Bitcoin turned 10 years on January 3rd this year 2019. The first lines of code were committed to the bitcoin blockchain on January 3rd, 2009, a few months after the publication of the original whitepaper. These lines of code, known as the “genesis block,” are credited to the person or persons known as Satoshi Nakamoto.
The Birth of Bitcoin
A week after, on January 12th, Nakamoto sent 10 bitcoin to Hal Finney, and a new financial system was born. At this point, the bitcoin’s worth was negligible. Users essentially gave each other bitcoins as rewards for good comments in forums just like you will do with an emoji. The first “real” transaction took place on May 22nd, 2010. Laszlo Hanyecz bought two pizzas for 10,000 bitcoin, or about $30. Comparing with the current prices, 10,000 bitcoin would be worth $38 million. I sure hope that pizza was satisfactorily tasty.
There are three main communities that can be identified as the prime movers of bitcoins, in some cases these group overlaps:
- First, the small community of original investors and true believers,
- Second, the blockchain technology die-hard fans, and
- Third, the speculators who are just here to make some money.
Bitcoin was born out of this original philosophy: To provide “A purely peer-to-peer version of electronic cash would allow online
payments to be sent directly from one party to another without going through a financial institution.” – Satoshi Nakamoto-Bitcoin: A Peer-to-Peer Electronic Cash System
In a simple term, Instead of a central bank that regulates financial institution, it had programming and some form of cryptography. This arose out of Nakamoto’s skepticism about ordinary financial institutions and to avoid any “trusted third party” involvement in transaction while eradicating any form of transaction charges which he called “double-spending”.
Bitcoin to the Rescue?
2008 was the year of Banking crisis, and amid this crisis, many groups made attempts at digital cash as some sort of alternative, but none of them truly took off. However, In August 2008, someone registered bitcoin dot org as a domain; that year, a paper went up describing a decentralized system for electronic transactions that did not rely on trust. The original Nakamoto’s paper describes it as saying: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
Bitcoin highlights how fundamentally bizarre money is. And in 2009, a lot of people were looking for alternatives to the mainstream financial system that had catastrophically failed. The core of banking, as most people understand it, is money. Of all the many previous attempts at internet-based currency, bitcoin was the one that broke out as the best possible alternative to society’s collective anxieties around the financial system.
Gaining More Acceptance
In the period of 2010 to 2014, Bitcoin gained more acceptance in the dark web of the underworld marketplace, Silk Road. In fact, When the Silk Road was seized by the US government in 2013, that seizure included 144,336 bitcoins that belonged to Ulbricht. In 2010, Mt. Gox (“Magic: The Gathering Online eXchange”) which wasn’t originally founded for bitcoin, launched a bitcoin exchange early. Mt. Gox let people buy bitcoin and sell using bank transfers; in 2011, its founder, Jed McCaleb sold it to Mark Karpelès. However, Mt. Gox filed for bankruptcy in 2014 after clients complained that they couldn’t withdraw their bitcoin. Its failure could have been catastrophic; Mt. Gox was responsible, by some estimates, for 70 percent of all bitcoin ever traded as of February 2014.
At the end of 2014, Microsoft began accepting bitcoin payments, according to Cointelegraph. In 2015, bitcoin was a cover story in The Economist. During this period, other cryptocurrencies — also based on the blockchain — began to emerge, the most important of which was Ethereum, launched in 2014, with an initial coin offering (ICO) that raised $18 million.
Boom!!! Bitcoin on The Rise
In 2017, the US Securities and Exchange Commission (the money cops) announced that under some circumstances, financing events for digital currencies would be regarded as securities, and it proceeded to file suit against a string of scammycoin projects for violating securities law. In some instances, this is potentially a way of legitimizing cryptocurrency.
During 2017, bitcoin’s price surged more than 1,000 percent, and on December 17th, 2017, bitcoin hit its all-time high of $20,000. Presently, as of this writing, cryptocurrencies generally — and bitcoin specifically — were being traded by the likes of venture capital firms.
2018 was rougher for those speculators, as bitcoin fell off 80 percent from its high the year before. And as its price fell, most people’s interest waned, but not that of finance professionals who can make money when assets increase or decrease in value.
Other Impacts of Cryptocurrencies
Outside of the financial community, bitcoin’s unexpected popularity has come with a cost. So many people are mining bitcoin that the powerful chips used by scientists have doubled in price, making it more difficult for astronomers, among others, to do their jobs. Bitcoin mining also consumes a lot of energy and produces a lot of emissions, which is very worrying to climate advocates.
Do you trade or use bitcoin, how has been your experience? Share in the comment below.
Credit: Elizabeth Lopatto of The Verge