On October 31st, 2008, “Bitcoin: A Peer-to-Peer Electronic Cash System” was posted to a cryptography mailing list published under the name Satoshi Nakamoto. Bitcoin became the first cryptoasset to be released being a digital currency that exists online in electronic form. Bitcoin is a decentralized form of currency meaning it doesn’t have a central authority that controls the amount of BTC in circulation. Bitcoin is a medium of exchange that relies solely on cryptography. It was created by an anonymous developer Satoshi Nakamoto accidentally. He was trying to create a decentralized electronic payment system based on mathematical proofs and cryptography and he came up with Bitcoin. BTC has since then brought what some would call anarchy in the cryptoasset world. It has brought so many other cryptoassets but it has remained to be the best, most valuable cryptoasset we have in the market today.
How are Bitcoins made?
This is a fair question and to those who love going technical, its music to their ears. The process of making Bitcoin is simple and very organized. BTC holders can transfer bitcoins through a peer to peer network. The transfers are tracked using a giant ledger known as the blockchain. The ledger is responsible for recording every transaction made using bitcoin. In the blockchain, each block is made up of data structures based on Merkle Trees encryption. These are used to detect fraud and corrupted files. Remember on a blockchain, you can’t alter the records whatsoever and no corrupt files can be stored on the records. If there is a fraudulent or corrupt file it is the work of the blockchain to prevent it from damaging the rest of the records in the ledger and the ledger itself.
What is mining in Bitcoin
The miners are the people on the network verifying every transaction instead of a single central server doing all the verification. Mining, therefore, is the process where every person on the decentralized peer to peer network verifies each transaction. Let’s simplify it a bit. A complex math problem is presented to the miners on a network. The first miner to solve the problem adds the verified block of transactions to the ledger (blockchain). The calculations are based on the proof that a minimum amount of energy was spent to get the answer.
No actual human beings are glued on the computers trying to solve these problems but instead, the hardware is used to do mining. After mining successfully, the Bitcoin’s in-built reward system compensates the miners with bitcoins. The reward changes per Bitcoin’s programming with the reward cutting in half every four years. Currently, the reward for a block of verified transactions is 12.5 BTC.