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2008
Bitcoin
Satoshi Nakamoto (pseudonym)
“Bitcoin was the first digital currency to gain mainstream use and demonstrate a practical application for blockchain, the powerful concept on which Bitcoin is based. Invented in 2008 by “Satoshi Nakamoto,” a pseudonym, Bitcoin immediately caught the interest of cypherpunks and cryptographers but was slow to gain broader adoption.
In the world economic system, most transactions don’t involve the exchange of cash but rather the movement of bits in banks’ computers. Bitcoin works much the same way, except that cooperating computers, rather than countries, mint the money. Every customer’s balance is public; the Bitcoin system is based upon an open, common ledger that records every single Bitcoin transaction that has ever occurred. Collections of transactions—called blocks—make up the links in this ledger, which is called the blockchain.
If Jean wants to send Pat five bitcoins, Jean sends a message to the Bitcoin network, which is made up of computers called miners. The miners verify the proposed transaction is legitimate, using the parties’ digital signatures and reading the entire blockchain to make sure that Jean has at least five bitcoins in the ledger. Next, the miners race to be the first to solve a complex math puzzle that includes Jean’s transaction and every other transaction in the network’s pool. The first miner that solves the puzzle sends the solution to the other miners, in the process confirming the pending transaction, minting 50 bitcoins for the miner, adding the completed puzzle to the Bitcoin blockchain, and starting all of the miners on the next puzzle.
On May 22, 2010, Laszlo Hanyecz paid 10,000 bitcoins to have someone deliver him two pizzas. It was the first Bitcoin transaction for a physical object. At the time, those bitcoins were worth about $40; by 2017, they were worth more than $20 million. May 22 is now known as Bitcoin Pizza Day.
Bitcoin is an open source project, and numerous digital currencies over the years have mimicked or improved upon the original concept. Recently there have been efforts to separate the blockchain concept from the financial system and use it as a public record to memorialize contracts, healthcare records, and other kinds of information.”
SEE ALSO Digital Money (1990)
Bitcoin, in which cooperating computers “mint” money, is an increasingly popular payment method.