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Bitcoin: A Short History

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Bitcoin initially entered the global vocabulary on October 31, 2008 when its famous white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System was published online by the mysterious and pseudonymously named Satoshi Nakamoto. The creation of the cryptocurrency was motivated by the desire to bypass intermediaries while also ensuring that transactions were non-reversible.

The importance ascribed to the non-reversibility of transactions was to avoid incurring the costs associated with dispute mediation as well as protecting the parties involved from fraud. In the white paper Nakamoto mentioned the possibility of people with ill intentions getting services and then reversing transactions when they had already enjoyed the services or products.

While Satoshi Nakamoto is the name associated with the bitcoin creator – it is believed to not represent one individual but rather a group of people. That has, however, not stopped some in the crypto community to go searching for an individual. One narrative claims that at the time of writing the white paper, Satoshi Nakamoto was a 37-year male resident of Japan. But the fact that Nakamoto never documented the bitcoin software in Japanese cast doubts on his supposed Japanese heritage. From the contributions that Nakamoto made to online forums others have deduced that his working hours betrayed the fact that his time zone was somewhere in the Americas.

Various individuals have actually been pinpointed as being Satoshi Nakamoto, though they have all denied this. So far all the attempts to identify Nakamoto have been in vain. While the mystery of Satoshi Nakamoto will likely remain for the foreseeable future, what is important is his contribution to mankind – a deflationary currency for the internet that does away with intermediaries. But regardless of who you believe Nakamoto to be, how do you obtain what he gifted us?

While Satoshi Nakamoto is the name associated with the bitcoin creator – it is believed to not represent one individual but rather a group of people. That has, however, not stopped some in the crypto community to go searching for an individual. One narrative claims that at the time of writing the white paper, Satoshi Nakamoto was a 37-year male resident of Japan. But the fact that Nakamoto never documented the bitcoin software in Japanese cast doubts on his supposed Japanese heritage. From the contributions that Nakamoto made to online forums others have deduced that his working hours betrayed the fact that his time zone was somewhere in the Americas.

Mining bitcoin is the process of verifying and adding transactions to the public ledger. This is carried out using specialized equipment known as ASICs (Application-Specific Integrated Circuit). For their calculating efforts, the miners are rewarded in bitcoins. Since there are many miners involved in the process of verifying and adding transactions, the reward is given to the miner who solves a computational puzzle first. The rewards are basically used to incentivize the miners who ensure that the bitcoin network works as intended.

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Currently, more than 17 million bitcoins have been mined so far. The maximum number of bitcoins that will be mined is 21 million, making the flagship cryptocurrency deflationary. And every four years the number of bitcoins that are offered as a reward to the miners are reduced. In 2009 the block reward was 50 but it has now been reduced to 12.5 per block. When all the bitcoin has been mined the creators of bitcoin envisaged that miners will be paid using transaction fees.

Various individuals have actually been pinpointed as being Satoshi Nakamoto, though they have all denied this. So far all the attempts to identify Nakamoto have been in vain. While the mystery of Satoshi Nakamoto will likely remain for the foreseeable future, what is important is his contribution to mankind – a deflationary currency for the internet that does away with intermediaries. But regardless of who you believe Nakamoto to be, how do you obtain what he gifted us?

Bitcoin is not the only cryptocurrency that exists now. While the first altcoins were developed to improve bitcoin, none has so far managed to surpass the oldest cryptocurrency by market capitalization or popularity.

Currently, there are more than 2,000 cryptocurrencies but in terms of market cap, bitcoin has a dominance of more than 53%. Some of the cryptocurrencies that have been created since bitcoin are mineable while others are not. Among the top ten cryptocurrencies by market cap you can find bitcoin cash (a fork of bitcoin), Ethereum, Litecoin, and Monero which are all minable. Coins like Cardano, XRP, and EOS are not.

Whether by design or not, bitcoin has emerged as an important digital asset that has attracted immense attention across the globe. This has led to some describing it as the ‘digital gold’ due to its finiteness that consequently contributes to its scarcity. Since bitcoin was launched in 2009, it has shown extraordinary appreciation in price.

Initially, it was worth a fraction of a cent but is now valued at over US$6,000. Initially it attracted individuals but has now begun getting the attention of institutional investors which includes pension funds. On average, investment advisors recommend putting 1% of a portfolio in cryptocurrencies which is lower than what is recommended for other investments such as stocks, real estate and bonds. But depending on performance in the future this figure could rise as bitcoin becomes more accepted as a legit asset class.

Finaly it is  subject to Personal discretion. Be alert while investing money.

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