Bitcoin history is quite tumultuous if we say the least. Since there is not a week passing by when this cryptocurrency is not making headlines, many questions might have flown over your head. TechTrends has put together a comprehensive guide on everything you need to know about Bitcoin history.
If you are on the lookout for a primer on Bitcoin, you clicked the right link. TechTrends aims to take a look at the basics – what is Bitcoin, how does Bitcoin work, who invented Bitcoin, who is Bitcoin creator, when was Bitcoin created and Bitcoin price history. But why should you know the answers to all these questions? Many people believe that Bitcoin is the future of finance; therefore, it could impact the money in our pockets detrimentally. Although the effect it will have is up for debate, one thing is certain. Bitcoin is a long-term fixture in the news cycle, notwithstanding the ups and downs in value. Known as the most valuable cryptocurrency, Bitcoin is too important not to know about. Keep reading to find out everything you need to know about Bitcoin history.
Everything You Need to Know about Bitcoin History
Bitcoin has gained immense popularity in the last few years. You might have heard that Bitcoin, which was in every headline in 2013 for going a high of $200, is now valued at about $42,000, making many people rich. Bitcoin and other cryptocurrencies have penetrated deeply into financial services and culture. So, let’s jump into what is Bitcoin, when was Bitcoin created and how does Bitcoin work.
What Is Bitcoin?
The first and the most important thing in the article Everything You Need to Know about Bitcoin History is Bitcoin definition. Bitcoin is a cryptocurrency that is decentralized, meaning it is not under any central control or banks or governments’ oversight. At its core, it is a combination of encryption, peer-to-peer software and cryptography. In other words, Bitcoin is a computer program designed to let people exchange value with each other directly. Unlike traditional currency, Bitcoin is mined by powerful computers that are connected to the Internet.
Since Bitcoin (BTC) was created, a lot of other cryptocurrencies came into existence. Bitcoin, however, is the largest by trading value and market cap.
Some of the factors that contribute to Bitcoin being a new kind of money are listed here:
Bitcoin is global
One of the main features of knowing the Bitcoin definition is its ability to be sent across the world. It is just as easy as transferring physical cash in the real world. However, the difference is that it is not closed on weekends and does not charge a fee to access your money or impose any arbitrary limits.
Bitcoin is irreversible
Unlike credit cards, conventional online payment systems and banking transactions, Bitcoin transactions cannot be reversed.
Bitcoin is private
Due to being decentralized, no bank statement or personal information is required in paying with Bitcoin. The only information involved is the Bitcoin addresses and amounts.
Bitcoin is secure
Since Bitcoin network has cryptographic nature, paying with Bitcoin is fundamentally more secure than other forms of transactions like the credit card. As there are no sensitive information needed, identity theft and financial information being compromised are extremely rare.
Bitcoin is open
Each transaction is publicly shown on the Bitcoin network, meaning no manipulation or changing
Every transaction on the Bitcoin network is published publicly, without exception. This means there’s no room for manipulation of transactions (save for a highly unlikely 51% attack scenario) or changing the supply of bitcoin. The software that constitutes the core of Bitcoin is free and open-source so anyone can review the code.
Bitcoin is safe
It has been more than a decade since Bitcoin was created. However, it has never been successfully hacked. Due to the fact that it is open-sourced and permissionless, many scientists and cryptographers examined its security and different aspects of the network.
Bitcoin Background
It was not until the late 200s that Bitcoin came into existence. However, we can trace it back to a few decades ago. Computer scientist David Chaum came up with the idea of e-Cash as he was concerned with privacy in the digital realm in 1982. In the early 80s, he published a paper with the title “Blind signatures for untraceable payments”. He described a new cryptography form with an automated payment system that did not allow third-parties to see the payment information in the article. He put it to practical use in 1990 when he created DigiCash. Despite his reputation as a brilliant man, his product failed to catch on.
Getting deeper into everything you need to know about Bitcoin history, we reach 1997. Adam Back rediscovered the idea when he invented hashcash. It was a proof-pf-work scheme that was very similar to what Bitcoin uses.
In 1998, Wei Dai released a proposal for distributed digital scarcity based on cryptocurrency and called it b-money. That same year, Nick Szabo also had a similar proposal called Bit Gold. He also aimed for an alternative currency that did not need the involvement of a third party. However, neither of them came to fruition.
When Was Bitcoin Created?
Those predecessors had failed but in 2008, Bitcoin came about. In August of that year, the domain name Bitcoin.org was registered. After two months, a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” was published by Satoshi Nakamoto. Details of how to use peer-to-peer network to generate what he mentioned in the paper was described. The idea behind the paper was similar to the previous ones: safe digital signature, no need for a third party, proof-of-work, and putting the transactions together in a chain.
It was three days into 2009 when the Bitcoin network came into existence. Nakamoto mined the first block of Bitcoin known as the Genesis Block. On January 9, they released the first iteration of Bitcoin software. Three days later, the first-ever Bitcoin was transacted.
Who Is Bitcoin Creator?
To really grasp everything you need to know about Bitcoin history, it helps to know: who is Bitcoin creator? It is a fascinating question since a decade after the technology was invented and notwithstanding a lot of digging into the crypto community, the Bitcoin creator remains anonymous.
It is such a mystery that some believe it is more than one person since the Bitcoin network is a very comprehensive creation. On the other hand, some believe it is only one person. The theories are yet to be verified.
