We review the main events that have marked the history of bitcoin to date. A path full of difficulties but which seems to be gradually consolidating itself and which I believe gives us a good idea of the risks and virtues of this electronic currency.
2008 – Financial Crisis
In 2008, in order to overcome the financial crisis that began with the collapse of subprime mortgages in the US, the main central banks initiated an extraordinary monetary policy and began to implement unconventional measures to inject liquidity into the system. The global recession and the sovereign debt crisis in the countries of Europe’s periphery are calling into question the soundness of government-backed fiduciary currencies. The financial crisis is the perfect storm that is planting the seed for a new electronic currency, Bitcoin (BTC), to emerge.
Since the birth of the Internet, there have been several attempts to create a digital currency. However, as digital money is only information token, the same token can be duplicated and spent twice. The way to solve this problem is for a trusted source to verify whether a token has already been worn out or not. Although a centralized authority can be created to perform this function, the system is very vulnerable to attacks as there is only one break-point.
2008 – Bitcoin Innovation
Bitcoin solves the problem of digital coins by creating a chain of blocks, a kind of public “account book”, in which all transactions are recorded and verified by an extensive and decentralized network of computers.
- In August 2008 the domain Bitcoin.org was registered.
- In October 2008, the first document explaining the design of Bitcoin is published.
Satoshi Nakamoto is the pseudonym used by the creator or creators of Bitcoin protocol. To this day, his identity is unknown. In mid-2010 Satoshi Nakamato made his latest public contribution to the development of Bitcoin and passed the baton to Garvin Andresen, who is now the visible head of Bitcoin development.
2009 – The Genesis
- In January 2009, the Bitcoin network was created with the release of the first open source Bitcoin client.
- Satoshi Nakamoto mines the first block of Bitcoin, through which he receives 50 Bitcoin, known as the genesis block.
- The first transaction in Bitcoins takes place when Satoshi Nakamoto sends Bitcoins to Hal Finney.
- In October 2009, the first exchange of dollars for Bitcoins is made at the New Liberty Standard broker. The price of this first transaction is 1,309.03 BTC for $1.
2010 – The Year of the Pizza
- For the first time, everyone can buy Bitcoins for dollars. The first public exchange rates are made at 1 BTC for $0.003.
- In July 2010, Mt Gox begins its services as a Bitcoin broker and will soon become the biggest buying/selling broker in Bitcoins.
- In August 2010, the first major vulnerability in the Bitcoin protocol arises. Until then, transactions were not verified before they were included in the blockchain. This allowed users to overcome Bitcoin restrictions and create an indefinite number of Bitcoins.
Bitcoin is a virtual, independent and decentralized currency since it is not controlled by any state, financial institution, bank or company. It is an intangible currency, although it can be used as a means of payment just like physical money. As stated in the document entitled ‘Currencies or virtual currencies: the case of Bitcoin’, produced by the Directorate-General for Operations, Markets and Payment Systems,’ virtual currencies or currencies’, including Bitcoin, ‘constitute a heterogeneous set of innovative payment instruments which, by definition, lack the physical support to support them’.
The term Bitcoin has its origin in 2009 when it was created by Satoshi Nakamoto (pseudonym of its author or authors), who created it with the aim of using it to make purchases only through the Internet. Bitcoin was born with high ambitions: to provide citizens with a means of payment that enables the execution of rapid value transfers at low cost and that, furthermore, cannot be controlled or manipulated by governments, central banks or financial institutions”.
Virtual currency uses cryptography to control its creation. The system is programmed to generate a fixed number of Bitcoins per time unit through computers called miners. Currently, that number is set at 25 Bitcoins every ten minutes, although it is scheduled to be halved every four years. Thus, from 2017 onward, 12.55 Bitcoins will be broadcast every ten minutes. Production will continue until the year 2140 when the limit of 21 million units in circulation is reached.
Brief history about the founder of Bitcoin
Even if we do not know who Satoshi Nakamoto is or was, we do know what he has done. Satoshi Nakamoto is how the creator of Bitcoin is known. Satoshi invented the Bitcoin protocol and had it published 2008 in a scientific article on the Cryptography Mailing List in November.
No one knows his identity, which makes this all the more mysterious. Who is the unknown person behind a system that is revolutionizing finance from head to toe? In 2009, he published the first version of the Bitcoin client and participated with others in the project until its presence began to fade towards the end of 2010.
He or she worked with others at first but was very careful not to make personal information visible and the last time he or she heard from you was in the spring of 2011, when he or she said: “on to other things”.
“Satoshi” means “clear, ingenious, wise thought.”
“Naka” can mean “means, relationship.”
“Moto” can mean “origin or creation”.
We can’t know for sure if he was Japanese or not, not even his sex, age or any other data. We could even be talking about a group of people, instead of just one individual.
Uses of Bitcoin
If you had any questions, this currency is used for online transactions. It is normal to have an application or Bitcoin wallet and use your Bitcoin to pay for your online purchases. It is a good alternative to paying by credit card or PayPal.
But you can also use it to pay for your purchases at physical stores. The same way you would pay with your credit card, you would do it using your Bitcoin purse. The control of your Bitcoin number is carried out in an exhaustive way, so there are total guarantees on your balance, which cannot be fraudulently manipulated.