Bitcoin is a cryptocurrency, a digital asset designed to work as a medium of exchange that uses cryptography to control its creation and management, rather than relying on central authorities. Prior to the release of bitcoin there were a number of digital cash technologies starting with the issuer based ecash protocols of David Chaum and Stefan Brands. In the bit gold proposal which proposed a collectible market based mechanism for inflation control, Nick Szabo also investigated some bitcoinwisdom bitcoin enabling aspects including a Byzantine fault-tolerant asset registry to store and transfer the chained proof-of-work solutions. The possibility that Satoshi Nakamoto was a computer collective in the European financial sector has also been discussed.
On 18 August 2008, the domain name bitcoin. 2009 Chancellor on brink of second bailout for banks. The text refers to a headline in The Times published on 3 January 2009. This note has been interpreted as both a timestamp of the genesis date and a derisive comment on the instability caused by fractional-reserve banking.
The first open source bitcoin client was released on 9 January 2009. One of the first supporters, adopters, contributor to bitcoin and receiver of the first bitcoin transaction was programmer Hal Finney. Finney downloaded the bitcoin software the day it was released, and received 10 bitcoins from Nakamoto in the world’s first bitcoin transaction on 12 January 2009. In the early days, Nakamoto is estimated to have mined 1 million bitcoins. The value of the first bitcoin transactions were negotiated by individuals on the bitcoin forum with one notable transaction of 10,000 BTC used to indirectly purchase two pizzas delivered by Papa John’s. On 6 August 2010, a major vulnerability in the bitcoin protocol was spotted. Transactions weren’t properly verified before they were included in the transaction log or blockchain, which let users bypass bitcoin’s economic restrictions and create an indefinite number of bitcoins.