A brief History of Bitcoin

A brief History of Bitcoin

Who Owns Bitcoin?

When people ask “who actually owns Bitcoin?”, the first name that pops to mind is Satoshi Nakamoto – a coder – who dreamt he could create the world’s first virtual currency. It’s not an accurate answer because a quick google search will show you that the creator hasn’t revealed his true identity, but what exactly did this person do?

What Satoshi did was excellent, you see there are several problems with “virtual money”, people could just create more and never be detected, they could spend one unit twice, and who would monitor the transactions? The simple answer to that is a currency that is owned, regulated and monitored by the people.

The Idea behind Bitcoin

In the founding days of Bitcoin, there were Bitcoin ‘taps’ where you could verify that you’re a human and earn a Bitcoin.

The ‘mining’ of a Bitcoin – literally bringing a Bitcoin to life – is a process through which people can earn Bitcoins. The process is two-faced, solve an extremely difficult puzzle and solve the block of transactions. Once one of the hundreds of people who race to mine Bitcoins have completed the puzzle, a Bitcoin is brought to life and given to the solver.

This allows the currency to be monitored independently, there’s no need for a Central Bank or governing authority to monitor malicious activity. That’s where the decentralized structure of Bitcoin comes in, there can be no tampering with previous transaction and prevents fraud.

The Early Days of Bitcoin

Bitcoin was launched in August 2008, with Satoshi being able to solve one of cryptocurrencies’ major problems, copying bitcoins. This provided the vital foundation to let Bitcoin grow on its own.

In January 2009, the Genesis block was launched in order to allow for the mining process to begin. This led to the very basis of the giant we know today.

As Bitcoin grew and started to gain speed, people began using Bitcoins for exchange. A popular story about a pizza that was bought in exchange for 10,000 bitcoins at the time, is now the world’s most expensive pizza ever sold valued at just under £20mn.

Tough Times for Bitcoin

In August 2010, Bitcoin suffered a major hack in which over 184 billion Bitcoins were created, this led to the price of Bitcoin to plummet and people started to turn their back against online currencies. After the hack in August, Bitcoin continued to suffer as intergovernmental groups exposed vulnerabilities that were being used in order to launder money.

Bitcoin survived the hit however but now was being attacked by a bigger monster; the silk road. The Silk Road was an online marketplace used to sell drugs or any other services on the dark web, the standard currency being Bitcoins.

This gave Bitcoin the spotlight, however people were fed of an image of the currency as one of the dark web, which it was never intended to be.

A Milestone for Bitcoin

About a month after, Bitcoin reached parity with the USD, a milestone for a currency that started worth absolutely nothing. In early 2014, the Bitcoin community came up with the concept of hardware wallets which let users save their Bitcoins.

In June of 2014, the Silk Road was shut down and hence came down the morose image that Bitcoin had developed. The government auctioned the seized bitcoins and removed the stain that the Silk Road had put on Bitcoin.

In late 2014, tech-giant Microsoft announced that it would accept the currency to buy content such as games and videos.

The Future of Bitcoin

So that’s a brief history of Bitcoin, and we know that Bitcoin has a long way to go in financial markets. In a TED Talk by Jeremy Rubin, hilariously called “What the #?!* is Bitcoin?”, he explores the future of Bitcoin and suggests a number of different uses for Bitcoin.

For example, taking a company public can be a tiresome and long procedure however now you can opt for an ICO, an initial coin offering which has now funded companies for over $153 million.

We’ve now understood the use of block-chain technology of Bitcoin in other fields, the banking sector is now testing the ability of block chains in verifying transactions which otherwise need complex software. Bitcoin not only grew itself, it helped other smaller cryptocurrency to emerge and develop such as DogeCoin, Ethereum, and LiteCoin as people began to realize the possibilities of cryptocurrency.

The New Face of Bitcoin

These companies are now gaining traction and have been able to secure millions in funding from the banking and tech industry.

However, the future of Bitcoin might not be in the digital currency aspect of it, but in the block-chain technology, it uses to validate transactions. Experts now claim that the volatility of Bitcoin will lead to a downfall, but the technology will be used in different sectors.

By design, the blockchain is a decentralized technology which allows different computers to jointly manage the database that records all transactions. This removes the need for a central authority, thus government intervention in banking can be practically removed in order to benefit the consumers of such banking services. It saves time and resources for the bank whilst providing assurance to consumers that all transactions on the block-chain are right and verified.

So, will Bitcoins replace dollars tomorrow? Unlikely, but maybe the technology will change banking forever.

If you are interested in moving forward with bitcoins, read our short 3-step guide to buy Bitcoin trading account here!

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About Article Author

Michael Serrano
Michael Serrano

Michael is an engineer and a bitcoin evangelist. He has been involved in cryptocurrencies since 2013. His biggest wish? 1 billion users of bitcoin, ether and litecoin by 2020. In the last 10 years he has worked for various early-stage start-up as a back-end developer.

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