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What is Bitcoin and what is Bitcoin history

In October 31, 2008 ‘Satoshi Nakamoto’ published a 9 page white paper and on November 2008 this was released in cryptography mailing list under the name Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System See below image of the letter.


In January 2009, Satoshi Nakamoto released the first version of the open-source bitcoin core software on SourceForge and the bitcoin protocol started running. Nakamoto mined the first 50 bitcoins.

During October 2009, an exchange rate for the bitcoin was established, which was US$1 = 1,309.03 BTC. This rate was decided after framing up an equation as to how much is the cost of the electricity to run a computer, generating bitcoins.

Bitcoin version 0.1 released on January 9, 2009 which compiled through Microsoft’s Visual Studio for Windows. And on January 12, 2009 the first bitcoin currency transaction takes place in block 170, between Nakamoto and programmer Hal Finney.

December 16, 2009 – Bitcoin version 0.2 is released.

July 7, 2010 – Bitcoin version 0.3 is released.

February 19, 2013 - Bitcoin version 0.8 is released.


May 22, 2010 – Florida programmer Laszio Hanyecz offers to pay 10,000 bitcoins for a pizza on the bitcoin forum marking the first, real-world transaction.


What is bitcoin?
Bitcoin is a digital currency that exists only in the virtual realm, unlike physical currencies like dollars, euros and rupees.


Bitcoin is electronic currency, known as 'cryptocurrency'. It is a form of digital public money that is created by mathematical computations and policed by millions of computer users called 'miners'.

Bitcoin is a decentralized currency managed by peer-to-peer technology (P2P2), without a central authority. All functions such as Bitcoin issuance, transaction processing and verification are carried out collectively by the network

Bitcoin has a maximum 21 million limit
Bitcoin is self-limiting because only 21 million total bitcoins will ever be allowed to exist, and in current circulation, approximately 11 million of bitcoins already mined.

Bitcoin mining involves commanding your home computer to work around the clock to solve 'proof-of-work' problems (computationally-intensive math problems). Each bitcoin math problem has a set of possible 64-digit solutions. Your desktop computer, if it works nonstop, might be able to solve one bitcoin problem in two to three days, likely longer. 

Bitcoin transactions have limitations
 A Bitcoin transaction can take as long as 10 minutes to confirm. Transactions are also irreversible and can only be refunded by the Bitcoin recipient.

Bitcoin balances are not insured
This means that if you lose your Bitcoins for any reason – for example, your hard drive crashes, or a hacker steals the digital wallet in which your Bitcoins are stored, or the Bitcoin exchange where you held a balance went out of business.

How does bitcoin work?
Once you have installed a bitcoin wallet on you computer or smart phone, it will generates you first bitcoin address and you can create more as your need. You can share you bitcoin address to you friends or for others with whom you wants to by or sell.

Bitcoins are traded from one personal 'wallet' to another.

Wallet
A wallet is a small personal database that you store on your computer drive, on your smartphone, on your tablet, or somewhere in the cloud.

Blockchain
A blockchain is a ledger that keeps records of digital transactions. Instead of having a central administrator, like a bank or the government, blockchain organizes data in batches called blocks. These data batches use cryptographic validation to link themselves together. In other words, each block identifies and references the previous block by a hash value, forming an unbroken chain.

Blockchain solves two of the most challenging problems of digital transactions : controlling the information and avoiding duplication. When a purchase is carried out, the ledger records it and sends it out to the entire network. Computers all over the world then compete to confirm the operation by solving complex math equations. The first to figure out the answer and validate the block receives a reward in Bitcoins (this process is called mining.)


A blockchain is a ledger of records arranged in data batches called blocks that use cryptographic validation to link themselves together. Put simply, each block references and identifies the previous block by a hashing function, forming an unbroken chain, hence the name.

Put like this, a blockchain just sounds like a kind of database with built-in validation—which it is. However, the clever bit is that the ledger is not stored in a master location or managed by any particular body. Instead, it is said to be distributed, existing on multiple computers at the same time in such a way that anybody with an interest can maintain a copy of it.

Effectively a blockchain is a kind of independent, transparent, and permanent database coexisting in multiple locations and shared by a community. This is why it’s sometimes referred to as a mutual distributed ledger (MDL).


Transactions
A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet. The signature also prevents the transaction from being altered by anybody once it has been issued. All transactions are broadcast between users and usually begin to be confirmed by the network in the following 10 minutes, through a process called mining.

Processing
Mining is a distributed consensus system that is used to confirm waiting transactions by including them in the block chain. It enforces a chronological order in the block chain, protects the neutrality of the network, and allows different computers to agree on the state of the system. To be confirmed, transactions must be packed in a block that fits very strict cryptographic rules that will be verified by the network. These rules prevent previous blocks from being modified because doing so would invalidate all following blocks. Mining also creates the equivalent of a competitive lottery that prevents any individual from easily adding new blocks consecutively in the block chain. This way, no individuals can control what is included in the block chain or replace parts of the block chain to roll back their own spends.

What is a satoshi?
Satoshi is the smallest unit in a bitcoin and this unit is named after Satoshi Nakamoto - the alias of the bitcoin creator. Each bitcoin (1 BTC) is can have a smallest part up to 8 digits, so 1 bitcoin can be divided into 100,000,000 units and each of these bitcoin units(0.00000001 BTC) is called a satoshi.

Table of units for Satoshi → BTC

1 Satoshi
=
0.00000001 BTC
10 Satoshi
=
0.00000010 BTC
100 Satoshi
=
0.00000100 BTC
=
1 μBTC (bit, you-bit, microbitcoin)
1 000 Satoshi
=
0.00001000 BTC
10 000 Satoshi
=
0.00010000 BTC
100 000 Satoshi
=
0.00100000 BTC
=
1 mBTC (em-bit, millibitcoin)
1 000 000 Satoshi
=
0.01000000 BTC
=
1 cBTC (bitcent)
10 000 000 Satoshi
=
0.10000000 BTC
100 000 000 Satoshi
=
1.00000000 BTC


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