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Example:

Step 1: Day 1 of bitcoin software got deployed in System A, A created Genesis Block and got awarded 50Coins. - I understand

Step 2: System B got installed bitcoin but no coins.

Question:

1) So only System A has 50 Coins, then how the transaction going to happen.

2) How come the Coins converted to the value of real money. I mean it is like someone writing "GOLD" on paper and hand it over to you. But it is not real gold, so no one going do any transaction for this paper.

Basically, I want to know about initial bitcoin flow and how it got multiplied. How people converting to real money.

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Satoshi Nakamoto mined the genesis block in January 2009 and then he sent 10 bitcoin to Hal Finney who was one of the first to run the bitcoin core software. Finney then started mining hundreds of bitcoins in the days that followed. Satoshi then offered his peers equity in the form of bitcoins in exchange for them to work on the bitcoin core software, both developing and testing. So the original guys did not need to buy bitcoin, they were given it as a form of equity. Only in 2010 did the first bitcoin exchange MT Gox open in Tokyo and this allowed other people to buy and sell bitcoin using Fiat currency.

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Satoshi, Finney, and many others were mining in those early times. Each block they found earned them 50 bitcoin (+ transaction fees but they were usually zero). So in your example B either buys bitcoin (maybe from A even) or mines a block to get his bitcoin. Now you see how a bitcoin can be cashed - A can sell to others for fiat. Transactions will happen as in any market - simply because people on each side want it. Proper markets (exchanges) didn't happen until later.

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