Bitcoin and Cryptocurrency

Bitcoin, created by the pseudonymous Satoshi Nakamoto in 2009, was the first practical implementation of blockchain technology. It introduced a peer-to-peer electronic cash system that operates without banks, governments, or any central authority.

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The Origins of Bitcoin

Date	Event
31 October 2008	Satoshi Nakamoto publishes the Bitcoin whitepaper: "Bitcoin: A Peer-to-Peer Electronic Cash System"
3 January 2009	The genesis block (Block 0) is mined
12 January 2009	The first Bitcoin transaction: Satoshi sends 10 BTC to Hal Finney
22 May 2010	"Bitcoin Pizza Day" — Laszlo Hanyecz pays 10,000 BTC for two pizzas
2011	Bitcoin reaches parity with the US dollar (1 BTC = 1 USD)
2017	Bitcoin reaches nearly 20,000 USD; altcoin boom begins
2021	Bitcoin reaches an all-time high of ~69,000 USD; El Salvador adopts BTC as legal tender

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How Bitcoin Transactions Work

UTXO Model

Bitcoin uses the Unspent Transaction Output (UTXO) model:

Alice has 5 BTC (from a previous transaction output).

Alice wants to send 3 BTC to Bob:

• Input: Alice's UTXO (5 BTC)
• Output 1: 3 BTC to Bob's address
• Output 2: 1.9999 BTC back to Alice (change)
• Fee: 0.0001 BTC (implicit: input - outputs)

Alice signs the transaction with her private key.

Transaction Lifecycle

1. Alice creates and signs a transaction
2. The transaction is broadcast to the Bitcoin network
3. Nodes validate the transaction (signature, UTXO existence, no double-spend)
4. Miners include the transaction in a candidate block
5. A miner finds a valid Proof of Work and broadcasts the block
6. Nodes verify and add the block to their chain
7. After ~6 confirmations (~60 minutes), the transaction is considered final

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Bitcoin's Key Parameters

Parameter	Value
Block time	~10 minutes (target)
Block size	1 MB base + SegWit witness data (~4 MB effective with SegWit)
Maximum supply	21 million BTC
Current block reward	3.125 BTC (after April 2024 halving)
Halving interval	Every 210,000 blocks (~4 years)
Difficulty adjustment	Every 2,016 blocks (~2 weeks)
Throughput	~7 transactions per second (on-chain)
Consensus	Proof of Work (SHA-256)

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Bitcoin Mining and Halving

The block reward halves approximately every four years:

Halving	Year	Block Reward	Cumulative Supply (approx.)
Genesis	2009	50 BTC	0
1st	2012	25 BTC	10.5 million
2nd	2016	12.5 BTC	15.75 million
3rd	2020	6.25 BTC	18.375 million
4th	2024	3.125 BTC	19.6875 million