Reviewed by Oct 05, 2020| Updated on
Bitcoin (B), a first of its kind cryptocurrency, is a decentralised digital currency which can be transferred from one user to another through a peer-to-peer technology for any services availed. The concept of Bitcoin came into existence in October 2008 after a pseudonymous individual/group with the name Satoshi Nakamoto authored a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”.
Nakomoto soon mined the first bitcoin in January 2009 after creating the first block of the blockchain. The smallest unit of bitcoin is 100 millionths of one bitcoin is also named after the creator Satoshi.
A blockchain is a public distributed ledger which tracks all bitcoin transactions after being verified by network nodes with the help of cryptography. Each transaction is considered as a block and once confirmed, they are added to the blockchain.
However, to limit the circulation of the cryptocurrency, Satoshi Nakamoto made sure that the maximum number of Bitcoins that can be mined and circulated does not exceed 21 million.
Independent individuals and firms with exceptional computational power who act as the decentralised authority in the Bitcoin network are called "Bitcoin miners". In addition to the transaction fees which is paid in bitcoin, the miners are rewarded with new bitcoin to keep them motivated.
It was in the year 2017 when the value of Bitcoin flew off the charts. When the year began, the value of one Bitcoin approximately stood around USD 800-900. As the demand for the cryptocurrency surged during the year, independent companies and individuals also began mining Bitcoin extensively.
Due to the limited number of Bitcoin left in the system, demand for the digital currency touched new highs and at one point of time towards the end of the year 2017, the value of one Bitcoin almost reached a whopping USD 20,000!
Despite the popularity that Bitcoin has gained over the years, it has been criticised for its use in illegal trade. Also, being a decentralised digital currency, i.e. no central authority to keep track of the transactions, many countries have criminalised the use of bitcoin and shut down cryptocurrency exchanges.