The age of cryptocurrency began with the introduction of bitcoin. Since the introduction of bitcoin, a number of other cryptocurrencies have been created and branded the word ‘altcoin’ meaning alternative coin. Bitcoin first appeared in the market in 2009. Since then the price of a single bitcoin has sky rocketed to beyond $19,500. However, this has not been an easy journey for the cryptocurrency.
History of Bitcoin (BTC)
Cryptocurrencies are designed to be anonymous. Therefore, the origin of this cryptocurrency is unknown because the founders probably want to remain unknown. Bitcoin began with the introduction of a new domain in 2008 which was anonymously registered. The domain, bitcoin.org, started to circulate the news about bitcoins online. A paper was then published two months later which had a title named ‘Bitcoin’. Afterwards a cryptography mail was passed around a few individuals and a peer to peer system was created. In the publication, bitcoins were permanently linked to the username ‘Satoshi Nakamoto’ which is still an anonymous person.
The core of the bitcoin is through a process known as mining which was first based on people trying to win a lottery in the gaming world. Over 20 million coins have been released since then and the numbers keep trickling-in every day. One of the few guys to ever try this gaming idea was Hal Finney who has continually denied ever been the founder of bitcoin. His story is, he was only an enthusiast who saw an opportunity and seized it. Finney also claims that he interacted with Satoshi Nakamoto, the person behind the invention of BTC.
Finney said that he thought he was actually dealing with some smart Japanese guy who had ancestral history in Japan. Satoshi Nakamoto is thought to be among the most brilliant people of their age. Well, since he is still a mystery, the Satoshi Nakamoto username may as well be a group of hackers who prefer being anonymous.
Back to the history, Finney also said that he was able to detect that Satoshi is a very smart guy. Unfortunately, in the year 2014, Finney died of ALS which is a neuro-degenerative disorder. Among his last online post, Finney claimed that he still didn’t know the identity of Satoshi Nakamoto but he was proud of the fortune he was going to leave to his heir.
In 2010, a few merchants accepted Bitcoins as a currency they could trade goods for. One of the first purchased goods through bitcoins was pizza. Currently, over a million dollars of BTC have been used to purchase pizza. In 2012, the cryptocurrency started attracting tech gurus with the Winklevoss twins purchasing over ten million dollars’ worth bitcoins and in just over six months, their fortune on BTC tripled. Some say that the twins have about 1% of the total bitcoins in circulation.
The unfortunate part is the fact that bitcoins also started attracting illegal trade. Since the cryptocurrency is completely untraceable, this has made it ideal for trades like drugs in the online black market. Bitcoin is digital cash with no rules and a governing system that completely maintains the anonymity of its citizens. This took most illegal business into another level.
In some ways, the acceptance of bitcoins as a form of currency by the illicit trade boosted the use and integration of bitcoin into our society. Even though this was quite unfortunate, the trade made BTC a new currency in the Silk Road since anyone could purchase any type of drug. This benefited both the traders and the investors in bitcoins.
With years passing by, many have tried to know who is Satoshi and why has he decided to remain anonymous. It is clear that his anonymity has partly contributed to the success of bitcoin. If the inventor could be known, he will be facing a huge number of legal court cases since bitcoin has been used to propel a huge number of illegal activities. No one knows the real inventor but the question is; is he proud of what he has made? Does he smile seeing the daily rise in the bitcoin values? Why isn’t he claiming his wealth?
That is some of the mysterious ideas that will always puzzle any bitcoin enthusiasts. I think this anonymity is something that will not end anytime soon. Well, enough of the history, let’s get to the fun stuff; how does bitcoin work?
Understanding Bitcoin (BTC)
The bitcoin ecosystem is quite complex to understand. Using bitcoin is the same as storing your money in the bank. The only difference is in bitcoin, the bank is digital and the money is completely digital too (something that is not like the regular paper and coins).
The bitcoins are usually a block of data that is moved from one person to another for instance; through the purchases of goods or services. The transactions of your money are validated by a group of people and this is what they call mining. The miners allow their computers to be used to safely transact bitcoins and also validate the authenticity of the transaction. The work the miners do is no easy task and through that, they are awarded in BTC. This is how bitcoins enter into circulation. The individual miners can choose to spend their bitcoin to purchase goods and services.
How to Purchase Using Bitcoin (BTC)
Imagine going to the store to purchase a phone. You will use your debit card and the bank will transfer the money from your account to the stores account. Bitcoin acts more or less with the same routine.
If you want to use bitcoin, you first identify your ‘bank’. This is a virtual space where you will store your bitcoins. It is usually referred to as wallets. In your wallet you agree with the seller the amount of bitcoin that you want to transact. Then you can now transfer your money to the seller and get your goods. In this transaction, miners constantly check and validate the transaction and hence prevent double spending.