The digital currency Bitcoin is making headlines almost everyday in someway or the other. The news is both positive and negative and has taken the whole world by the storm. Almost everyday we keep on hearing about – rise and fall of its price, how different countries are dealing with it, individuals becoming millionaires & billionaires, how celebrities are investing, and many more.
But at the same time, many people don’t understand what Bitcoin is all about, it’s history, how it works, and how to buy and sell this crypto currency and others.
So this article and subsequent series will cover – all about bitcoins in a simple and understandable way. The topics will cover everything from understanding how it works, to setting up an account (wallets) to buying and creating your own bitcoins and much more.
In the end, readers will understand more about this new currency – bitcoin. In addition, latest news and updates surrounding this booming digital currency will be offered, a new type of money and of course the most controversial payment system of all time.
So ready to learn more about this new type of money and the most controversial payment system of all time?
Here we go!
Origin of Bitcoin:
First let’s go back to the history. And as the saying goes – history is always interesting and the same holds true for bitcoin. The origin of Bitcoin is mysterious. According to unknown people, they were invented by Satoshi Nakamoto in 2007. However, it is still unclear whether Nakamoto is a real individual or whether it is a group.
In March 2014, a leading US publisher unveiled something interesting. Dorian S. Nakamoto came to the USA as a child, graduated in physics and worked on various projects for various clients, including the US government and army.
After years of puzzling about the true identity of the Bitcoin inventor and the alleged “Newsweek” revelation attracted a lot of attention, the alleged inventor strongly disputed his participation right from the very beginning. A few days later, an interview with a leading press appeared. “I got nothing to do with it,” said Nakamoto. So the mystery behind the inventor continued to exist.
But one thing is certain: from 2008 on, the bitcoin was really on the road of becoming a craze. Anonymous users registered the address bitcoin.org in August. Under the author’s name Satoshi Nakamoto, the first release of Bitcoin was published in October. The white paper is titled: “Bitcoin: A Peer-to-Peer Electronic Cash System”.
Shortly before the URL registration, a patent called “Updating and Distributing Encryption Keys” was registered in the USA (#20100042841). It contains the names Neal King, Vladimir Oksman, Charles Bry. However, despite of the many possible links between these scholars and Bitcoin, no one could find any conclusive evidence that it was Satoshi Nakamoto who invented Bitcoin.
Bitcoin Pizza Day
In January 2009 the first bitcoin was generated (how this works technically, we will learn in the subsequent articles). Shortly afterwards the first transaction took place, but only virtually.
It took more than a year before an actual item was purchased for the first time. The bitcoin early adopter Laszlo Hanyecz offered 10,000 Bitcoins (BTC) for a pizza in the BitcoinTalk forum. On May 22nd, he found a salesman. Since then, the date is also known as the Bitcoin Pizza Day.
Bit by bit, the currency started gaining more and more attraction and in 2010, Bitcoin Market and Mt. Gox became the first exchanges for bitcoin trading. Like many other platforms, however, both have closed down. In case of Mt. Gox, up to 850,000 BTC have even disappeared.
In the beginning, bitcoin was not very valuable. However the decimal places were the most important. The smallest unit of the Bitcoin is a Satoshi. 100 million Satoshis (100,000,000 units) equals 1BTC (i.e. bitcoin).
The price fluctuations of Bitcoin were already quite high in 2010. In the beginning, the bitcoin wasn’t even worth a dollar cent. The value soared tenfold from $0.008 per bitcoin and then fell back to $0.06 per bitcoin. At the end of the year, all bitcoins together were worth more than one million US dollars (i.e. market capitalization).
As a result, Bitcoin experienced another upswing. Until February 2011, a bitcoin was then for the first time worth as much as a US dollar. Interestingly, the drug platform Silk Road was launched in the same month.
Then things continued to go up gradually and from $1 in 2011 till the current price of $14,189.84 (till December 24, 2017) the meteoric price gave enough reasons for people to keep interest in this valuable investment option.
Scandals since the beginning
Small and large uncertainties and scandals had always been the most important reasons for its high price fluctuations. Fraudsters were able to steal up to 40,000 BTC from individual users or platforms due to all kinds of vulnerabilities.
A list on the Bitcoin Wiki gives information about all vulnerabilities since July 28th, 2010.
A famous example
On August 15, 2010, a bug allegedly generated over 184 billion bitcoins. Some “malicious block chain” had crept into the transaction code. But a “good block chain” took over it in the meantime and fraudulent bitcoins don’t exist anymore. Later a forum post revealed that Satoshi himself already knew about the bug one and five hours later he implemented a solution.
Do you know, Bitcoin ATMs are up and running in USA? Watch this video:
In the next articles, you will learn more about bitcoins on following topics:
- Understand the functionality of Bitcoin
- How are bitcoins created? What is mining?
- Understand bitcoin wallets
- Securing bitcoin wallet correctly
- How to create a bitcoin wallet on the computer?
- How to create bitcoin wallets online?
- Where and how to buy bitcoins?
- Where to spend bitcoins?
- Alternative digital currencies
- And many more