According to one recent report, as many as 100,000 people might be Bitcoin millionaires. Are you looking to join their ranks?
Arguably the most popular and well-known type of cryptocurrency, Bitcoin came on the scene in 2008. In the years since its inception, it’s taken the financial world by storm, and continues to grow.
Today, we’re taking a look back at the history of Bitcoin. Where did it originate and how did it get to this point? The answers can help shed light on where this coin is going and how you can get on board.
Way Back in 2008: Bitcoin’s Humble Beginnings
To understand Bitcoin’s impressive track record, it helps to go all the way back to the beginning. Its name first appeared on October 31, 2008. At this time, the U.S. was smack in the middle of what’s now known as the Global Financial Crisis, or the Great Recession.
Using the pseudonym Satoshi Nakamoto, a poster made an entry on an online cryptography mailing list. In the message, Nakamoto linked to a white paper, titled “Bitcoin P2P e-cash Paper”. It was this file that would change the face of the financial industry forever.
With a simple title (“Bitcoin: A Peer-to-Peer Electronic Cash System”), the paper laid out how Bitcoin would work.
It also detailed the problems that it was designed to solve, namely those related to third-party involvement in online payment transfers. Bitcoin was meant to be a decentralized digital currency that would allow users to bypass traditional banking institutions when conducting monetary exchanges. Instead, transaction details would be stored in an online ledger, accessible and editable by anyone.
The white paper is still available, in its entirety, on the Bitcoin website.
The Early Months: Mining and Validating
Before it ramped up, Bitcoin was primarily accessed and used by sophisticated miners, who were able to solve complex algorithms to validate the blockchain.
As they solved these complicated math problems, those miners would unlock new Bitcoin “tokens”. They would also verify that previous blockchain transactions were valid and accurate.
From there, they could simply trade those tokens among their community, mostly for fun. It wasn’t until later that Bitcoin would amass real monetary value, though that shift was on the horizon.
Although miners uncovered and shared Bitcoins in those first few months, the world’s first recognized Bitcoin transaction officially took place on January 12, 2009. During this time, programmer and early adopter Hal Finney received 10 Bitcoin directly from Nakamoto himself.
They were available to give because Nakamoto was mining the coin alongside others. In fact, it’s estimated that he mined roughly 1 million Bitcoin before essentially disappearing from the scene. In 2011, programmer and developer Gavin Andresen became the face of the cryptocurrency when he became the Lead Developer at The Bitcoin Foundation.
While the exchange between Nakamoto and Finney was an official transaction, it was considered a private one. The first public transaction occurred on May 22, 2010. On that day, a man from Florida named Laszlo Hanyecz managed to purchase two Papa John’s pizzas with the Bitcoin that he’d mined.
The pies were valued at a total of $25, and Hanyecz paid for them with 10,000 Bitcoin. The transaction helped to establish the real-world monetary value of Bitcoin: four coins to one penny.
Now, hundreds of thousands of Bitcoin transactions occur every day. You can even wager Bitcoin in online casinos! To discover where to safely place your bets, be sure to check out the best Bitcoin casino reviews online, first.
Initial Hiccups and Lessons Learned
For the most part, Bitcoin has become known as a highly secure and regulated network. However, its history does include one instance of vulnerability. This issue occurred in August 2010.
On August 15, 2010, regulators discovered that some transactions weren’t being properly verified on the Bitcoin blockchain. As a result of the breach, some users managed to create more than 184 million Bitcoin in a single transaction. The currency was sent to two network addresses.
Although programmers fixed the bug in hours, the fraudulent activity highlighted the need for updates on the Bitcoin protocol. Those updates eradicated the problem and the network has remained secure since.
The Fluctuating History of Bitcoin Prices
In the early days, the value of Bitcoin was mostly arbitrary. People would log into forums and exchange the cryptocurrency for goods or services, deciding among themselves how many should be exchanged.
Before long, other competitors joined the club, and the Bitcoin price became much more important. In 2011, networks like Ethereum and Litecoin emerged, and interest around the cryptocurrency community started to surge. It was this rise in popularity that contributed to the rise in Bitcoin value.
After all, this is and has always been, a type of currency whose value is in perception. If the public is interested in Bitcoin and perceives it to be a valuable investment, then the price surges. Likewise, it dips when interest is down.
As more crypto networks joined the scene, perception rose. Some major retailers and brands even began accepting cryptocurrency as a valid form of payment.
Between 2011 and 2017, the price of Bitcoin continued to ebb and flow. It hit a major high in December 2017, when each coin was valued at around $20,000. Within a few months, the pendulum was swinging in the opposite direction.
By February 2018, the currency’s value dropped 51%. Over the next few years, the currency earned a reputation for being very volatile, often fluctuating by thousands of dollars over the course of one day. In April 2021, the value skyrocketed to around $65,000 per coin.
Will You Join the Bitcoin Movement?
For all of of its volatility, Bitcoin remains an intriguing and hugely popular form of alternative currency. Whether you want to invest so you can sell and trade, or simply make e-commerce purchases without touching your bank account, it’s worth a look.
The history of Bitcoin reveals the initial challenges that the network had to overcome. There were also many instances that contributed to its inevitable price fluctuations. As you learn more about it, be sure to take these variations into account.
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