1. What is Bitcoin and Where Did it Come From?
Who created Bitcoin?
Bitcoin is the first implementation of a concept called “cryptocurrency”, which was first described in 1998 by Wei Dai. The vision was to create a monetary policy that didn’t rely on centralized authorities; such as banks, the Federal Reserve, or governments. Bitcoin was invented by an unknown person or group of people using the name “Satoshi Nakamoto” and released as open-source software in 2009. Satoshi left the project in late 2010 without revealing much about himself. While Nakamoto himself may have been a puzzle, his creation solved a problem that had stumped cryptographers for decades. The idea of digital money—convenient and untraceable, liberated from the oversight of governments and banks. The community has since grown exponentially with many developers working on Bitcoin.
What is Bitcoin?
Bitcoin is a consensus network that enables a new payment system and a completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users. This created an electronic payment system based on mathematical proof. The idea was to produce a currency independent of any central authority, transferable electronically, more or less instantly, with very low transaction fees. In that sense, it’s like conventional dollars, euros, or yen, which are also traded digitally.
Who Prints it?
Bitcoin is not printed like Fiat money by a centralized authority on a whim whenever it is deemed that more cash is needed to be placed into circulation. Instead, Bitcoin is created digitally, by a community of people that anyone can join. Bitcoin is mined using computing power in a distributed network. (we will discuss this further in another lesson). The Bitcoin Protocol states that only 21 million Bitcoins can ever be created by miners on a set rate of production. These coins can be divided into smaller parts, to make its use easier, the smallest divisible amount is one hundred millionth of a Bitcoin and is called a ‘Satoshi’, after the founder (0.00000001). This network also processes transactions made with the virtual currency, effectively making Bitcoin its own payment network.
The major reason why government don’t like bitcoin:
- It removes the need for a central authority to monitor, control and print money. It is now been monitored and controlled by the public. It’s open to everyone.
- Secondly, government believe it can boost money laundery and terrorism, but bitcoin is just like any other currency naira or dollar, it’s the motive of the person using it that determines whether legal or illegal. I will even suggest terrorist or money launderers should desist from bitcoin because it is powered by blockchain (all transaction are added together i.e. there is a history). Example: if you catch a drug dealer on the street selling or buying drug with naira, you only caught him for that crime but if you catch him using bitcoin, you will most likely catch him alongside is previous act and transactions, simply because the history is on the blockchain.
- Diversion of funds: Banks and government officials can no longer divert funds because, once it’s diverted, the public will know, since the blockchain is visible to the public.