Arguably one of the world’s most interesting inventions in recent years, Bitcoin and other cryptocurrencies have begun reshaping a range of industries as well as our thoughts on money. Bitcoin is the most famous of all cryptocurrencies and was established in 2009. Its value has increased dramatically since its inception, but there have been many volatile moments too. Here is a brief history of the cryptocurrency:
What is Bitcoin?
Bitcoin is a cryptocurrency, or in other words, a digital currency. Investors can check out the best crypto South Africa to find out the coin’s current value.
It operates on a peer-to-peer network, which doesn’t involve the use of financial institutions such as banks as third parties. The network is built on blockchain technology, which is a public ledger. What this means is that all transactions that take place are recorded on the Bitcoin network. This is publicly accessible to anyone who is connected to the internet.
One Bitcoin (BTC) is a unit of currency. This is broken down into 1/1,000,000, which is its smallest denomination and equates to 0.000000001 BTC. This unit is called a ‘satoshi’ and is named after the creator. The interesting thing about Bitcoin is that there will only be 21 million Bitcoin ever made. It is expected that the last Bitcoin will be mined in around 2140.
How many Bitcoin are there currently and how did they come into existence?
Currently, around 18,000,000 Bitcoin exist. They are created by ‘mining’ and then distributed as Bitcoin block rewards. The process of mining Bitcoin involves every transaction going through a verification process by the network. This is complex as special computers compete against each other to solve complex algorithms. The one that solves it and confirms the transaction then receives Bitcoin as a reward.
Satoshi Nakamoto – the anonymous creator of Bitcoin
The name Satoshi Nakamoto is a pseudonym for the creator of Bitcoin who wishes to remain anonymous. Though their identity has been speculated, nobody knows for sure who they are.
The start of Bitcoin
The domain Bitcoin.org was first registered in August 2008. In October of that year, the anonymous creator published a paper to a mailing list on the topic of cryptography. The paper had the title: Bitcoin: A Peer-to-Peer Electronic Cash System.
A few months later at the start of 2009, Satoshi Nakamoto launched the Bitcoin network. The first transaction occurred on 12th January when 10 Bitcoins were given to Hal Finney, who was one of Bitcoin’s first supporters, contributors and adopters.
The purpose of this cryptocurrency
When Bitcoin was launched, there was text embedded, which read: “The Times Jan/03/2009 Chancellor on brink of second bailout for banks.” This text illustrated the motive for the new currency. It was taken from The Times newspaper in London. It highlighted the failures of the British government to stimulate the UK economy in the wake of the 2007/8 financial crisis.
Bitcoin has been advertised as ‘trustless’. In other words, there is no third party such as a bank facilitating the transaction. Being peer-to-peer but on blockchain technology means the receiving and sending parties don’t need trust for the transaction to take place. The system works to achieve a consensus without requiring third-party input.
Price history of Bitcoin
The Bitcoin price has been volatile, and investors have faced many bumps in the road. For the first year or two, the currency was worth very little. It was essentially a novelty between the limited number of initial investors.
After the first two years, investors in Bitcoin started to experience its volatility for the first time, and the coin has become renowned for this ever since. In 2011, the value fluctuated considerably. From its value of just $1, it jumped a huge 3200% to $32 in the space of just three months. This was followed by a steep decline and the coin was back to being worth $2 by the end of the year.
2013 can be described as Bitcoin’s decisive year. This was a year in which it experienced two huge price rises. In April, the coin went up 300% to $220 then two weeks later it was trading below $70 again.
In 2017, Bitcoin prices saw a huge rise. The lowest point of this year was in January when it was worth $775.88. By the end of the year, it was $19,783.21. Anyone who invested at the beginning of the year and sold at the end certainly made a lot of money!
More recently, in 2022, there has been a huge drop in the other direction and although prices have started to recover, Bitcoin remains as unpredictable as ever.
Bitcoin’s history – Still the biggest cryptocurrency out there
November 2021 will certainly be remembered as a time when cryptocurrencies really made the news, as this was the highest value ever recorded for Bitcoin. Whether we’ll ever see values like that again remains to be seen! You can find out more about its price history here.
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