Bitcoin is a digital asset also known as digital gold designed to work as a medium of exchange that uses cryptography to control its creation and management without the involvement of the central bank and other financial institutions. Bitcoin is a cryptocurrency created in 2008 by an unknown person or a group of unknown people using the name Satoshi Nakamoto. Bitcoin was made official in 2009 when its source code was released as open source software. According to the research produced by Cambridge University in 2017, there were 2.9 to 5.8 million people using a cryptocurrency wallet, most of those users were using bitcoin. In 2020, almost everybody on earth who has access to the internet knows about bitcoin.
DECENTRALIZED DIGITAL CURRENCY
Bitcoin is the first currency that was totally decentralized beyond the control of any financial power because of the lesson learned from the failure of the centralized economic system. At the inception of bitcoin, so many people believed it was a scam, even today, some people still have the belief that the digital currency is illegal and shouldn’t be accepted as a means of payment. However, digital gold is part of our future and a lot of people are realizing that already. Bitcoin is based upon a blockchain that contains a public a ledger of all the transactions in the bitcoin network. The participants using computer power are called miners and they get block rewards as an incentive to keep mining.
In May 2010, the first transaction of bitcoin for physical goods took place between a teenager named Jeremy Sturdivant and a programmer named Laszlo Hanyecz. The programmer offered users on bitcointalk.org forum 10,000 bitcoin in exchange for two pizzas then Jeremy accepted the bitcoin offered by Laszlo and sent him two pizzas from Papa John’s. In May 2011, Satoshi sent a short mail to the core developer of bitcoin that he had moved on to other things and that the future of bitcoin was in safe hands.
To maintain the total supply of bitcoin projected which is 21 million, the rewards given to miners for each new block generated are cut into half and it happens once every four years. As Swanepoel stated “When bitcoin was first released in 2009, the reward was 50 bitcoin per block. Halvings are programmed to take place every 210,000 blocks mined, which takes roughly four years” so the rewards of the miners are cut in half once every four years to maintain the projected supply. The first bitcoin halving took place in 2012. The reward for mining a new block was slashed from 50 bitcoin to 25 bitcoin. The second halving took place in 2016, the halving event cut miners’ rewards to 12.5 BTC for each block mined. The third halving is set to take place this month (May 2020), it will cut rewards for every block mined to 6.25 BTC. By 2140, the whole 21 million bitcoin projected will have been mined. No one knows if there will be an extension of supply but we have a lot of time to prepare and wait for what will be the end of the digital gold.