Did you know that the very first Bitcoin was mined in January 2009? It’s taken a while to catch on but there is a growing movement to adopt the technology and Bitcoin’s rise in popularity has challenged mainstream thoughts on the status quo and expanded into new digital frontiers. Now, some people may be wondering if the initial distribution of Bitcoin was “fair” – particularly in the earlier stages of the network’s development. We’ll dive into the timeline surrounding Bitcoin’s launch, and provide a thorough debunking of unfair early distribution claims.
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Premining is the mining, or creation, of a number of crypto coins before the cryptocurrency is launched to the public. Premining sometimes has a negative connotation due to the ability of private developers to privately mine and allocate a number coins to themselves before releasing the open source code of the currency to the public. This could lead to a basic distrust in the lack of transparency. Bitcoin actually did not premine before it was offered to the public.
Satoshi Nakamoto, the mysterious individual or group, gave everyone a two-month heads up before mining the Genesis block, reaching out to people who would be interested in experimenting with a sovereign digital currency. Kind of funny to think that we referred to them as Cypherpunks. The whitepaper was published on October 31, 2008, then Bitcoin 0.1 software was released on January 9, 2009. The Genesis Block was minted earlier January 3, 2009. It was unlike all other blocks because there were absolutely no previous blocks or hardforks to reference from. All that was required was a custom code to mine Bitcoin and we were in a new frontier. Satoshi included a message in the Genesis Block as a “proof of no premine.”
“The Times 3 Jan 2009 Chancellor on brink of second bailout for banks”- Genesis Block
Timestamps for subsequent blocks indicate that Nakamoto did not try to mine all the early blocks solely for himself. Before Satoshi’s invention, the concept of premining didn’t exist. To be this prescient demonstrated incredible maturity. The code to mine bitcoin was available on the day Satoshi began mining, other than the special purpose Genesis Block as we had stated. It even had a 1-click miner available so it was incredibly easy to do in the beginning. Once the code was released, several individuals started mining, and we know for a fact that Hal Finney was mining one day after the initial launch. Satoshi definitely wasn’t mining alone in the early days, granted the number participating was slim.
First Year of Mining
For the first year of Bitcoin’s existence, Satoshi and other miners couldn’t muster enough hashrate to mine more than 144 blocks/day and trigger an upwards difficulty adjustment. Satoshi mined because the network required a miner, and turned off the mining when the network was stabilized enough that it didn’t need his mining power anymore. He reduced his % of the hashrate in a slow and steady manner. The mining activity carefully balanced the hashrate of the cluster, with the goal of historically viewable well-meaning intentions.
Initially, the hashrate was reduced by 1.7 Mhps every five months, but a month after the second such drop abandoned this method in favor of a continuously decreasing hashrate. Bitcoin benefited from an extremely rare set of circumstances. Because it launched in a world where digital cash had no established value, they circulated freely. That can’t be recaptured today since everyone expects all coins to have some kind of value.
Bitcoin was definitely a pioneer and has earned the nickname of “Granddaddy of Cryptocurrency”. Not only was it a very fair distribution it made history, even if it’s taken over a decade to appreciate it.
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