Trader’s Vocabulary: Genesis Block
Table of Contents
The First Bitcoin Block
Satoshi Nakamoto created the first block or Bitcoin Genesis Block in the Bitcoin saga. The person or group identified as Satoshi Nakamoto created the block without competition since it was the beginning, and Bitcoin’s idea was still unknown to the broader world. The Genesis Block was block zero. The next block was created six days later; it became block one.
An interesting sidebar to the Genesis Block was a message lifted from that day’s London newspaper. It described the British government about to issue a bailout for the banks. The quote may reflect the advantages of decentralized ledgers and the Bitcoin blockchain.
Fifty Bitcoins and Growing
The initial block contained fifty unspendable bitcoins. Whether by accident, oversight, or intention, those initial tokens remain in the Genesis Block. Over the years since the discovery and wide adoption of Bitcoin, people have randomly sent Bitcoin to the Genesis block. It appears to be an ongoing tribute or honoring of the first Nakamoto effort.
Creating Bitcoin Blocks
Bitcoin blocks result from a process called mining. Bitcoin miners operate computing devices capable of carrying out an extremely high volume of computations in a short period. The Bitcoin miner is an essential part of the decentralized ledger that records and creates every bitcoin existence.
The initial problems were quite simple when contrasted with the current day level of difficulty. Miners use specialized equipment designed to solve hashing problems. These devices operate at high speeds and manage a tremendous volume of attempts. The first miner to solve the problem wins the right to close the block. The process of closing creates the Bitcoin and other assets contained in the records. The successful miner gets a fee for the efforts.
The limit for each block of Bitcoin mining is one Mb of data. This rule limits capacity and causes the system to operate at slower speeds than if the blocks were larger.
Miners must solve the problem and also be the first to solve it. Most miners solve problems but do not qualify as the first solver. Miners keep the system going and keep it honest. They avoid the double spending problem of digital currency by auditing every transaction for consistency and accuracy.
The hashing problems are complex. They are difficult because of the time limit to succeed. Only the first to solve the problem can reap the reward for closing the block. The key to successful mining is to operate at an extremely high hash rate.
The Satoshi Mystery Remains
Satoshi‘s initial set of blocks was mined, and his share from those mining efforts would be substantial. Since the time that he created the initial blocks, the mining shares earned have gone unclaimed. His unclaimed shares’ potential value would drastically alter existing Bitcoin’s value by diluting it with a flood of new coins.
Many fans and interested parties consider the Genesis Block as a clue to the identity of Satoshi. They theorize that only the real Satoshi has the keys needed to access block zero and leave a message.