A Short History Of Bitcoin And Cryptocurrency Everyone Should Read
The Idea for Cryptocurrency
Bitcoin hit news headlines this week as the price of one unit of the cryptocurrency passed $11,500 for the first time.
Although it’s often referred to as new, Bitcoin has existed since 2009 and the technology it is built on has roots going back even further. In fact if you had invested just $1,000 in Bitcoin the year it was first publicly available, you would now be richer to the tune of £36.7 million.
Those who don’t learn from history are doomed to repeat its mistakes – so here is a brief history of Bitcoin and cryptocurrency.
Although Bitcoin was the first established cryptocurrency, there had been previous attempts at creating online currencies with ledgers secured by encryption. Two examples of these were B-Money and Bit Gold, which were formulated but never fully developed.
In 2008 Satoshi Nakamoto published his whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” which detailed how he intended to create a digital currency that could be exchanged peer-to-peer without relying on trust or third parties such as banks or governments to authenticate transactions - thus becoming an alternative form of payment system free from government control or interference.
The idea was not new though - rather it was inspired
The Beginning (2008-2010)
The genesis block was mined on January 3, 2009, by Satoshi Nakamoto, who embedded a headline from The Times newspaper on the first block in order to permanently refer to the economic preconditions that lead to the technology of Bitcoin.
The first block of 50 Bitcoins is now referred to as the Genesis Block. Bitcoin had almost no value for the first few months of their existence. Six months after they started trading in April 2010, the value of one Bitcoin was less than 14 cents. In May 2010, Laszlo Hanyecz bought two pizzas with 10,000 Bitcoins (now worth $20 million), and by early November it surged to 36 cents before settling in at around 29 cents.
The Market Begins to Form (2010-2016)
Cryptocurrency has been a hot topic these days, with Bitcoin’s meteoric rise in value and the explosion of many other digital currencies. As with any new technology or financial product, there were risks involved. The anonymity and lack of centralized control made cryptocurrency a lucrative venture for criminals, as evidenced by the 2014 collapse of MtGox, which lost 850,000 bitcoin—at the time, equivalent to $400 million USD.
Though cryptocurrency wasn’t inherently bad (and it can be used for good), it carries a lot of risk. 7 major cryptocurrency exchanges were hacked , losing more than $100 million USD in total. Hackers have also targeted individuals—a woman in New York reported losing $28 million USD worth of bitcoin after she was swindled by a friend who claimed to be an FBI agent helping her transfer money overseas.
To protect yourself from these types of scams and hacks: use a hardware or software wallet to safely store your cryptocurrency rather than storing them on an exchange; do your research before investing in any company or product; and be aware that there is no guarantee against losses when trading cryptocurrencies.
Bust and Eventual Recovery (2018-Present)
In recent years, cryptocurrencies have seen a massive spike in popularity. Bitcoin reached its all-time high in December 2017 at around $20,000, and then Ethereum also reached its own all-time high in January 2018 at around $1,400. However, by the end of 2018 Bitcoin had dropped down to around $3700. Prices did not stay down however, and since the end of 2018, Bitcoin, along with most other cryptocurrencies, Ethereum included, have rebounded in the present.
While the volatility of cryptocurrencies is both attractive and potentially devastating, the underlying technology behind them all—blockchain—has the power to change many sectors of our society. Whether it’s providing accessible and affordable financial exchange options or securing your own funds so that no one but you can access them, blockchain technology can be used in almost any area of our everyday life.