Introduction To Bitcoin
If you haven’t already, check out the Introduction To The Blockchain article I wrote in order to better understand this on. Nonetheless, in this article, I will be briefly talking about the history of Bitcoin and talking about some of the concepts it uses in order to work effeciently.
Before Bitcoin came to being, money transfer was not an easy thing to do. You would typically go to a bank or a service in order for them to help you transfer money. This took both a lot of time, and a lot of money. A bank or service can also be hacked, regardless of how secure it is, one small manipulation can change a lot, and money is not to be played with. Almost 100 years ago, a person nicknamed “Pretty Boy Floyd” robbed banks, and one thing he did was destroy debts of mortgages. While this might seem like a heroic act, for software engineers nowadays, this can seem like a problem that needs to be fixed.
Due to this difficulty of transferring money around, someone by the name of Satoshi Nakamoto, created what is called Bitcoin. He first wrote a white paper about it, which is a document that describes the technology and the reason it has been built. In the white paper, he described a peer-to-peer electronic cash system. It uses multiple concepts in order to ensure that it cannot be hacked or changed. He describes how this technology works by explaining the transactions that occur on it (i.e. transferring money), the way it ensures that a transaction is valid (Proof-of-Work), and even how it gets used in a network of nodes. This white paper was published in October of 2008.
A few months after the release of the white paper, in January of 2009, the first transaction on the blockchain happened, which was a transfer of 10 Bitcoins from Satoshi to a cryptographer called Hal Finney. A year later, someone named Laszlo Hanyecz made the first commercial transaction by buying two pizzas for 10,000 Bitcoin, that day (May 22nd) is marked as the Bitcoin Pizza Day.
The way that Bitcoin was made (before you could simply buy it on an exchange), you had to “mine” the coins. This meant using hardware, such as your PC, to do some computations, to ensure that the transactions on the blockchain are valid, while also “mining” the actual Bitcoin. This made the situation of using Bitcoin a win for everybody. Those who needed to transfer money, could simply do it on the blockchain, while those who wanted to earn some money (Bitcoin), they used their hardware to mine the Bitcoin and make sure that the transactions on the blockchain are approved.
While Bitcoin was a very innovative idea, some people thought the blockchain could be more useful than simply transferring money. New ideas such as Ethereum started rising, building on concepts such as Smart Contracts, NFTs, and more.
This was some history about Bitcoin and why it was built.
If you are interested in this topic, I recommend reading these two introductory books: This first one is a Chinese book that was translated to English. Some reviews on GoodReads wrote that they had difficulty understanding some of the English in it, but I personally had no problems. It is very simple and is filled with pictures, making it a fun and easy read: https://amzn.to/3HBCOSs
The second book explains lots of aspects in the Bitcoin and Blockchain technology, as well as many other technologies that use blockchain: https://amzn.to/3LgzGgW
Originally published at https://hazemhadi.com.
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