The Advent of Bitcoin
Now that you understand what blockchain is, it's time to look at the breakthrough that brought it into global awareness: Bitcoin.
In 2009, an anonymous person or group using the pseudonym Satoshi Nakamoto introduced Bitcoin - the first decentralized digital currency. It did not rely on banks, governments, or financial institutions. Instead, it operated entirely on cryptography, peer-to-peer networking, and blockchain.
Bitcoin's launch marked the beginning of a new era in the Internet's evolution and is widely viewed as a key milestone in the transition toward Web 3.0.
The Birth of a New Currency
Bitcoin was first described in the now-famous white paper Bitcoin: A Peer-to-Peer Electronic Cash System. This nine-page document outlined a bold idea:
- People should be able to send money to each other directly - without banks, intermediaries, or centralized control.
To make this possible, the white paper introduced the concept of a public, decentralized ledger where all transactions are recorded permanently and transparently. This ledger would later become known as the blockchain.
Bitcoin demonstrated for the first time that trust could be established through:
- Mathematics;
- Cryptography;
- Network consensus.
Instead of institutional authority.
Key Principles of Bitcoin
These foundational ideas are what make Bitcoin unique. We will explore each of them in detail later in the course, but here is a short overview:
1. Decentralization
Unlike traditional currencies issued by central banks, Bitcoin runs on a network of independent computers called nodes.
No single organization controls the system - the network collectively validates and stores all transactions.
2. Limited Supply
Bitcoin has a fixed maximum supply of 21 million coins - a rule encoded directly into the protocol. This scarcity is designed to mimic precious metals like gold and protect the currency from inflation.
As of January 2024, approximately 19.61 million bitcoins have already been mined.
3. Mining
New bitcoins enter circulation through a process called mining.
Miners compete to create new blocks by solving cryptographic puzzles, which:
- Secures the network;
- Processes transactions;
- Introduces new coins as a reward.
4. Proof of Work (PoW)
Bitcoin uses a consensus mechanism called proof of work. Miners must perform computational work to add a block, ensuring that the ledger cannot be altered without enormous computational effort.
PoW makes the blockchain resistant to fraud, tampering, and double-spending.
Bitcoin's Total Supply Over Time
Bitcoin's supply grows gradually as new blocks are added. The following graph illustrates how total supply increases until it eventually reaches the 21-million limit set by the protocol:
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Now that you understand what blockchain is, it's time to look at the breakthrough that brought it into global awareness: Bitcoin.
In 2009, an anonymous person or group using the pseudonym Satoshi Nakamoto introduced Bitcoin - the first decentralized digital currency. It did not rely on banks, governments, or financial institutions. Instead, it operated entirely on cryptography, peer-to-peer networking, and blockchain.
Bitcoin's launch marked the beginning of a new era in the Internet's evolution and is widely viewed as a key milestone in the transition toward Web 3.0.
The Birth of a New Currency
Bitcoin was first described in the now-famous white paper Bitcoin: A Peer-to-Peer Electronic Cash System. This nine-page document outlined a bold idea:
- People should be able to send money to each other directly - without banks, intermediaries, or centralized control.
To make this possible, the white paper introduced the concept of a public, decentralized ledger where all transactions are recorded permanently and transparently. This ledger would later become known as the blockchain.
Bitcoin demonstrated for the first time that trust could be established through:
- Mathematics;
- Cryptography;
- Network consensus.
Instead of institutional authority.
Key Principles of Bitcoin
These foundational ideas are what make Bitcoin unique. We will explore each of them in detail later in the course, but here is a short overview:
1. Decentralization
Unlike traditional currencies issued by central banks, Bitcoin runs on a network of independent computers called nodes.
No single organization controls the system - the network collectively validates and stores all transactions.
2. Limited Supply
Bitcoin has a fixed maximum supply of 21 million coins - a rule encoded directly into the protocol. This scarcity is designed to mimic precious metals like gold and protect the currency from inflation.
As of January 2024, approximately 19.61 million bitcoins have already been mined.
3. Mining
New bitcoins enter circulation through a process called mining.
Miners compete to create new blocks by solving cryptographic puzzles, which:
- Secures the network;
- Processes transactions;
- Introduces new coins as a reward.
4. Proof of Work (PoW)
Bitcoin uses a consensus mechanism called proof of work. Miners must perform computational work to add a block, ensuring that the ledger cannot be altered without enormous computational effort.
PoW makes the blockchain resistant to fraud, tampering, and double-spending.
Bitcoin's Total Supply Over Time
Bitcoin's supply grows gradually as new blocks are added. The following graph illustrates how total supply increases until it eventually reaches the 21-million limit set by the protocol:
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