Genesis Block: Bitcoin Definition, Mysteries, and Secret Message

What Is a Genesis Block? A Genesis Block is the first block in a cryptocurrency blockchain. A blockchain consists of a series of blocks that are used to store information related to transactions that occur on a blockchain network. Each block contains a unique header, and each such block is individually identified by its block header hash. These blocks are chained together by their encrypted headers, with the Genesis Block being the foundation—and they grow in number. A block's number is referred to as its height on the blockchain. So, the Genesis Block has a height of zero, the following block has a height of one, and so on. The chained information in each block is one of the things that makes a blockchain so secure. Bitcoin's Genesis Block was the first instance of a proof-of-work blockchain system and is the template for all other blocks in its blockchain. In 2009, Bitcoin's anonymous developer, Satoshi Nakamoto, created the Genesis Block, which launched the cryptocurrency and blockchain boom. KEY TAKEAWAYS A Genesis Block is the first block on a cryptocurrency blockchain. In 2009, a developer named Satoshi Nakamoto created the Genesis Block on the Bitcoin blockchain. The information from the Genesis Block is present in all blocks in a blockchain because of how information is encrypted and used in the following blocks. Understanding the Genesis Block Blocks are effectively digital containers where data pertaining to the transactions on a network are permanently recorded. A block records as many of the most recent Bitcoin transactions it can hold that have not yet entered any prior blocks. Thus, a block is like a ledger or a record book page. Each time a block is "completed," it gives way to the next block in the blockchain. A closed block is thus a permanent store of records that, once confirmed, cannot be altered or removed. The Genesis Block, also known as Block 0, is the very first block upon which additional blocks in a blockchain are added. It is effectively the ancestor that every other block can trace its lineage back to since every block references the one preceding it. This began the process of validating bitcoin transactions and introducing new bitcoins into existence. The next block, Block 1, wasn't mined until five days after the Genesis Block. This is considered odd as the average timestamp gap between blocks is intended to be 10 minutes. 1 2 There are a few theories regarding the delay of five days between the first two blocks: Some have theorized that Nakamoto spent five days mining the original block to test out the Bitcoin system to make sure it was stable (then backdated the timestamp), while more cultish followers believe Satoshi intended to recreate the story of God's rest after creating the world in six days—even though the recorded difference is only five days. Bitcoin Basics Bitcoin is a type of cryptocurrency developed by Satoshi Nakamoto. Bitcoin (with a capital b) refers to the blockchain and network, and "bitcoin"—with a small "b"—refers to the virtual coinage that is used. There are no actual coins, hence the "bit"—or binary digit, the most basic unit of data in computing—before "coin." In the world of virtual currency, blocks are files where data about the Bitcoin network and its transactions are permanently recorded. Each time a block is completed—that is, when a miner guesses the solution—the block is closed, giving way to the next block in the blockchain. The only way to release new cryptocurrency into circulation is to mine it (receive it as a reward for doing work for the blockchain). So, to "mine bitcoin" is to "mint currency." Like gold, Bitcoin cannot be created arbitrarily. Gold must be mined out of the ground, and bitcoin (BTC) must be mined via digital means. Moreover, Bitcoin's founder stipulated that, like gold, the supply of bitcoin should be limited and finite. Only 21 million BTC can be mined in total. When miners have unlocked this many bitcoin, the supply will be tapped out unless someone changes Bitcoin's protocol to allow for a larger supply. 3 Mysteries of the Genesis Block Beginning with the fact that the name "Satoshi Nakamoto" itself is a pseudonym, the Genesis Block and the founding of Bitcoin remain riddled with mystery. Shortly after Bitcoin's launch, the person calling themselves "Satoshi Nakamoto" vanished from the face of the earth, leaving barely a trace. The First 50 BTC Could Not be Spent The Genesis Block's beginnings were shrouded in the debate about a fine point of its creation: Was the code that rendered the Genesis Block effectively untradeable an intention or a mistake on the part of Nakamoto? Although the Genesis Block points to a web address—written into the Genesis Block's code—that link displayed an error message when activated. The system could not find the first transaction of 50 BTC in its database, and the spending transaction was rejected. So, the Genesis Block's transaction is not considered a "real transaction" by the original Bitcoin client. But why? Did Nakamoto mean for the first bitcoin to be non-tradeable? Or was it a mistake? This became the subject of much debate among Bitcoin fans and insiders. Because of the precision of this developer, however, most believe it was hardly an error. Nakamoto likely wrote the code for the Genesis Block exactly the way he wanted it. We will never know why, as the quirk was not discovered until after Nakamoto disappeared. Current versions of the Bitcoin system handle the block/transaction databases differently from the original system, so the Genesis Block's transaction is now just a weird special case in the code. Bitcoin's Genesis Block Message Another puzzling aspect of the Genesis Block is the message that Nakamoto instilled within the Block's raw data: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." Although Nakamoto never commented on the meaning of this text, most believe that it serves as a mission statement for Bitcoin itself. The text is a headline for an article in the Jan. 3, 2009 edition of The [London] Times about the British government's failure to stimulate the economy following the 2007–08 financial crisis. Nakamoto spoke out against the idea of financial institutions that were too big to fail and wanted Bitcoin to be different. Most people think that Nakamoto's reference to the article in the Genesis Block's code was a hint as to how Bitcoin is different from the big investment banks that needed government bailouts in 2008. The True Legacy of the Genesis Block Bitcoin cannot be bailed out because its process eliminates the intermediary; no third party or corporate entity exists between BTC and the consumer. The Bitcoin network checks and double-checks itself continuously using encryption, validation, and automated general consensus. Another failsafe is that because all transactions cannot be altered, the actions of miners can always be traced back to their wallet addresses, which makes it impossible to hide any evidence of wrongdoing. However, unless the owner of the wallet address makes their identity known, there is no way to know who it is. In November 2013, early protegees of Nakamoto formed the Satoshi Nakamoto Institute (SNI) to educate the public about the history and vision of Bitcoin's creation. Among other interesting details, the SNI houses one of the biggest remnants of Nakamoto's online existence: An extensive list of forum posts, broken into subject categories, that the Bitcoin creator penned while still working on the project. Some Bitcoin fans hold the Genesis Block in a kind of cult-like reverence, as they do its anonymous creator. Fans are drawn to Bitcoin's arcane construct and idiosyncratic vocabulary with the fervor of one obsessed with a sophisticated arcade game. Bitcoin devotees have been donating small amounts of BTC to the Genesis Block as a tribute to Satoshi Nakamoto. This is seen as a kind of sacrifice because once a coin is moved into the Genesis Block, it can never be used again—sort of like throwing a quarter into a bottomless fountain. Is Genesis Block 0 or 1? The first block on the Bitcoin blockchain is the Genesis Block, which has a block height of zero. Why Is the Genesis Block Important? The Genesis Block is actually not that important unless you view it as a historical occasion. It is simply the first block that contains the first transaction, but it has been hyped as something special by fans. When Was the First Bitcoin Block? The first Bitcoin block is believed to have been mined on Jan. 3, 2009, as it contains a message with that date, and the blockchain recorded it as such. The Bottom Line The Genesis Block is the first block on the Bitcoin blockchain, but it is also a term that can be used to refer to the first block on any blockchain. It is special to cryptocurrency fans because it signifies an attempt to transition away from the current financial system, which is full of third parties chipping away at people's finances and causing widespread problems through corrupt practices. The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read our warranty and liability disclaimer for more info. 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