Bitcoin’s 10-Year Anniversary: The Block Reward Has Halved TwiceBy Jack Filiba
Exactly ten years ago, on January 3, 2009, history was made. The first-ever Bitcoin block was added to blockchain. Now known as block #0 (or more colloquially as the "genesis block") this transaction marked the beginning of the Bitcoin blockchain.
The first physical Bitcoin transaction would not occur until 2010, when a developer used it to purchase two pizzas. Before that, people used Bitcoin to exchange online goods and services, experiment, or to send money to others.
In retrospect, there are a few key factors that prove particularly interesting about Bitcoin’s genesis block. At that time, the block reward for miners was set at 50 BTC. This was the rate at which miners would be rewarded for successfully helping confirm Bitcoin transactions.
Since Bitcoin is designed to have a maximum supply cap of slightly less than 21 million units, the block reward halves every 280,000 blocks. This process slows down the rate at which Bitcoin will hit its maximum cap. Further, the process allows Bitcoin to become more scarce over time and serve as a store of value like gold.
The first ever block halving occured in November 2011, when the block reward for mining Bitcoin became 25 BTC. In mid-2016, it halved again to its current reward of 12.5 BTC.
According to a prominent Bitcoin halving countdown, the next halving is currently projected to occur on 25 May, 2020. This will bring the reward down to 6.25 BTC per block.
Bitcoin was born from the vision of an anonymous figure
October of last year marked the 10-year anniversary of the white paper where Bitcoin was first described. This white paper was published by an anonymous person or group who went by the name Satoshi Nakamoto.
The identity behind this figure was never revealed, and he/she/they are no longer involved in Bitcoin’s development. Cryptocurrencies are designed to exist without leaders or even their creators.
Today is a different kind of anniversary. Other figures dreamed of creating a purely-digital currency before Bitcoin, but major obstacles stood in the way. Without relying on an intermediary such as a bank, developers were largely unable to find a way of facilitating online payments without a risk of duplicate transactions occurring.
Nakamoto solved this issue with a technology known as a blockchain. All transactions would be recorded on a public ledger and the task of verification would be divided among network participants. Transaction are added to the chain in blocks, which are then verified by network participants known as miners.
The secret message inside Bitcoin’s genesis block
Another interesting tidbit about the genesis block is that the 50 BTC it held at the time of its creation remain permanently unspendable. It remains unclear if this was an intentional decision.
Further, the genesis block actually contains hidden text that references a news event at the time. The text reads: “03/Jan/2009 Chancellor on brink of second bailout for banks.”
This refers to an article that the UK Times published on that day, involving at-the-time-Chancellor Alistair Darling considering a second bailout for banks in the midst of the financial crisis.
The inclusion of this headline serves as evidence that the first Bitcoin block was in fact created on January 3, 2009. In addition, many in the crypto community believe that Nakamoto included it to serve as a critique of the financial institutions and intermediaries that contributed to the economic disaster.
Now, ten years later, Bitcoin’s advocates continue to view it as a decentralized alternative to the intermediaries that have long dictated the global economy.