How Crypto currency Became A Thing
If you’ve read the news lately, you’ll know that Bitcoin has been gaining in popularity. But what most people don’t know is how this currency came to be. Here’s a brief rundown of how cryptocurrency began and its early days as an unregulated, decentralized form of payment.
Bitcoin was created in 2009 by someone under the alias Satoshi Nakamoto. Though there is plenty of speculation about who Satoshi is or where they are located, no one knows for sure who it really is. The first bitcoin was mined on January 3rd, 2009 and the first transaction took place on January 12th when 10 bitcoins were transferred from one address to another. This was the start of this decentralized currency.
Transactions could only be made on the network if you had bitcoins. You needed a digital wallet and bitcoins to be able to do any type of transaction online.
In early 2010, the first bitcoin currency exchange opened up and there were less than 10,000 bitcoin in circulation. According to Google Trends, there were only about 100 searches for bitcoin in March of that year. Today that number is over 250,000 . The price went from 8 cents per bitcoin on January 1st, 2010 to $10 per bitcoin on June 1st of that same year . The price slowly rose over time as people started figuring out what Bitcoin was and how they could use it for their transactions.
In 2011, the bitcoin network split as a result of a disagreement on how to upgrade the software. The two factions are still warring today to decide which version of Bitcoin will be the one and only Bitcoin.
Through 2011 and 2012, governments around the world started putting pressure on banks and payment systems to cut off access for people using bitcoin in transactions. This led to a series of virtual double-spending attacks by miners that created chaos in the bitcoin network. It was really bad at this time and most of the people who traded or mined bitcoin were in it because they thought it was going to be big. Eventually, there were enough people mining bitcoin that the transaction time and fees became competitive with traditional payment systems like Paypal. Since then it’s been a wild ride with bitcoin. There have been thefts, earnings, scams, high risk investments and everything else you can think of. Ethereum is the current “in” thing while bitcoin has fallen out of favor for many investors. Other cryptocurrencies are being created all the time as well as other forms of crypto currency like Monero and Ripple. This is a rapidly changing market with new innovations popping up every day.
You can still buy bitcoins today from Coinbase or other exchanges and pay for them using your credit card or bank account (with low fees). You can also buy them from a friend or someone nearby who has them and use cash. Then you just have to enter the recipient’s address and the amount of bitcoins you want to send in the wallet. Then click “Send” and it’s done. You don’t need any extra fees or anything like that like other payment systems charge. Most wallets will have a QR code as well so you can scan it and send bitcoins to someone with your phone. Bitcoins are not controlled by any one entity or currency exchange so they can be transferred anywhere around the globe in an instant at a very low cost to the sender (but high fees for miners who verify transactions). There is a limit to the amount of bitcoins that can be created at any one time and this is part of the reason why they are so valuable.
Many people have been trading or mining for bitcoins because they think it is going to be big. Recently, however, there has been a lot of attention on bitcoin as well as other cryptocurrencies like Ethereum. There are many reasons for this. First, Bitcoin recently reached the $1,000 per coin mark for the first time in its history and some investors just got scared out of their money by this. Second, there are reports that governments around the world are starting to crack down on cryptocurrencies like bitcoin as an unregulated form of money that could create issues with countries getting involved in their affairs. How did people react to this issue? They bought more. There is always a lot of speculation in the markets so this reaction was just normal. Again, the price only went up because there was a lot of investment interest and lots of people mining it which keeps it secure.
While I’m not saying that bitcoin, Ethereum or any other crypto currency won’t fall out of favor someday and lose all their value, I do believe that if they are used in transactions more often they will become more valuable (as long as the network remains functional). You could make an argument that cryptocurrencies are not real yet but I see them as being around for a while to come. They’re definitely here to stay.
