Bitcoin began its journey by being some sort of a cryptocurrency that was not pre-mined. When Satoshi Nakamoto, the first ever user and so-called founder of Bitcoin, started using it on Jan 3, 2009; there literally were no bitcoins created. It was then when Satoshi mined the first block and created the first ever 50 bitcoins.
Going by the estimations, he was the first miner to mine bitcoins and with hardly any others out there at that time, a total of 1 million BTC were mined by him, whose market value would have been $69 billion on the peak of November 10, 2021. However, the last known thing about Satoshi is his disappearance from the whole block chain and crypto scene way back in 2011. What we know as of today is that 1 million BTC mined by Satoshi were never used and no one would be able to use them ever.
There are many theories surrounding his existence. Some people have been touted as so called Satoshi, while others assume he is dead. Whatever it is, it seems he hasn’t left the keys to 1 million BTC to anyone, though there is a legal dispute ongoing between Dave Kleiman’s brother and Craig Wright for owning the possession of “Tulip Trust” where possible keys are allegedly stored.
As per the records, Satoshi continued to mine new blocks in sequence, right after a few days of mining the first genesis block. Few days later, the first BTC transaction was performed, when Satoshi sent BTC to Hal Finney, who became the first recipient ever to receive BTC in a transaction. All these went for a couple of years before Satoshi went into hiding and then never ever seen again.
Bitcoin Pre-Mining during early times
When Bitcoin came into picture, there were a handful of people mining and making use of Bitcoin, with a vast majority of them mined by none other than Satoshi himself. In fact, there was no platform at all to buy or sell bitcoins in exchange of fiat money, making it almost impossible for an average person to own Bitcoins, with a zero value at that point in time. The block sequence mined by Satoshi, is also called “Patoshi.”
Anybody who was involved in mining using their standard desktop Central Processing Unit (CPU) until 2012 would have earned 50 BTC per block. Mining 1 block every 10 minutes allowed for 2.5 million BTCs mined each year. However, it is worth noting that by the end of December 2009, only 1.6 million BTCs were mined, not sufficing the average of a block mined every 10 minutes.
What does that mean? One can cancel out the possible theory of Satoshi accelerating the block time, so that more and more could be mined, but in reality it seemed he really slowed things down that year. The following year, the mining accelerated, as 3.4 million BTCs were mined, with Patoshi coming to an end in May 2010, and Satoshi ending with the mining job in June 2010.
Origin Of ‘Satoshi Unit’
The roots of the term ‘Satoshi’ date back on BitcoinTalk forum, an open forum specifically meant for bitcoin ecosystem discussions. It was the year 2010 when a user with the name Ribuck suggested 0.001 or one hundredth of bitcoin to be taken into account as the smallest bitcoin unit on the entire interface of the block chain. He further recommended the name to be Satoshi, while participating in a thread, talking about the unicode character for a bitcoin.
There was no traction for about three months after which Ribuck started with another thread “More divisibility required — move the decimal point” while suggesting 0.00000001 or one hundred millionth to be the Satoshi which eventually got the much awaited traction in form of user responses. Eight days right after all this happened, a new thread started on BitcoinTalk with the name Bitcent, initiated by the user Kolbas. He suggested 1 microbitcent as 1 satoshi or simply 1 bitcoin be equal to 1 million satoshis.
Over so many years, there have been multiple subdivisions of bitcoin taking place with the likes of microbitcoin or 1-millionth of a bitcoin or 0.000001 and millibitcoin or 1-thousandth of a bitcoin or 0.001 BTC. Another subdivision that gained momentum is millasatoshi or 1000th of a Satoshi. Milla Satoshi has been extensively used on the parallel lightning network rather than the Bitcoin mainnet.
The lightning network is a separate payment channel other than Bitcoin mains. The reason it was created and Milla Satoshi was used, is to divert the scalability issues dealt by bitcoin mainnet. It furthermore accelerated the number of bitcoin transactions taking place per second.
Knowing more about Satoshi Unit
Satoshi equals a value of 100 millionth of a bitcoin, which means 100 million Satoshi equals 1 bitcoin as of today. The use of Satoshi was instrumental in transacting smaller volumes of cryptocurrencies and hence avoid any kind of errors during the transfers of volume in small denominations.
It further propelled buying Bitcoin and other cryptocurrencies in fractions rather than as a whole to make it affordable for everybody to transact. Additionally, people were able to pay in small amounts for small things like coffee, or any day to day stuff. Most important of all, mining rewards get halved every four years due to bitcoin halving, and hence it got much easier to count the individual rewards.
History of Miners
It was a step by step process, yet over the years the process of mining went through several stages, with crypto miners moving from CPU > GPU > FPGA > ASIC. With such an evolution, the process of mining got more and more faster, with miner equipment getting more and more sophisticated. Let us understand how this transition from one era to another took place.
Mining with CPUs
After the Bitcoin genesis block came into existence, there were hardly any users or competition. Hence, no special mining hardware was required to mine Bitcoins. It was the personal computer’s central processing unit doing the job of solving the blocks and mining Bitcoin with ease.
Mining with GPUs
As bitcoin gained momentum, there was a slow and gradual rise in the number of users joining the network. This required a bit more specialized hardware in the form of Graphics Processing Unit to do the job. The GPUs were highly capable enough to compute multiple mathematical equations at a time, and could be re-programmed to solve puzzles.
Mining with FPGAs
Sometime later Field Programmable Gate Arrays came into existence which the miners started using with immediate effect, as more and more miners joined the network. These FPGAs delivered double the computational power of GPUs using thrice lesser energy. This made them an even better choice in the market.
Mining with ASICs
Finally, in 2013, Canaan Creative brought about the first ever application specific integrated circuit miner in the market. Their sole purpose was to mine bitcoins and nothing else, which meant they were multiple times more effective than FPGAs using the least amount of energy. Since they have just one purpose to solve and asic miners are still considered to be the best option for mining Bitcoin and other cryptocurrencies as well.