What is Bitcoin?
Emerging on October 31, 2008, when a person or group with the pseudonym Satoshi Nakamoto published a whitepaper called “Bitcoin: Peer-to-Peer Electronic Cash System”, Bitcoin was born with the principle of eliminating the need to trust third-party payment systems, banks and intermediary institutions.
Today, the role of financial intermediaries in providing trust is no longer a necessity, as the two parties directly connect with each other thanks to the technology underlying Bitcoin.
The Emergence of Bitcoin: Bitcoin Whitepaper
Bitcoin was first heard of by the person or persons under the pseudonym Satoshi Nakamoto on October 31, 2008, in an email sent to a cryptography messaging group. Satoshi Nakamoto made no mention of Bitcoin in his document to promote the online payment method he calls “Bitcoin: Peer-to-Peer Electronic Cash System”.
Included in the technical details of the blockchain in the Bitcoin White Paper, Satoshi proposed a reliable online payment method without the need to trust any central authority. Bitcoin was the name of both this new payment system and the currency of this system. Although the title of the document started with Bitcoin, the word Bitcoin was not used in the document.
Who is Satoshi Nakamoto?
Satoshi Nakamoto is the person or people who created Bitcoin. The identity of Satoshi Nakamoto still remains a mystery. The name Satoshi Nakamoto first appeared in the Bitcoin White Paper published on October 31, 2008. Satoshi, whose real identity, age and whether he is still alive is unknown, is the owner of the first Bitcoins produced. He is also the first person to transfer Bitcoin.
Satoshi Nakamoto, the creator of Bitcoin, concealed his identity, enabling Bitcoin to become a community-owned cryptocurrency with no owner or centralized management. Bitcoin has managed to become a worldwide accepted cryptocurrency among thousands of cryptocurrencies in the cryptocurrency ecosystem.
How Does Bitcoin Work?
One of the most important concepts about Bitcoin is decentralization. No authority, central bank, head of state, company or organization controls the Bitcoin network. In today’s traditional financial system, the whole order is based on a central landscape. However, there is only a group of volunteer coders behind Bitcoin. All transactions and transfers take place without intermediary between individuals.
One of the factors that make Bitcoin valuable is “limited supply”. The main actors of the traditional financial system, such as the dollar, the euro, and the Turkish lira, can be printed an unlimited number of times. However, the production of Bitcoin is limited to 21 million units. One of the most basic statements of financial theories says that if supply remains constant while demand increases, the price will always increase. The fact that the demand for Bitcoin has been constantly increasing since 2008, while the supply has been limited, confirms these basic statements.
Limited Supply of Bitcoin
One of the reasons Bitcoin is likened to digital gold is that the resources of both are limited. However, although gold is a limited resource, what percentage of the total supply has been mined, processed and circulated in the market, so we do not have clear information about the remaining reserve amount. On the other hand, we know when and how much Bitcoin will be produced and how many can be produced in total in which year. A total of 21 million Bitcoins will be mined, which will be completed in 2140.
Types of supply; It is divided into 3 as Maximum Supply, Total Supply and Circulating Supply.
As of 16.06.2022; The circulating supply of Bitcoin has exceeded 19 million.
The Importance of Bitcoin Dominance
Bitcoin has been the biggest player in the cryptocurrency market since 2009, when the first production took place. Although there are many cryptocurrencies in the market, no cryptocurrency has managed to surpass Bitcoin in terms of market dominance.
Bitcoin Market Dominance or Bitcoin Dominance is a data that expresses the ratio of the market value of Bitcoin to the overall value of the cryptocurrency market.
The Importance of Bitcoin Volume
Bitcoin transaction volume is the sum of the Bitcoin buying and selling amounts in a certain period. In Bitcoin, the trading volume shows how many hands in total have been changed by investors in a given time period. Bitcoin trading volume can be calculated for a 24-hour, daily, weekly, monthly, yearly or longer period.
To invest in Bitcoin; Evaluating Bitcoin trading volume can benefit potential investors. Understanding and comparing how much interest investors have shown in Bitcoin in the past can be important in predicting the future value of Bitcoin.
Bitcoin’s Market Cap
Market Cap is a term used to measure the value of Bitcoin. Bitcoin’s market value; It is calculated by multiplying its current price by its circulating supply.
How is Bitcoin Produced? Bitcoin Mining
The miner who first validates the Bitcoin block is entitled to receive newly generated Bitcoins and transaction fees for transactions within the verified block.
All transactions on the Bitcoin blockchain are recorded from the first Bitcoin block. All transfers made are anonymous but not completely confidential.
What Is The Main Purpose Of Bitcoin?
- Users should be responsible for their financial transactions and their own money.
- Banks, companies, state institutions and organizations should be removed from being the intermediary of these financial transactions.
- Value transfers should happen 24/7, not just during business hours.
- Transfer fees should be much less.
- Transactions must be anonymous and transparent.
- Users should be able to deposit, withdraw, send and receive their money independently from any central authority.
- A currency should be produced against inflation by keeping the aggregate supply limited.
Features that Distinguishes Bitcoin from Other Cryptocurrencies
- Bitcoin is the first cryptocurrency created.
- The total supply of Bitcoin is limited to 21 million units.
- Bitcoin blockchain is decentralized.
- The person or persons who developed Bitcoin is anonymous.
- Bitcoin is the cryptocurrency with the highest market capitalization
What is Bitcoin Block Reward (Halving)?
Genesis is the only block that does not contain previous block information, as it is the first block of the blockchain to be created. In the Initial Block, 50 Bitcoins were generated as a block reward. However, this award was produced by Satoshi Nakamoto as non-spendable, non-transferable.
The Bitcoin block reward is used to identify new Bitcoins that are rewarded to cryptocurrency miners for every block they successfully process on the blockchain network. The initial block reward decreased to 25 BTC on November 28, 2012, to 12.5 BTC on July 9, 2016, and to 6.25 BTC with the halving on May 11, 2020.
The halving of new Bitcoin production, which takes place every 10 minutes, in certain periods is defined as the Halving, that is, the Block Reward Halving. Reward halving repeats every 210,000 blocks and occurs approximately every four years.
Important Developments in Bitcoin History
January 3, 2009 – Bitcoin’s Initial Block, called the “Genesis Block”, was created by Satoshi Nakamoto. Thus, the first block of Bitcoin was realized.
January 12, 2009 – The first Bitcoin transfer took place between Satoshi Nakamoto and Hal Finney.
May 22, 2010 – The payment of 10,000 Bitcoin for 2 pizzas by Laszlo Hanyecz on the BitcoinTalk forum is considered the first real Bitcoin exchange.
May 22 is celebrated as “Bitcoin Pizza Day” every year.
November 28, 2012 – The 1st Bitcoin Block Reward Halving took place. Bitcoin block reward dropped from 50 BTC to 25 BTC.
July 9, 2016 – The 2nd Bitcoin Block Reward Halving took place. Bitcoin block reward decreased from 25 BTC to 12.5 BTC.
May 11, 2020 – The 3rd Bitcoin Block Reward Halving has taken place. Bitcoin block reward decreased from 12.5 BTC to 6.25 BTC.
February 19, 2021 – Bitcoin’s market cap exceeds $1 trillion.
September 7, 2021 – Bitcoin adopted by El Salvador as the official currency. Thus, Bitcoin became the legal currency of a country for the first time.
November 10, 2021 – Bitcoin (BTC) price hits an all-time high of $69,000.