Satoshi Nakamoto is considered to be the founder of bitcoin, but the actual identity of Satoshi Nakamoto is not known, and we don’t know if the name represents a single person or a group.
The bitcoin system, in simple terms, is a combination of a peer-to-peer file sharing network like Napster. The peer-to-peer music sharing application and cryptographic technologies that use digital signatures made bitcoin possible.
In 2008, Nakamoto published a paper on bitcoin that detailed the concept of cryptocurrencies. Nakamoto, who was active online for the next few years, disappeared in 2012 from the online world, leaving the open source platform to enthusiasts and supporters across the world.
Nakamoto wrote of a transparent transaction system that competes with services like Visa (V) and Mastercard (MA). He wanted transactions to be irreversible to protect the sellers and remove unwanted control imposed by the financial institutions (XLF).
The Genesis Block
The first block of cryptocurrencies was mined by Nakamoto, resulting in the creation of 50 bitcoins. This first block of bitcoins is referred to as the Genesis Block. (We’ll discuss the process of creating bitcoins in the next few parts in this series.)
The bitcoin program stipulates that only 21 million bitcoins can be mined and thus limited supply in the future is dictating the price of bitcoin today. Bitcoin is traded like stocks in the S&P 500 Index (SPY), where the difference in demand and supply dictates the price.
The growth of bitcoin
The Genesis Block marked the beginning of the bitcoin revolution, according to bitcoincharts.com, and a total of ~16.5 million bitcoins have been mined so far through nearly 482,000 blocks. Bitcoin is traded in over-the-counter exchanges that are set-up exclusively for cryptocurrency trading and mostly traded in US dollar (UUP) terms.
In the next part, we’ll discuss how bitcoins are created.