The invention of Bitcoin & Worldwide acceptance

By Lumai Mubanga. [email protected]

With B-Money, HashCash and DigiCash having laid the foundation as bitcoin Predecessors, Bitcoin was set to do what no other cryptocurrency before it had ventured to do; create an anonymous, trustless, decentralized currency. Instead of putting trust in any human or human organization, the bitcoin protocol was set to attempt putting full trust in math, cryptography, and logic.

Therefore, even if no individual user would be trusted in the network, the bitcoin protocol would. This cryptocurrency relies heavily on the computational power to cast votes. This is the principle known as proof – of – work. In a white paper written by Santoshi in 1980, it was stated that the proof of work principle was meant to enforce a “one-CPU-one-vote” system. This implied that every computer on the network had the ability to cast only one vote in the consensus process.

In addition, based on the idea presented by David Chaum from DigiCash, each person would maintain their own identity through public and private keys. They would then identify themselves through blind signature. This would ensure that every user would maintain his or her own privacy until such a time that they choose to voluntarily reveal themselves.

As in the B-Money’s protocol were every user maintained their own database to keep track of how much money belonged to each user, the Bitcoin development ensured that every node on the network maintained its own copy of the block chain.

Another innovative designed in the development of Bitcoin was its deflationary property. As a deflationary currency, Bitcoin was designed to be limited in amount, specifically, 21 million only. Every bitcoin miner would get a block reward for finding a block, but this block reward would decrease over time.

Initially, it began at 50 bitcoins and this would be halved every 210, 000 blocks. This will eventually result in 0 (zero) block reward, at which point 21 million bitcoins would have been minted. The implications of this design is that, there are only 21 million bitcoins that would be mined in total unless the Bitcoin protocol is redesigned to allow for a larger supply. Going by the halving mining strategy to keep the bitcoin deflationary, current projections point to the year 2140 as the year when the last bitcoin will be mined. According to the buybitcoinworldwide website that claims that all data and stats are in real time, there are currently 18,186,825 bitcoins in existence. This number changes about every 10 minutes when new blocks are mined. Right now in 2020, each new block adds 12.5 bitcoins into circulation.

When and how did the first bitcoin transaction occur? A man named Laszlo Hanyecz asked for Pizza in exchange of 10, 000 bitcoins. On May 22, 2010, he received a $25 order of pizza in exchange for his bitcoins. This was the first ever bitcoin transaction! Thus, bitcoin moved from mere worthless Internet money to something with real value. Before this purchase, bitcoin then was merely an online hobby but after this transaction, bitcoins were validated as legal tender for the purchase of goods.

It took years of development before bitcoin became accepted as legitimate technology and it still have a long way to go before it reaches worldwide legitimacy.