1. Introduction

Bitcoin is a form of digital currency that operates without the need for a central bank. Instead, it relies on a network of computers distributed across the globe, which anyone can access by downloading open-source software – called Bitcoin wallet. Bitcoin was created in 2008 and launched in 2009, making it the first cryptocurrency. Users can send and receive digital money, called Bitcoin (BTC), which cannot be censored or spent more than once.

Bitcoin’s decentralized, censorship-resistant, secure, and borderless nature makes it appealing for various use cases, such as international remittances and payments where individuals want to keep their identities private. Bitcoin’s finite supply of coins has made it popular among investors who view it as a store of value, often referred to as “digital gold.”

When a user makes a Bitcoin transaction, they broadcast it directly to the peer-to-peer network known as the blockchain. Each participant of the Bitcoin blockchain, a ledger that records all transactions, has an identical copy of the network stored on their devices. Additionally, the blockchain database records and validates transactions through a process called mining. Although mining sounds like a labor-intensive process, it is done by supercomputers that process complex equations and problems in which new blocks of transactions are recorded.

The blockchain is a secure append-only ledger that makes it difficult to modify or delete data once it has been added. The blockchain enforces this by including a pointer to the previous block in every subsequent block. The pointer is a hash of the previous block, making it impossible to edit an old entry without invalidating the blocks that follow.

Bitcoin is legal in most countries, but the regulatory landscape surrounding it is still highly underdeveloped. Before investing in cryptocurrency, it’s essential to read up on the laws of your jurisdiction.

Bitcoin’s origins are shrouded in mystery, as the identity of its creator, Satoshi Nakamoto, remains unknown. The person or group behind the pseudonym published the Bitcoin white paper and software in 2008 and launched the cryptocurrency in 2009. Although Satoshi vanished in 2010, their legacy continues to shape the world of cryptocurrency.

While Bitcoin is often associated with blockchain technology, the concept of a chain of blocks existed long before its creation. In the early 1990s, Stuart Haber and W. Scott Stornetta proposed a system for timestamping documents using unalterable data structures secured by cryptographic techniques. Satoshi’s white paper does not use the term “blockchain,” but the technology it describes shares similarities with Haber and Stornetta’s proposal.

Bitcoin was not the first attempt at digital cash, as earlier schemes laid the groundwork for Satoshi’s invention. DigiCash, founded by cryptographer and computer scientist David Chaum, introduced a privacy-oriented solution for online transactions in the late 1980s. It was a centralized system and went bankrupt when e-commerce had not yet taken off. B-money, proposed by computer engineer Wei Dai in the 1990s, suggested a Proof of Work system and the use of a distributed database where users sign transactions. Although it did not make it past the draft stage, b-money influenced the development of Bitcoin.

Similarly, Bit Gold, created by computer scientist Nick Szabo, is often considered a precursor to Bitcoin. Bit Gold proposed a ledger that recorded data strings originating from a Proof of Work operation, similar to Bitcoin’s blockchain. While Bit Gold was not developed further, its similarities with Bitcoin cement its place in the history of digital cash.

Today, Bitcoin’s decentralized and censorship-resistant nature makes it appealing for international remittance and payments where individuals want to keep their identities private. Its finite supply of coins has also made it popular as a store of value, earning it the nickname “digital gold.” However, the regulatory landscape surrounding cryptocurrency is still highly underdeveloped, making it essential to read up on the laws of your jurisdiction before investing in Bitcoin.