Bitcoin is a payments technology, decentralized ledger system and digital currency created in 2009 following turmoil in the traditional financial system known as the “Great Recession.” The concept for Bitcoin was first outlined in a white paper written by its pseudonymous (and still unknown) creator Satoshi Nakamoto. Per this outline, Bitcoin is intended to be a medium of exchange that is free of all middlemen and gatekeepers, which offers lower transaction fees than the traditional system and allows anyone to transact with anyone else that they like, anywhere in the world.
Bitcoin is completely digital and balances are maintained on a public and transparent ledger (called a “blockchain”), so there are no physical bitcoin anywhere in existence and bitcoin cannot be directly secured in a physical location. Transactions are also made public, so while the technology can be used pseudonymously, it is not anonymous.
Though Bitcoin does not have a central authority in control, the “double spending” of bitcoin is made virtually impossible due to the energy required to verify transactions, thus ensuring trust in the network.
In summary, Bitcoin is:
For more information on Bitcoin’s basics, visit Bitcoin Magazine’s guide.
Blockchain technology is the distributed ledger system introduced alongside Bitcoin to track and verify transactions and prevent double spending. The Bitcoin blockchain is distributed across Bitcoin nodes — individual computers that run the protocol. The data in the blockchain are collected in “blocks” and they are cryptographically linked together in a chain so that, as transactions are buried in the blockchain, they cannot be altered without changing the rest of the data that has been verified on top of it as well. This data is verified automatically at certain intervals.
Because the Bitcoin blockchain is distributed across thousands of individual computers, there is no single “point of failure” or source that controls the network. Rather, it is decentralized across many nodes.
Like Bitcoin, blockchain technology was first introduced by Satoshi Nakamoto. But the technology has now been adopted by many different groups and companies for a wide range of use cases that involve maintaining a distributed ledger.
Learn more about blockchain technology here.
Bitcoin was created by a pseudonymous developer, or group of developers, named Satoshi Nakamoto. The identity of Nakamoto is unknown to this day, making them one of the most famous unknown people in the world. While Nakamoto interacted heavily with developers to help guide and build Bitcoin in its early days, they completely disappeared in 2011, with their last known communication coming in April 2011.
Nakamoto claimed to be of Japanese origin, born on April 5, 1975. On April 5, 1933, the U.S. government, through Executive Order 6102, outlawed individual gold storage to prop up the demand for the U.S. dollar and reduce demand for gold. 1975 was the year in which the executive order was reversed.
People doubt the person behind Nakamoto was Japanese due to their native-level understanding of the English language. Nakamoto also preferred working hours which were more consistent with the U.K. time zone than that of any Asian country.
On October 31, 2008, Nakamoto published the original Bitcoin white paper, describing their blueprint for a “A Peer-to-Peer Electronic Cash System.” In January 2009 they released version 0.1 of the source code and launched the cryptocurrency by mining the genesis block.
Hal Finney (May 4, 1956 to August 28, 2014) was a cryptographic pioneer and the first person other than Satoshi to publicly use the software and file bug reports. Finney also lived a few blocks away from a man named Dorian Nakamoto, who was mistakenly accused by Newsweek of being Satoshi Nakamoto in 2014.
The writing analysis consultancy Juola & Associates compared a sample of Finney's writing to Nakamoto’s and found that it was the closest resemblance it had yet come across. However, Juola & Associates also found that Nakamoto's emails to Finney more closely resemble Nakamoto's other writings than Finney's do.
Szabo is a decentralized currency enthusiast and published a paper on "bit gold," which was one of the precursors of Bitcoin. In a May 2011 article, Szabo stated regarding the Bitcoin creator: "Myself, Wei Dai, and Hal Finney were the only people I know of who liked the idea (or in Dai's case his related idea) enough to pursue it to any significant extent until Nakamoto.”
In December 2013, a blogger named Skye Grey linked Szabo to the Bitcoin white paper by analyzing the white paper and conducting an open-ended search of articles on the web. Szabo’s bit gold articles came up as the closest matches to the writing style used in the Bitcoin white paper.
Szabo, however, has denied being Nakamoto.