Bitcoin – what is it and where did it come from?

The internet has revealed many previously unexplored secrets, while showing us a whole new world we are still learning about. Nothing illustrates this better than cryptocurrencies - we use them, we create them, yet most of us still do not fully understand where they came from and how they really work. In our last article on the subject we covered the basics of cryptocurrencies in general, while today we will take a closer look at the history and uses of the best known of them all - bitcoin.

What is bitcoin?

This is the fundamental question, and the answer seems simple. In short, bitcoin (BTC) is a cryptocurrency, and not just any cryptocurrency - it is the first one ever created. Like other cryptocurrencies, bitcoin was developed outside financial institutions, which makes it something of a threat to the financial status quo. Even so, most countries in the world recognise cryptocurrencies as a monetary unit, and among them practically all recognise bitcoin specifically, even if they do not recognise others.

As the best-known and most recognisable cryptocurrency, bitcoin is by far the most widespread, which means it can be used through public channels, such as exchange bureaus, banks, or even to pay for shopping in stores.

What sets bitcoin apart?

Many people ask themselves a basic question - if bitcoin is a virtual currency, what determines its real-world value? The answer lies in the so-called blockchain. Blockchain is the name of an open, peer-to-peer network with no central computers, which anyone can access using apps, points of sale, or exchanges. It is the record in the chain of blocks that means bitcoin cannot be double-spent, counterfeited, or stolen. This is because all bitcoin transactions are public and can be easily verified.

This is what gives bitcoin its value and lets it be used like any other currency, because the blockchain is an entity that cannot be forged in any way. The number of bitcoins is limited and there will never be more of them than was set from the start (around 21 million), which is why faking a transaction is simply impossible, and every transaction is completely irreversible. In addition, all the transaction ledgers form a body of data encrypted using advanced cryptographic methods. Bitcoin therefore stands out not only for its strong reputation and stable value - it is also one of the best-secured cryptocurrencies.

How was bitcoin created?

Interestingly, the creator of bitcoin remains something of a mystery to this day. For years it has been believed that bitcoin was created in 2008 by someone using the pseudonym Satoshi Nakamoto. It is not known whether that is a real name, or whether it conceals a single person or an organisation made up of scientists, cryptographers, mathematicians, and so on. In 2015, Craig Steven Wright claimed that he was the one behind the Nakamoto pseudonym, but he provided no conclusive evidence to confirm it.

Bitcoin can be used in all kinds of transactions, representing various monetary units - but more on that in the next article.