In brief: The Genesis Block. Everything you need to know about the first block of the Bitcoin network.
After the Bitcoin white paper appeared on October 31, 2008, on a cryptography mailing list, the Genesis Block — the first bitcoin block and the basis of the entire Bitcoin trading system in place to this day — was mined on January 3, 2009.
The Genesis Block is also known as Block 0 or Block 1, and is still in the Bitcoin network, where it will remain as long as there is a computer running the Bitcoin software. All nodes in the Bitcoin network can consult it, even if it is at the other end of the network with hundreds of thousands of blocks.
A block is a collection of transactions that are validated together. The transactions in a block are added all at once to the network, which is the complete history of legitimate transactions recorded on the Bitcoin Blockchain.
Every blockchain has a Genesis Block, just as every network has an end link. People often celebrate when the first Bitcoin block is mined because Bitcoin was the first Blockchain and remains the most secure and largest cryptocurrency in the world.
The number of transactions in a Bitcoin block varies, but is currently usually between 1,000 and 2,500.
On the other hand, blocks take around 10 minutes to be validated or “mined”. This timing is pre-set in the software, so if the blocks are mined too quickly, the validation hurdle created to keep the network secure and ensure that the mining process is competitive automatically becomes more difficult, and vice versa.
The Genesis block contains the first set of bitcoin transactions to be validated, which in reality only covered a single transaction — the distribution of the 50 BTC reward for mining the Genesis block at a given address.
To this day, miners are rewarded for each block mined. The value of the reward received, however, has fallen to 6.25 BTC and, in the next halving — an event that takes place every four years and halves the amount of bitcoins mined per day — it will fall by half, to 3.125 BTC.
In the case of the Genesis Block, there was only one person who knew about bitcoin to mine it: the creator of the first cryptocurrency, Satoshi Nakamoto.
Satoshi (almost certainly a pseudonym) mined the Genesis Block on January 3, 2009, three months after having published the Bitcoin white paper on an online crypto forum. And now, people call January 3rd “Genesis Block Day” or "Bitcoin Genesis Day".
There are several reasons why Bitcoin’s first block is so special.
1 — The reward of 50 BTC was sent to an address from which it can never be recovered.
The 50 BTC transaction was not recorded as such in the same way as subsequent transactions.
Although the reward was transferred to a regular address: ‘1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa’ — it cannot be spent.
This is due to a possibly intentional quirk or bug, which prevented the transaction from being added to Bitcoin’s UTXO database. The acronym UTXO stands for Unspent Transaction Output and refers to a model used by various cryptocurrencies whose function is to ensure that the transfer of value between wallets is carried out properly. It should be emphasized that not all cryptocurrencies use this model.
2 — The “secret” message in the Genesis Block
Satoshi wrote a “secret” message inside the standard lines of data attached to the block. See the message inside the red square in the picture below:
This message refers to the headline in the January 3, 2009 edition of The [London] Times about the failure of the British government to stimulate the economy after the financial crisis of 2007–2008.
“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”
Although Satoshi has never commented on the meaning of the text, there are two theories on the subject.
Most believe that the message serves as a mission statement for the Bitcoin Blockchain itself:
Bitcoin is an asset to protect wealth against monetary inflation.
One of Satoshi’s goals in creating Bitcoin may have been to prevent people from having to hand over money to a bank as an alternative to stashing cash under the mattress.
In 2009, a major recession was in full swing due to the “subprime crisis”, triggered by the granting of subprime loans or subprime mortgages, a practice that dragged several banks into insolvency and had a strong impact on stock markets around the world.
This crisis was caused by the unbridled granting of housing loans by companies such as Fannie Mae and Freddie Mac, controlled by the US government, as well as flaws in the regulation of the financial system which allowed mortgage loans (CDS, CDO, etc.) to be transferred in series, allowing the transfer of risks to other counterparties. Some also point out that the background to the crisis was the Fed’s (the US central banking system) maintenance of low interest rates as a way of stimulating the US economy, which had just emerged from the so-called internet bubble crisis (bankruptcy of dot com companies), which occurred in 2001.
As a result, at the same time as the Bitcoin Blockchain was launched, many people went to the bank to find that their money had disappeared. Other people found that their pensions had disappeared.
That’s why many people think it’s no coincidence that Satoshi chose this particular message to appear on the Genesis Block. This should be the beginning of the end of people’s trust in banks that went bankrupt because of their own mistakes, and yet were bailed out by governments using taxpayers’ money.
Whether Satoshi’s comment was directed primarily at banks, governments or both remains a topic of debate among bitcoin enthusiasts.
Another theory for the secret message of the Genesis block, which is less well known, is that the inclusion of a headline from January 3, 2009 served as proof that the code was not written before that day. Satoshi perhaps just wanted to dispel any mention that he had mined the block in advance to gain some advantage as its creator.
3 — The second Bitcoin block was mined on January 9th
The second Bitcoin block was only mined on January 9, six days after the first.
Now, it’s worth remembering that Bitcoin blocks take around 10 minutes to be mined. Why was the second block mined outside the time allotted by the Bitcoin software?
One of the theories is that the algorithm that adjusts the mining difficulty to maintain the 10 minutes only kicks in every two weeks or so.
However, among the many theories, the most amusing is that Satoshi was consciously imitating the six days it took God to create the world, according to the Biblical book Genesis.
Regardless of what is in people’s minds, since January 3, 2009 the Bitcoin Blockchain has been operating 24/7 without a glitch, and has revolutionized financial intermediation and its relationship with centralized monetary policy.
Bitcoin is actually three things. It is a global settlement system for all the transactions that take place on its network, and it has never been hacked. It is an open financial network, the ecosystem of value created around this network and also the technology in the form of the blockchain protocol.
By enabling value transactions without the need for a traditional trusted third-party validator, bitcoin has had economic, social, political and economic impacts.
No wonder Wall Street and even Jamie Dimon — who recently hit back at bitcoin, suggesting that it should be banned — have thrown in the towel, and are about to hitch a ride on bitcoin via a Bitcoin ETF Spot, which is set to be approved by the Securities and Exchange Commission [SEC] in the coming days.
I hope you have a wonderful 2024! Stay safe until we meet again!
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