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What is Bitcoin?

What is Bitcoin?

August 2, 2022
3
 min read

Bitcoin was created in 2009 by Satoshi Nakamoto (a pseudonym) to be a “peer-to-peer electronic cash system.” Let's explore how Bitcoin works and its history.

By Peter

Bitcoin was created in 2009 by Satoshi Nakamoto to be a “peer-to-peer electronic cash system.” (whitepaper)

Today, many people use bitcoin as a store of value.

How does Bitcoin work?

Bitcoin is built on a blockchain and therefore is decentralized, immutable, and open. It’s also:

  1. Hard capped: There will only ever be 21M bitcoin.
  2. Single-purpose: Many holders just want it to be a token that stores value.

Bitcoin is arguably the most secure and decentralized of all cryptocurrencies. However, it can only support 3-7 transactions per second. This is good enough for its primary use case of storing value, but projects like Stacks and Lightning are working to let Bitcoin do more things.

You can read more about why Bitcoin might be a good store of value in our guide on "Why invest in crypto?"

History of Bitcoin

  • 2008: A person using the pseudonym Satoshi Nakamoto published a whitepaper that outlined a plan for a "new electronic cash system that's fully peer-to-peer, with no trusted third party."
  • 2009: The first Bitcoin is mined.
  • 2010: A programmer named Laszlo Hanyecz makes the first Bitcoin transaction, buying two Papa John pizzas for 10,000 Bitcoin (now worth $600M+, oops).
  • 2013: Bitcoin experiences several controversies including the collapse of Mt. Gox exchange and the seizure of 26,000 BTC from Silk Road (a black market).
  • 2017: Bitcoin Cash is created as a fork of Bitcoin with larger block size to enable faster peer to peer transactions.
  • 2021: El Salvador becomes the first country to adopt Bitcoin as legal tender.

Let's cover Ethereum, the 2nd most popular cryptocurrency, next.

Up next: What is Ethereum?

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