Since its advent in January 2009, Bitcoin’s presence in the world has increased quite dramatically. Conceived as a cryptocurrency and digital payment system, it is also beginning to take on a more physical form. The decentralized governance of Bitcoin is one the main attractions among people who are skeptical about the efficiency and fairness of a central bank. Now, with several thousands of merchants and vendors accepting payments in bitcoins and ATMs popping up, Bitcoin is quickly becoming an influencing economic force as well in various nations. So, here are some amazing facts about Bitcoin that we are sure you would enjoy reading about.
1. The founder of Bitcoin is someone known as “Satoshi Nakamoto.” No one knows who he is, what his real name is, or where he lives. As of 2017, he owns up to one million bitcoins which have an estimated value of $2.7 billion.
The only personal information available about Satoshi Nakamoto (his pseudonym) is based on claims and speculation. He is claimed to be a Japanese man born in April 1975. However, all the speculation regarding his identity was mainly focused on non-Japanese cryptographers and computer science experts residing in the United States. It was because of his use of perfect English, occasionally with British spelling, and as no Japanese labels or documents were found in his software. It is believed that he began coding Bitcoin software in 2007 and collaborated with other developers until 2010. After that, he handed over the reins to Gavin Andresen, his collaborator, and made him the lead developer of Bitcoin Core.
2. The first real-world transaction using Bitcoin was done to purchase two large, Papa John’s pizzas for 10,000 bitcoins. As of August 2017, that amount is now worth $27 million.
After the founding of Bitcoin, the early users were quite generous with sharing bitcoins. Nakamoto’s collaborator, Gavin Andresen, had even bought 10,000 bitcoins for $50 and gave them away on Bitcoin Faucet, a website he created. Another software programmer from Florida, Laszlo Hanyecz, made what is considered the first ever transaction in Bitcoin history. He bought two pizzas for 10,000 bitcoins by sending them to a volunteer in England who then made a credit card order transatlantically. Though it was only a few dollars at that time, those bitcoins are now worth over $27 million. Soon after that, a farmer named David Forster from Massachusetts started accepting bitcoins as payment for his alpaca socks.
3. Unlike what most people think, bitcoins are not unlimited. The number of bitcoins in circulation will never exceed 21 million.
Our regular monetary system is a centralized economy which means that a central bank controls or issues currency based on the amount of goods that can be traded. Bitcoin, on the other hand, is a decentralized monetary system. There is no central authority to regulate the issue of currency. The currency is, instead, created by the users or nodes of a peer-to-peer network. This often gives the impression that currency could be generated infinitely. But, Bitcoin uses a bitcoin generation algorithm which defines in advance how and at what rate currency is created.
Bitcoins are created when a user discovers a new block. A block is a file that contains permanently recorded, read-only, transaction data. The rate of block creation is adjusted every two weeks to ensure that an average of only six blocks are created per hour. That is a total of 2016 blocks in two weeks. Approximately every four years. or for every 210,000 blocks, the number of bitcoins per block is decreased geometrically by 50 percent.
As a result, the number of bitcoins in existence will not exceed 21 million (more precisely 20,999,999.9769 bitcoins) and it is believed that the last bitcoin to be mined will be on May 7, 2140. This, however, is based on current technological limitations and it is difficult to accurately predict how Bitcoin mining evolves with new changes in technology in the future.
4. The global Bitcoin computing power is 256 times faster than that of top 500 supercomputers combined!
Being a decentralized system, Bitcoin relies on a mutually beneficial relationship with miners. Miners are individuals or organizations that use the processing power of various types of processing hardware, including ad hoc ones. Mining is the process of adding transaction data to the public ledger of past transactions with the purpose of providing a secure and tamper-resistant transaction. In return, the miners receive transactional fees and a subsidy of newly created coins. So, on the whole, it creates a vast and global network of miners ensuring that the system remains decentralized and motivating people to keep the system secure.
As the competition for earning bitcoins increases so does the rate at which bitcoins are generated. And as the rate of bitcoin generation increases so does the difficulty in finding new blocks in order to compensate and regulate the rate of block creation. That means it requires immense processing power to discover new blocks. As a consequence, Bitcoin farms have cropped up around the world employing huge arrays of circuits for the purpose of mining.
By November 2013, the total Bitcoin FLOPS was 64 exaFLOPS (that’s 64 x 1018 FLOPS or floating point operations per second, a measure of computing performance while calculating real numbers). To put that into perspective, the top 500 supercomputers combined have only 0.250 exaFLOPS (25 x 1015 FLOPS). That makes the entire network of Bitcoin 256 times faster than the top 500 supercomputers combined.