THE HISTORY OF BITCOIN

The History of Bitcoin

The term ‘bitcoin’ is a buzzword that stands for a consensus network, which enables a whole new system of payment and complete digital money. Thus, it is a sort of digital currency, which isn’t controlled by anybody. Bitcoins are not printed as in the case of Euro or USD. They are the first example of the money category which is referred to as cryptocurrency. The Altcoins such as Litecoins, GCRcoin e.t.c came later on.

The main factor which makes this type of money differ from other currencies is that they are used electronically. But the major characteristic which makes bitcoins stand out among other currencies is that it is decentralized. This means that this currency is not controlled by any institution.

What is the history of Bitcoin?
 Bitcoin is the first implementation of the concept of ‘cryptocurrency”. This idea was first described in 1988 by Wei Dai, who suggested that a new type of money should be created that will use cryptography for its creation and transactions instead of a central authority.

The history of the Bitcoin started in August 2008. Three men, NealKin, Vladimir Oksman, and Charles Bry, developed an application that was designed for an encryption patent application. These three individuals deny that they have had any connection with Satoshi Nakamoto, who is known as the originator of the concept of Bitcoin system. These three men also registered the website Bitcoin.org over the website anonymousspeech.com which was a website where people could buy anonymous domains.

In October of 2008 Satoshi Nakamoto spoke about his new invention, which represented a new type of currency that could only be used in electronic version and which was a peer-to-peer decentralized money system. Satoshi Nakamoto had tremendous success in solving the problem of  money being copied and he gave a starting point for the legal development of the Bitcoin system.

In January 2009 the first block, called ‘Genesis’, was launched which allowed the first ‘mining’ of Bitcoins possible. During that month a transaction between the originator and the cryptographic activist also took place.

In October 2009 the Bitcoin received an equivalent value in traditional currencies. The value of the Bitcoin was established at $1 = 1,309 BTC by the New Liberty Standard. When deriving the equation, it was taken into account that it should first of all include the cost of electricity that ran computers for creating Bitcoins.

In August 2010 Bitcoin was hacked, as a result of which it was discovered how the system should verify Bitcoins. In November 2010 Bitcoin reached 1 Million USD. In March 2013 this amount reached 1 billion USD. This shows how popular the system of Bitcoins had become.

In November 2013 the value of a Bitcoin on an exchange that converted it to USD turned 700$. It was a great gain as compared with its value in 2010.

Who controls the Bitcoin network?

The uniqueness of Bitcoin system lies in the fact that it isn’t controlled by any institution. It resembles the case where the technology behind emailing is controlled by nobody.

Bitcoin is controlled by the Bitcoin users all over the world. While the developers of the program are making certain improvements from time to time, they cannot make any change in the protocol of Bitcoin as all of the users are free in their decision which software and version to use. However, for remaining compatible with each other the users should use the same system that has the same rules. This is really important as Bitcoin can only work when there is a certain consensus among the users. Thus, all of the users and developers need to protect this consensus so that they have a success in their work.

How does a Bitcoin work?

If we look at the Bitcoin from a simple user’s perspective, it is just an application and a program that proved with an electronic wallet via which the users can send and receive Bitcoins. This is how the users think the system of Bitcoin works.

In reality, things look a little bit different. The Bitcoin network is sharing a public ledger that is called a ‘block chain”. This ledger demonstrates the history of transactions so that the computer can check whether this or that transaction is valid or not. The authenticity of all of the transactions is ensured by electronic signatures that are sent from a given address. This enables the users of the Bitcoin system so take control over the transactions that are done from their Bitcoin addresses.

Nowadays, there are a great number of people who make use of the Bitcoin system. The users are usually people who run a brick and mortar business, like restaurants, law firms, apartments and many popular online shops and services. While Bitcoin is a relatively new phenomenon, it has fast grown roots.

How can you acquire Bitcoins?

You can acquire Bitcoins by the following means:

1.                  As payment for goods and services

2.                  Buy Bitcoins at a Bitcoin Exchange

3.                  Exchange your Bitcoins with somebody who is near you

4.                  Earn bitcoins by taking part in competitive mining

Bitcoin has its advantages and disadvantages. However, millions of people trust this system as it is an open source system and it is decentralized.