The cryptocurrency market is still recovering from the events of the last 6 months, but Bitcoin is still holding on to its market dominance at a 46% market capitalization out of a total market cap of $301 billion. The next best currency, Ethereum, is far behind at only 16% market capitalization! Although majority of people have only started to catch on to the cryptocurrency trend in the past few years, it’s important to remember that crypto has been around for almost a decade formally (two decades informally). Let’s take a look at a brief overview of the history of Bitcoin.
Pre 2008 Era
Bit Gold, B-Money and Hashcash were some of the few online currencies with encryption based ledgers that predated Bitcoin. Ultimately though, these attempts at creating ledger systems and electronic cash were unsuccessful, but they did lay the groundwork upon which Bitcoin was built.
In late 2008, the Bitcoin white paper titled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ was distributed on a mailing list concerned with cryptography. It was posted under the pseudonym ‘Satoshi Nakamoto’, a person (or group of persons) whose identity has to this day remained unknown.
The paper’s main goal was to propose a version of P2P electronic cash which solved the problem of double-spending faced by parties.
Bitcoin mining—the process by which transactions are recorded on the blockchain and subsequently Bitcoins are created—started in 2009 with the public availability of the Bitcoin software.
For quite a while bitcoins were only mined by users and never actively traded and so there was no specific monetary value assigned to them. Laszlo Hanyecz made the first Bitcoin transaction by using 10,000 bitcoins to purchase two pizzas. At the time these coins were worth only $40, whereas today they are worth millions.
By this point the idea and need for decentralized, encrypted currencies was starting to catch on around the world and people were investing in Bitcoin. Around this time, other cryptocurrencies which built on the Bitcoin formula but offered additional functionalities started to appear. Notable among these are Litecoin, Namecoin and SwiftCoin. Today there are over 1600 total cryptocurrencies making up the crypto market.
As cryptocurrency acceptance grew, Bitcoin price steadily increased to reach over $1000 for the first time. However a mixture of government institution policies mixed with Bitcoin being associated with criminal activities started a price decline that ended in 2015 with the price little over $100.
This year saw a number of scams and thefts which further propagated the downfall in price, the biggest of which was the Mt Gox exchange theft wherein 850,000 bitcoins (approx. $500 million) were stolen from customers.
Prices faced fluctuation and the emergence of Ethereum in 2016 threatened to overshadow Bitcoin. However, the currency endured and steadily recovered to over $1000 by the end of 2016.
Within the last year and a half, Bitcoin prices have fluctuated as exponentially increasing numbers of people begun investing in and started using Bitcoin for sending / receiving payments. Its volatility is evidenced by its 2017 year end price of $19,000.
However, since then the price has leveled off and decreased as more hacks and thefts surrounding other cryptocurrencies have put people in doubt about the security of the payment method.
Like it or not, cryptocurrency is the next big thing, and Bitcoin is at the top of them all in spite of its rocky history, with influential investors believing the currency will keep going strong in the future.
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