Consensus between nodes is achieved using a computationally intensive process based on proof of work, called mining, that guarantees the security of the Bitcoin blockchain. Mining consumes large quantities of electricity and has been criticized for its environmental effects.

Based on a free market ideology, Bitcoin was invented in 2008 by Satoshi Nakamoto, an unknown person. Use of Bitcoin as a currency began in 2009, with the release of its open-source implementation. In 2021, El Salvador adopted it as legal tender. Bitcoin is currently used more as a store of value and less as a medium of exchange or unit of account. It is mostly seen as an investment and has been described by many scholars as an economic bubble. As bitcoin is pseudonymous, its use by criminals has attracted the attention of regulators, leading to its ban by several countries as of 2021.

1. History

1.1 Creation

The domain name "bitcoin.org" was registered on 18th August 2008. On 31st October 2008, a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System was posted to a cryptographic mailing list. In June 2021, El Salvador became the first country in the world to make Bitcoin a legal tender. In April 2002, the Central African Republic made bitcoin a legal tender.

1.2 Pseudonymous

One of the differences between using Bitcoin and using regular money online is that Bitcoin can be used without having an internet connection to link any sort of real-world identity to it. Unless someone chooses to link their name to a Bitcoin address, it is hard to tell who owns the address. Bitcoin does not keep track of users; it keeps track of addresses where the money is. Each address has two important pieces of cryptographic information, or keys: a public one and a private one.