in a year-long series on the basics of Bitcoin. By now most people have heard about Bitcoin or at the very least the crypto industry. However, few people know the basic details surrounding Bitcoin and the problems it is attempting to solve. The sole purpose of this series is to discuss the basic fundamentals of Bitcoin. The series will be a collection of one-page word articles that will be released weekly. The series will try to balance the details necessary to understand Bitcoin without going into the nuanced details of the technology. It is our goal, by the end of the series, and hopefully even before then, that readers will have a basic understanding of money, how Bitcoin functions, the problems Bitcoin solves, and what makes Bitcoin distinct from the other cryptocurrencies currently in the ecosystem.
Bitcoin was created by Satoshi Nakamoto (Satoshi), a pseudonymous person or persons, in 2008. Satoshi released the Bitcoin whitepaper, which goes into detail of the mathematics and computer science that allow Bitcoin to function, on October 31, 2008. However, the Bitcoin protocol did not start operating until January 9, 2009 when Satoshi mined the first block. Since that time, a new Bitcoin block has been created and recorded approximately every 10 minutes on Bitcoin’s public blockchain ledger.
The goal of Bitcoin is to create an alternative monetary system that does not rely on a trusted third party. Instead of a trusted third party, which when discussing the current monetary system is the central banks and also the large banks like JP Morgan Chase, Bank of America, or Wells Fargo which hold trillions of dollars in peoples’ money, Bitcoin’s goal is to allow users to transfer funds in a peer-to-peer fashion with no trusted third party. To date, Bitcoin has been able to successfully operate without a trusted third party based on decades of advances in mathematics and computer science. At the time of this publication, there have been over 770,000 blocks mined in Bitcoin’s history which have included approximately 800,000,000 transactions all without a trusted third party.
While the comparison is certainly not perfect, Bitcoin is attempting to do for the monetary system what VRBO and Airbnb did to the lodging industry or Uber and Lyft did to the taxi industry. Bitcoin is similar to these projects as it is trying to put control back into the peoples’ hands. However, in a lot of ways it is a unique project with no apt comparisons. Bitcoin is truly decentralized and has no employees or known founder. It is incredible in this day in age where greed and ego are pervasive, that Satoshi has remained anonymous and never cashed in a single one of his more than 1.1 million bitcoin worth over $18 billion at the current price ($16,000) for a profit motive! As opposed to being operated by a small collection of people like central banks, Bitcoin is solely operated under a set of rules administered by the nodes (more on this during a later publication).
We look forward to embarking on this journey exploring the basics of Bitcoin in 2023. If you have any questions or comments, please don’t hesitate to contact us.
