What is bitcoin?

Posted by Edward William on July 15th, 2021

Where does bitcoin come from?

The process by which bitcoins are generated is called mining. Using powerful computer processors, individual miners or groups working together essentially solve a complex mathematical problem, which not only uncovers new bitcoin, but also serves to maintain the security and integrity of all bitcoin transactions that take place on the network. Learn more about this see Paraiba World.

Specifically, transaction details resulting from the transfer of bitcoin around the world are collected into a list called a block. It’s up to miners to confirm those transactions and write them into a general ledger, which is essentially a long list of blocks, known as the blockchain. Anyone can access the blockchain to explore any transaction made between any bitcoin addresses, at any point on the network.

When a block of transactions is created, miners put it through a complicated process involving a hash algorithm and a nonce, which this blog from Coindesk describes in greater detail for those who are so inclined. In return for all their hard work maintaining blockchain, miners earn bitcoins for successfully completing each complex cryptographic hash. The mining process makes use of various checks and balances to ensure that the system’s data remains secure, as tampering with data effectively prevents the production of new bitcoins.

There is a finite number of bitcoins to be discovered — 21 million to be exact — and the process of mining inherently increases in difficulty over time as a way of limiting the number of bitcoins found each day. It is predicted that all 21 million bitcoins will be mined by 2140.

Who created bitcoin?

It only makes sense that a cryptocurrency’s origin story should be shrouded in mystery. The name Satoshi Nakamoto has been associated with its invention ever since the first digital paper on bitcoin emerged in 2008. But even now, almost 10 years later, we are no closer to knowing with certainty just who Satoshi Nakamoto is or whether bitcoin was actually the result of a team of people working together instead.

So far, Hal Finney, Dorian S. Nakamoto, Craig Wright, and Nick Szabo, among others, have been considered possible candidates. As an homage to bitcoin’s purported creator, a satoshi is the smallest divisible amount within one bitcoin, representing 0.00000001 bitcoin or one hundred millionth of a bitcoin.