Quick Lessons about Cryptocurrencies and Bitcoin
The Bitcoin (฿) is a decentralized digital cryptocurrency, i.e., not belonging to a central bank; It can be sent from user to user in a peer-to-peer network without the need for intermediaries.
The first proposal based on the concept of “cryptocurrency” were the B-money Wei Dai and the bit-gold Nick Szabo, who also investigated some additional aspects, including a fault-tolerant protocol agreement based on quorum addresses for storing and transferring the chained test, which was vulnerable to Sybil attacks. Hal Finney developed a reusable test algorithm (RPOW) using Hashcash. Before the release of Bitcoin, there was a series of digital technologies for cash, starting with issuers according to the ecash protocols David Chaumy Stefan Brands. Back Adam Hashcash developed a working test plan to control spam.
Before we dive right into the details surrounding the cryptocurrency, we must have some historical context:
On August 18, 2008, the domain name bitcoin.org was registered. Later that year, on October 31, a link to a document written by Satoshi Nakamoto, named “An electronic cash peer-to-peer” was sent through a Cryptography mail list, this document outlines methods on how to use a peer to peer network to generate what’s described as “a system for electronic transactions without relying on trust.” On January 3, 2009, the Bitcoin network was born with the genesis extraction block Bitcoin Satoshi Nakamoto (block number 0) rewarding up to 50 bitcoins. Embedded in the Coinbase of this block was the text:
The Times (03 / Jan / 2009) Chancellor on the brink of the second bailout for banks
The text refers to a headline The Times published on January 3, 2009, which has been interpreted as a timestamp both for the genesis and as a disparaging remark about the instability caused by fractional-reserve banking. The first open-source customer, Bitcoin, was released on January 9, 2009, hosted on SourceForge.
One of the first supporters to adopt Bitcoin and recipient of the first bitcoin transaction was the programmer Hal Finney, who downloaded the Bitcoin program on the day it was released, and received ten bitcoins. The World’s first Nakamoto Bitcoin transaction happened on January 12, 2009. Other early supporters were Dai Wei and Nick Szabo.
In the early days, it’s estimated that Nakamoto mined at least 1 million bitcoins. Before stepping down from Bitcoin, Nakamoto handed the reins to the developer Gavin Andresen, who then became the developer for bitcoin at the Bitcoin Foundation. The first Bitcoin transaction done through the Bitcoin forums was valued at BTC 10,000, used to buy two pizzas at Papa Johns, indirectly delivered.
On August 6, 2010, they found one of the greatest vulnerabilities in the Bitcoin protocol. The transactions weren’t properly verified before being included in the transaction log or Blockchain, enabling economic constraints to bypass Bitcoin users creating an indefinite number of bitcoins in the process. On August 15, people started abusing this vulnerability; someone generated more than 184 billion Bitcoins in a transaction and then sent them to two different addresses on the network. Within hours, the transaction was discovered and deleted from the transaction log after the error was corrected, and the network forked to an updated version of the Bitcoin protocol. This was the only major security flaw discovered and exploited in the history of Bitcoin.