Today, we will talk about the world’s most expensive Pizza transaction. A pizza worth ₹2,800 crores. We will talk about Satoshi Nakamoto’s obvious role in BitCoin and Blockchain.
Lastly, we will also talk about how BitCoin and the Blockchain technology work. And most importantly about whether you can mine or not. We will be discussing all these topics today.
What is Bitcoin Pizza Day?
Bitcoin Pizza Day is celebrated every year on 22nd May. The story behind it, is very interesting. On 22nd May 2010, a Software Developer named Laszlo Hanyecz bought two Pizzas with 10,000 Bitcoins.
At the time, Bitcoin’s value was only $41. And today, the value of 10,000 Bitcoins is ₹2,800 crores.
Laszlo Hanyecz had 1 Lakh Bitcoins. If he held them today, their value would be ₹28,000 crores. In memory of this infamous incident, 22nd May is celebrated as Bitcoin Pizza Day.
History of Bitcoin
Recently, Bitcoin has been trending around the world. Everybody is talking about Bitcoin and Cryptocurrency.
The returns Cryptocurrency has given, it’s a topic of interest. From the start i.e, 2010-11 till today, Bitcoin’s price has increased a lot.
But if we talk about the last few years, the returns are quite shocking. If you bought a Bitcoin in 2016 at the price of ₹39,000, Its value in August 2021 would be ₹30 Lakhs.
Similarly, if you bought one Ethereum in 2016 for ₹700, that single Ethereum is worth ₹1.7 Lakhs today. In the last 5 years, Bitcoin has given a compounded return of 137% every year.
Ethereum has given a compounded return of 182% and Lite Coin has given a return of 108%.
|Cryptocurrency||Year 2016||Year 2021||Return %|
History of Currencies
If we talk about the history of currencies, they have been changing constantly for a long time now. The Barter System was used years ago. Later, Barely was as currency in a lot of places.
Then came Gold and Silver coins. Copper coins were used as well. Later emerged different currencies for different Kingdoms. Then came Digital Currency.
What is Bitcoin Cryptocurrency
Now, we have Cryptocurrency, which are based on Blockchain Technology and Bitcoin is the first Cryptocurrency based on this technology although Bitcoin started in 2009, its history goes far back.
In 1983, Cryptographer, David Chaum, Built the world’s first Digital Currency Transaction System. He named it “E-Cash.” Many platforms were made after this, such as Digi Cash.
Many different companies were built on its basis. One of them was Elon Musk’s X.com Later, PayPal acquired X.com And Elon Musk became a part of the PayPal team.
Then in October 2002, Ebay bought PayPal. At the time, Elon Musk had an 11.7% stake in PayPal. Based on this, he got $100 million for that transaction. With the help of this money, he started many of his companies.
Main purpose of Bitcoin
Cryptocurrencies were made to work on two main problems:
- Eliminate the Mediator
The first one was to eliminate the mediator. Whenever we make a transaction, the bank acts as a middleman.
So the main idea of Cryptocurrency is to eliminate the middleman and the transaction takes place between the sender and recipient, there is no middleman involved. This requires the help of miners.
2. Reducing time and transaction costs
The other main reason is to reduce transaction costs. When we send money to a foreign country, It takes a lot of time and banks charge high transaction fees.
An attempt was made to solve this problem using Bitcoin. Talking about Cryptocurrency transactions, You must have a Crypto Currency wallet.
How does Bitcoin work ?
When you open a cryptocurrency wallet, you get an address with it how banks have unique account numbers, similarly, wallets have an unique address.
Let’s assume you have to transfer some cryptocurrency to a friend you will have to give your friend your BitCoin wallet address.
Using the wallet address, your friend can easily transfer you the cryptocurrency. So the question is if there is no mediator or bank here, then who will verify the transactions?
For example, your friend is sending you 0.1 Bitcoin. So, the first step is to check whether your friend has 0.1 Bitcoin in his account or not. And also check if the address they entered is correct or not.
So the work of verifying all this is done by Miners.
How does Blockchain work ?
If we talk about Bitcoin’s back end, all of these work based on Blockchain technology. So every transaction that happens is saved in a block.
How banks save transactions on files, here the transaction is saved on a block. When a lot of transactions are saved in one block, it fills up. Then, another block is created and all other transactions need to be filled there.
Then a third block is created and the blockchain goes on. This is what we call Blockchain. As soon as a block fills up, the miners receive a puzzle.
Whoever solves the puzzle first, gets a reward. That reward is in the form of a Bitcoin.
This is a puzzle because as soon as the block fills up, this puzzle is used to seal that block, So nobody can manipulate the block later.
A lot of miners try to solve the puzzle in groups so they get good rewards. In 2009, solving the puzzle would give you 50 Bitcoin.
In 2012, it became 25 Bitcoin. And in 2016, it became 12.5 Bitcoin. They say every 4 years, the reward reduces by half. Some miners try to solve the puzzles alone, some in groups.
So this is how the miners maintain the entire system and in turn they get a reward. Bitcoin and other cryptocurrencies are criticised because they require lot of power consumption.
Power consumption in Bitcoin Mining
Every year Bitcoin uses 113 TWh in power consumption. How much do you think is the yearly power consumption in the banking system? How much is it in Gold mining?
So it’s necessary to use Renewable Energy for mining as mining requires a lot power.
So the question is whether you can mine or not? Yes, you can mine as well. As far as the banking system is concerned, It consumes 263TWh of power every year.
The mining system consumes 240TWh of power every year. So it’s using more power than cryptocurrency.
But the way cryptocurrencies power consumption is increasing It is necessary to mine based on Renewable Energy.
Bitcoin Pizza Day is celebrated every year on 22nd May. The story behind it, is very interesting. On 22nd May 2010, a Software Developer named Laszlo Hanyecz bought two Pizzas with 10,000 Bitcoins. In memory of this infamous incident, 22nd May is celebrated as Bitcoin Pizza Day.
When a lot of transactions are saved in one block, it fills up. Then, another block is created and all other transactions need to be filled there. Then a third block is created and the blockchain goes on. This is what we call Blockchain.
Every year Bitcoin uses 113 TWh in power consumption. The mining system consumes 240TWh of power every year. So it’s using more power than cryptocurrency.