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A brief history of Bitcoin

A brief history of Bitcoin

June 13, 2021

The concept of a digital currency is not novel. Many attempts to create a cryptocurrency have been made in the past. The biggest thing that most of them had was the matter of double-spending. To avoid copying and effectively to counterfeit a digital asset, it must be available only once. We will start our discussion with a short description of three keywords. 

A blockchain is a public ledger that documents internet transactions in a digital format. It is the foundation of cryptocurrencies such as bitcoin. 

A cryptocurrency is a digital means of exchange that uses cryptographic techniques to monitor the formation of monetary units and validate the movement of funds.

Finally, bitcoin is the most well-known cryptocurrency which is produced as a result of the “mining” operation. Additionally, it is a digital resource created and managed using cryptography instead of involving central or fundamental authorities. But where did it all start? 

Bitcoin’s Birth

Bitcoin was created in 2008 by an anonymous individual or group of individuals identified as Satoshi Nakamoto. First, it is introduced as a whitepaper, and then, in 2009, it is developed as open-source software. In that year, for the first time, the Bitcoin program became publicly accessible, and mining – the method of creating new Bitcoins and recording and verifying transactions on the Blockchain- took place.

The First Transaction

On January 12, 2009, the first Bitcoin transaction was made to validate the network. Ten bitcoins were transferred between Nakamoto and the late Hal Finney, who was helpful in the early development of Blockchain, e, creating reusable proof-of-work system (RPoW) in 2004. The New Liberty Standard set the first BTC exchange against the Dollars on October 5, 2009, and, as a result, Bitcoin attracted attention. 

A Pizza Purchase

Bitcoin’s first test transaction was quickly followed by a real-world foodie transaction. On May 22, 2010, programmer Laszlo Hanyecz started using the website to buy two pizzas for 10,000 bitcoins. Jeremy Sturdivant, a student, welcomed the offer and sent Hanyecz his Papa John’s food order. It’s fantastic! This payment was a watershed moment for Bitcoin, demonstrating that BTC could be used to purchase real-world goods.

Black markets, such as Silk Road, became the first large BTC users after early “proof-of-concept” exchanges. Silk Road only accepted bitcoins as payment for the first 30 months of its life, starting in February 2011, and transacted 9.9 million bitcoins worth $214 million. 

Genesis Block

The first block mined in a blockchain, such as Bitcoin, is referred to as a Genesis Block. It contains 50 BTC that cannot be expended, and it has spawned the development of additional blocks. The creation of new blocks takes about 10 minutes on average. The next block, on the other hand, took six days to be added to the Blockchain. There are some hypotheses as to why this was the case. One of the most intriguing claims is that Satoshi waited six days to imitate Genesis from the Bible. 

2011 – Rival cryptocurrencies showed up

The first competing cryptocurrencies emerged as Bitcoin grows in popularity, and, thus, the concept of decentralized and cryptographic currency was taken into account. They are often known as altcoins, and they aimed to develop the initial Bitcoin architecture by providing a faster transaction process, anonymity, or any other benefit. Namecoin and Litecoin were the first to appear. So far, there are over 1,000 cryptocurrencies in use, with new ones appearing regularly. 

Bitcoin’s price plummeted in 2013

Shortly after reaching $1,000 for the first time, bitcoin’s price continued to decline rapidly. Many investors had lost money at this moment when the stock fell to about $300 – it took about two years for it to hit $1,000 again.

Scams and thefts in 2014

Bitcoin has proved to be an attractive and profitable destination for hackers, perhaps predictably for a currency built for secrecy and loss of control in mind. Mt.Gox, the world’s biggest Bitcoin exchange, went down in January 2014, and the holders of 850,000 Bitcoins never had access to them again. Investigations are currently ongoing to determine what occurred, so whatever the case might be, anyone deceitfully obtained a haul estimated at $450 million at that time. Those missing coins are worth $4.4 billion at today’s value.

2017- a sharp rise

During a time where Bitcoin’s worth stayed below previous highs, a steady rise in the number of sites where BTC could be invested led to its continued success. As more applications were available, it became apparent that more capital was coming into the Bitcoin and crypto-coin ecosystem. During this time, the total market capitalization of all crypto coins increased from $11 billion to over $300 billion. As a result, banks such as Barclays, Citi, Deutsche Bank, and BNP Paribas have stated that they are looking for ways to deal with Bitcoin. Meanwhile, the blockchain technology that underpins Bitcoin has ignited a movement in the fintech industry (and beyond) that has only just begun.

Future of Bitcoin

In most deals, the third party is normally a bank, and Bitcoin essentially eliminates the third party. Is it possible that banks will become redundant as a result of this? Since banks are so critical in today’s world, this is a no. They’ll likely respond to the Bitcoin revolution and even assist in its regulation. The cryptocurrency’s volatility has proven to be a challenge that must be addressed.

Furthermore, the currency’s existence is dependent on the Internet, which has proved to be vulnerable to hackers. Hence, there’s a chance that a hacker could raid your simulated treasure and make off with it. What matters is that traders are confident about Bitcoin’s growth, implying that fixing many of the cryptocurrency’s issues is just a matter of time.

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