The functionality of traditional currencies is that financial institutions have the ability to issue new units of traditional currencies, a result that leads to inflationary trends. In contrast, cryptocurrencies, which are based on blockchain technology, are designed so that their production volume does not have a declining value trend. Bitcoin, for example, will not have more than 21 million units in circulation, which contradicts the definition of inflation.
But what is a bitcoin and how it was created?
For the first time in 1998, Wei Dai used the term cryptocurrency as a new form of money that would replace any central authority and would essentially use cryptography to control the creation and trading of a new form of money. Almost a decade later, in 2009 the well-known developer nicknamed Satoshi Nakamoto created Bitcoin.
Satoshi said… “I am working on a new electronic money system, which works with the peer-to-peer system (P2P), without the presence of a third, trusted party. The document is available at the email address Here. Its main features: The peer-to-peer network prevents double costs. Without publishers or other third parties. Participants may be anonymous. New coins are created through a Hashcash Proof of Work-POW”
That was what made Bitcoin known to the general public and it was essentially the solution that everyone was looking for, to create a currency that would make online transactions secure. Bitcoin was not the first attempt in this direction. Other attempts to create digital currencies preceded the publication of Satoshi Nakamoto in 2008.
The main parties of the blockchain network
Initially, it would be helpful to understand that no one ‘manages’ Bitcoin, as its existence is independent of any organization. There are basically different groups of people who exert their influence in different ways:
- Bitcoin users
- The miners, that is, those who support its operation
- Companies and web pages that provide Bitcoin services
- The developers
- Those who pay developers to keep the code “alive” (investors)
When a transaction is executed, the user enters the number of bitcoins as well as the recipient’s public key, and this transaction bears the sender’s signature (private key). Each bitcoin “user” has a wallet in which all addresses belonging to him have been stored. Using each time one of these addresses the “user” can send bitcoins to any other “user” and thus complete a transaction. This is a brief overview of how the transactions work. These are some basic points of bitcoin’s dynamic. Keep exploring to learn more!
