/MINING ACADEMY/ What is Bitcoin?/

What is Bitcoin?

Category:Mining FAQAuthor:Jessica2021.11.17

1. The origin of BTC


In 2008, the global financial crisis broke out. Countries implemented quantitative easing to alleviate the financial crisis, but this led to inflation and currency devaluation.


To solve the problem of inflation, Satoshi Nakamoto proposed the concept of Bitcoin (BTC) on November 1, 2008.


The idea behind BTC is to abolish the issuing agency (decentralization), instead using a specific algorithm to generate currency, and the accounting is done via many nodes (i.e., users) in the P2P network. The algorithm fixes the total amount of BTC at 21 million to prevent inflation. Not only that, as more and more people recognize BTC, it became more and more scarce, and its value grew, causing deflation.


BTC was officially launched in January, 2009. Since then, it has gone from being effectively worth $0 to its current value of $32,053.40 (data from QKL123, July 22, 2021).


2. The history of BTC


Throughout the history of BTC, the price of the currency has experienced three-step gains, and all three occurred after halving.


This so-called halving refers to the halving of the bookkeeping reward.


The accounting work that revolves around BTC needs to be completed by many users in the P2P network. The network uses BTC as an incentive for active bookkeeping and sends them to users who complete these tasks. How are bookkeepers chosen fairly from among the many users? Satoshi Nakamoto's method is to ask mathematical problems. The user needs to use a device to calculate the answer to questions provided by the network, and the first user to answer correctly will receive the right to bookkeeping and BTC rewards. This process is known as mining.


Mining is a method of issuing new BTC and is at the source of the BTC economic ecology.


There are 21 million BTCs in total. Initially, the billing reward was 50 Bitcoins, but for every 210,000 billings, the billing reward is reduced by half. The Bitcoin network bills once every 10 minutes, and the interval between two halvings is about 4 years.


Initially, BTC was worth nothing. It was not until May 22, 2010 that the first BTC transaction occurred in the real world when Florida, USA’s Laszlo Hanyecz purchased two pizzas with 10,000 BTC. At that time, two pizzas were about 25 USD (1 BTC = 0.0025 USD), giving the BTC its physical value for the first time. This day is also known as Bitcoin Pizza Day by the crypto community.


On July 18, 2010, the BTC exchange Mt. Gox went online. On that day, BTC price was 5 cents (1 BTC = 0.05 USD).


On February 9, 2011, BTC reached parity with the USD for the first time (1 BTC = 1 USD).


On November 28, 2012, BTC ushered in the first halving, and the price of the currency began to rise from 12.35 USD. Nearly one year later, on November 30, 2013, it reached a peak of $1,149.14 and then retreated sharply, plunging more than 51% at one point, falling to as low as 203.86 USD and signaling the start of a two-year bear market.


On July 9, 2016, BTC ushered in the second halving, and the price of the currency began to rise from $653.70. Nearly one and a half years later, on December 17, 2017, it reached a peak of 19,535.70 USD, but then retreated sharply, falling more than 67% at one point, reaching a low of $3,209.76 and starting a one-year bear market.


On May 12, 2020, BTC ushered in the third halving, and the price of the currency began to rise from US$8,879.80. Nearly one year later, on April 13, 2021, it reached a peak of 63,000 USD. Subsequently, it fell sharply, with a drop of more than 47% at one point, reaching a low of 29,987.31 USD (as of July 22, 2021).


The three tiered increases in the price of BTC all occurred within one to one and a half years following the halving. After peaking, there will be a 50%-70% callback within 2 months, and then enter the slow bear until the next halving.


Despite fluctuations, each halving will bring the currency price to a new level, and the bottom of the currency price has been increasing. Overall, the currency price shows a trend of volatility and increase.


Everyone should own BTC.


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