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What is Bitcoin?
Bitcoin is a cryptocurrency, a digital asset intended to operate as an exchange medium that is decentralized and uses encryption to govern its creation and maintenance. It's a peer-to-peer electronic cash system that's also used as a store of value, similar to gold. It can be bought, sold, and exchanged without the use of a middleman such as a bank. The maximum supply of bitcoin is 21 million, and that's all there will ever be.
History of Bitcoin
In 2008, a person using the pseudonym "Satoshi Nakamoto" submitted a white paper titled "BitCoin: A peer-to-peer electronic cash system" which gave birth to blockchain technology and bitcoin. The white paper detailed a peer-to-peer network to be created and was characterized as "an electronic transaction system that does not rely on trust". The domain ‘bitcoin.org’ was also registered in the same year.
Later, in early 2009, Satoshi Nakamoto mined the genesis block (i.e., the first block of the bitcoin blockchain network, also called block 0) of the bitcoin network and got a reward of 50 bitcoins. The first block consists of the message "The Times Jan/03/2009 Chancellor on brink of second bailout for banks." which was the headline from the British daily newspaper "The Times," published on January 3, 2009. Nakamoto is thought to have mined 1 million bitcoins in the early days of Bitcoin before vanishing from the scene.
The first open source bitcoin client, hosted at SourceForge, was launched on January 9, 2009. It is said that Hal Finney, a programmer, was one of the initial believers, users, contributors, and receivers of the first bitcoin transaction.
Why does Bitcoin have value?
Bitcoin has value "because people think it does," - Bryan Routledge, professor at Carnegie Mellon University.
"Gold, like your $100 bill, is assigned that value by humans. The $100 banknote is worthless in and of itself. That is the value we attach to it. " -Kiana Danial, author of "Cryptocurrency Investing for Dummies."
At the time of writing this article, one bitcoin is worth around sixty thousand US dollars, but in the early days of bitcoin, it had no value. When it was created, there were no exchanges or markets, and users were mostly cryptography enthusiasts who were transmitting bitcoins for fun at cheap or no cost. Laszlo Hanyecz made the first real-world transaction on May 22, 2010, when he purchased two pizzas in Jacksonville, Florida, for 10,000 BTC, which would be millions of dollars if held till now.
Bitcoin has certain characteristics of a currency, but its primary source of value is its limited supply and rising demand, which meets the basic demand and supply rules of economics. People believe that Bitcoin's value will continue to rise due to its restricted total supply (i.e. 21 million), which raises demand for it and drives up its price, comparable to gold.
Bitcoin Price History
When bitcoin was first created in 2009, it was practically worth zero in terms of value. In July 2010, Bitcoin began trading from roughly $0.0008 to $0.08 per coin. Since then, Bitcoin has gone up to $69, 000 in November 2021. Though the bitcoin price is too volatile, here are some of the price events to remember.
- Bitcoin and the US dollar reached parity in February 2011. That implies the price of Bitcoin has surpassed $1.
- The year 2013 was a watershed moment for Bitcoin's price. The digital currency began trading at $13.40 in the same year and saw two price bubbles. The first was in early April 2013, when the price was raised to $220. Early in October, the coin was trading at $123.20. By December, it had climbed to $1,156.10. It decreased to around $760 shortly after that.
- Bitcoin's price surpassed the December 2013 high of $1,156 in March 2017 and later went above $1,290.
- The price of bitcoin surpassed $2,000 for the first time on May 20, 2017.Later that month, on September 1st, 2017, the price of bitcoin broke $5,000 for the first time, and on December 17, 2017, the price had risen to $19,783.
- Bitcoin's price unexpectedly fell below $3,300 on December 7, 2018, a 76 percent fall from the preceding year and a 15-month bottom.
- The price of Bitcoin gained a major all-time high of $19,850 on November 30, 2020.
- The price of Bitcoin hit a new all-time high of $50,000 on February 16, 2021.
- On April 14, 2021, the all-time high price of $64,800 was hit.
- Bitcoin was trading at $30,000 and below on May 19, 2021.
- Bitcoin reached an all-time high of $66,000 on October 20, 2021.
As we can see, the bitcoin price is extremely volatile. The cryptocurrency market is immature and is easily influenced by economic news, acceptance and banning rules, influencer opinion, and blockchain events. It causes bitcoin price volatility and rides the price like a roller-coaster.
Bitcoin major upgrades and achievement
- The Bitcoin Foundation was established in September 2012 to encourage bitcoin's growth and adoption.
- US Financial Crimes Enforcement Network issued regulatory guidelines for "decentralized virtual currencies" like bitcoin, designating American bitcoin miners who sell their generated bitcoins as Money Service Businesses (MSBs), which must register or comply with other legal criteria.
- In October 2016, a group of 35 developers released Bitcoin Core 0.13.1, which included the "Segwit" soft fork, which sought to reduce transaction fees while also increasing the network's maximum transaction throughput. It also included a scaling upgrade targeted at optimizing the bitcoin block size.
- In August 2017, there were two major forks in the road. The first, Bitcoin Cash, is a hard split off the main chain, whereas the second, Segregated Witness, is a soft fork. A blockchain fork is characterized as a split in the blockchain into two paths forward, or as a change in protocol regulations.
- CVE-2018-17144 was assigned in September 2018 to address an issue that could allow the production of blocks that exceed the 21 million coin limit. An anonymous source found and reported the vulnerability.
- MicroStrategy, a business intelligence firm, invested $250 million in bitcoin as a treasury reserve asset in August 2020.
- Tesla (Elon Musk's electric vehicle manufacturing company) announced a $1.5 billion bitcoin purchase on February 8, 2021.
- The Legislative Assembly of El Salvador approved in June 2021 to make Bitcoin legal tender in the country.
- The Taproot network software upgrade, which added support for Schnorr signatures, improved smart contract functionality, and Lightning Network, was authorized in June and installed in November.
Bitcoin is a peer-to-peer electronic cash system that's also used as a store of value. It can be bought, sold, and exchanged without the use of a middleman such as a bank. The maximum supply of bitcoin is 21 million, and that's all there will ever be. Its primary source of value is its limited supply and rising demand, which meets the basic demand and supply rules of economics. Bitcoin's price has risen from $0.08 per coin to $69,000 in November 2021.The Bitcoin Foundation was established in September 2012 to encourage bitcoin's growth and adoption. To summarize, this blog post gave us good insight on history of Bitcoin.