Who launched bitcoin?
The first bitcoin transaction took place in March 2009, conducted by a person or group of people using the name Satoshi Nakamoto. By inventing blockchain technology, Nakamoto was able to solve the problem of easy copying of digital currency, which had previously allowed it to be spent multiple times - similar to how someone counterfeits banknotes by printing copies of the original bills.
The first known purchase, an exchange of bitcoins for real goods, took place in May 2010, when a certain person offered 10,000 bitcoins to anyone who could arrange to have two pizzas delivered to his home. At the time, the value of one bitcoin was $0.0015 USD. Now in bitcoins, both pizzas would be worth almost 380 million USD.
How big is the bitcoin market?
The total value of bitcoins in circulation at the beginning of February 2021 was 700 billion USD. This amount can be compared to the value of all the physical gold in the world, which is almost 9.5 trillion USD.
In other words, over a period of just over 10 years, bitcoin has reached a value that is more than 7% of the value of all gold.
It is difficult to predict the volume of daily transactions, also because some markets sometimes exaggerate their volume data for marketing purposes. CoinMarketCap, a market data services company, said daily bitcoin transaction volume in early February 2021 was about $60 billion, but other calculations of actual volume ended up being much lower.
According to another market data analytics company, Nomics, the actual volume is about USD 12 billion. By comparison, at the end of 2019, the daily physical gold trade reached 145 billion USD, in turn the daily volume of the S&P 500 U.S. stock index was about 150 billion USD.
How many cryptocurrencies are there?
Along with bitcoin, there are more than 4,000 other cryptocurrencies. Every week, new cryptocurrencies appear, while others, on the contrary, disappear. Three years ago, there were about 1,300 cryptocurrencies in the wave of popularity.
The total value of the cryptocurrency market exceeds 1 trillion USD, of which about two-thirds are bitcoins. The next largest cryptocurrency is Ethereum, with a market value of about 165 billion USD.
Where and how are bitcoins mined?
Most cryptocurrencies use mining technology to keep the blockchain on which the currency is based secure. Simply put, new bitcoins are created by computers that use random guesswork to try to find solutions to a complex cryptographic problem-it is necessary to verify and add a new block of transactions to the bitcoin block chain.
The computer, which must first find a new solution for the block, provides several new bitcoins as compensation, from among those not yet mined. In addition to the compensation in the form of new bitcoins, the miner also receives a transaction fee, which is paid by the users who made the transactions included in the block.
The algorithm automatically adapts the degree of difficulty of the cryptographic problems that the computer needs to solve, so that an average of one block is mined in 10 minutes. In this way, the bitcoin algorithm automatically compensates for the increase or decrease in computer processing speed and the number of miners.
In the early days of bitcoin it was much easier to solve mathematical problems because there were fewer miners and they used ordinary home computers. Now such equipment may no longer be able to compete, and bitcoins are mined by computers equipped with special chips that are designed to solve cryptographic problems in the bitcoin block chain.
Often thousands of these computers are assembled in large computer centers for industrial bitcoin mining, but individuals can also compete in mining.
Is it true that bitcoin wastes a lot of electricity?
Yes, it is true. All the computers that are trying to solve the problems in bitcoin cryptography waste a lot of electricity. Last year, the bitcoin network consumed 77 terawatts of electricity - more than the whole of Australia consumes.
At the same time, it's wrong to think of it as completely wasted electricity. The mining process ensures that the chain of blocks is always intact and ensures that no one can sell their bitcoins to two or more buyers at the same time.
In this regard, we can think of the cost of electricity as the cost of maintaining the security of the network.
Right now, most bitcoins are mined in northern China because of the low electricity prices there, which makes the "factories" there more efficient. Miners like Iceland for the same reason.
The higher the bitcoin price, the more widespread the introduction of new mining farms will be profitable. Here, too, we can draw a parallel with the production of traditional commodities, whether it is gold, copper, coal, or something else. If the price of the commodity in question goes up, it is profitable to produce it even at great expense.
However, electricity consumption is becoming a bigger problem, and some cryptocurrencies will switch to other methods to keep themselves safe.
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