A person or a group called Satoshi Nakamoto published the principles behind Bitcoin in 2008. Although it was not the first idea for digital currency in the field of cryptography and computer science, it provided a solution to the problem of building trust between online entities. Nakamoto, who is also the answer to the question “who invented Bitcoin”, devised two intertwined concepts. They are Bitcoin private key, which is used to control it, and the blockchain ledger, which is for each private key to be tracked on.
How Does Bitcoin Work?
All Bitcoin transactions are recorded in a public ledger and their copies are on servers around the world. Anyone who has a computer can set up a server that is called a node. Furthermore, the transactions will then be publicly broadcasted to the network and go from node to node. Next, every few minutes or so, miners collect these transactions into a group known as a block and add them to the blockchain permanently.
Similar to the way to put your money in a physical wallet, digital currencies can be put in digital wallets. Users can access them with software or some online and hardware tools.
You can buy Bitcoin and sell it on exchanges with US dollars as well as other fiat currencies. Since the transactions can be anonymous, it is easier to move money across borders. This is one of the reasons why digital currency is popular among libertarians, enthusiasts, speculators and sometimes criminals.
Here is a detailed list of how does Bitcoin work:
- Powerful computers called ‘mining rigs’ work on the equations needed to verify and record a new transaction. In the beginning, a normal desktop PC had enough power to participate, which permitted anyone to mine if curious. These days, however, massive, specialized computers are required. In addition, the owners are businesses or a great number of individuals pooling all their resources.
- In order to assure the ledger is accurate, the Miners’ collective computing power is utilized. Bitcoin is tied to the blockchain in a way that it cannot be separated. Every new Bitcoin and the subsequent transaction will be recorded on the blockchain.
- A question arises as to how the network keeps miners motivated to participate in keeping the blockchain and verifying transactions. A continuous lottery is held by the Bitcoin network. All the mining rigs worldwide compete to solve a math problem first and every 10 minutes, someone will be a winner. The winner will then update the Bitcoin ledger with new transactions. The award changed as time goes by.
- With the value of Bitcoin rising, a key attribute was added which enables buying a small fraction of one Bitcoin. The smallest unit of Bitcoin is referred to as a “Satoshi”.
- Nakamoto decided to ensure scarcity by setting a number for Bitcoin, which is 21 million. Currently, about 3 million Bitcoin is available for mining, with the last blocks predicted to be mined in 2140 as it is happening more slowly.
Bitcoin Price History
2009
On January 12, the first-ever Bitcoin transaction happened when Nakamoto sent 10 Bitcoins (BTC) to Hal Finney, the computer programmer and developer. In October of that same year, the first exchange rate of Bitcoin in cryptocurrency history was published. They considered $1 to be worth 1,309.03 BTC.
2010
When an exchange rate was put on it, it was just a matter of time until someone tried to actually purchase something using Bitcoin. It occurred on May 2010. Laszlo Hanyecz, a programmer in Florida, sent 10,000 BTC to a local restaurant for two pizzas, worth $25. After the purchase was made, many started seeing potential in it. A few months later, Bitcoin’s value went beyond the penny threshold.
That was a pivotal year in the Bitcoin price history as later that year, the first mining pool successfully mined Bitcoin. By November, the market capitalization of BTC went beyond $1 million for the first time. However, to mention the one and only major security flaw in the Bitcoin history, someone saw a vulnerability in its protocol in October. The transactions were not verified properly, generating 184 billion BTC. Hours later the transaction was found and erased. Moreover, the bug was also fixed.
2011
It was gradually gaining value and in February of 2011, Bitcoin came across a milestone. 1 Bitcoin was worth $1 for the first time.
There was good and bad press for Bitcoin that year. TIME Magazine published a Bitcoin-related article and so did Gawker. Through the word of mouth after the publicity, Bitcoin’s price began to rise. By June, it was worth over $30. However, it crashed back to over $10 soon after. Despite all that, Bitcoin was gaining more popularity as the cryptocurrency grew.
2012-2013
2012 was a smoother sail for Bitcoin and looking at the notable moments that year, Bitcoin crossed the $100 threshold in April. In 2013, Bitcoin price went through ups and downs; however, its value went beyond $1,000 for the first time.
2014-16
During this period, Bitcoin stalled. At the beginning of 2014, it fell below $1,000 and struggled for a couple of years. Crypto exchange Mt. Gox going bankrupt was one of the events of that time. However, Bitcoin went through rising and falling phases while not reaching its high in those years.
2017
The busiest and biggest year for Bitcoin was 2017 following desperate years of trying to make its way back. It successfully reached and surpassed the $1,000 mark and by June, its worth was more than $3,000. Another important fact that year was the frustration of the users with the network. As there were more miners, higher fees and more time were spent on transaction processing. Therefore, many were asking for an increase in block size. This resulted in the creation of Bitcoin Cash (BCH) in August of 2017. BCH is now the fifth largest crypto considering market capitalization.
2018-2019
Bitcoin endured a rough year in 2018, especially for those who thought it would only keep ascending. However, there was a 76% drop that year and many sold their Bitcoins.
2020-2022
In 2020, when the coronavirus pandemic hit, it heavily affected the Bitcoin price. It dropped 50% at the beginning of the year, with 25% of that coming in 24 hours. However, the value recovered in late 2020 as it reached a new all-time high of $19,850.
At the beginning of 2021, Bitcoin went through ups and downs, reaching an all-time high of $66,974.
Currently, in January 2022, Bitcoin’s value is $41,314.