Merely 8 years ago, in January 2009, the Bitcoin network came into existence. It started with someone known as Satoshi Nakamoto, the true identity of whom is still remains somewhat of a secret. Mining the first block, worth of 50 Bitcoin, Satoshi started the entire cryptocurrency industry, this first batch of BTC is still referred to as genesis block.
According to the story (since the pre-genesis history is still a mystery), the concept of Bitcoin started back in 2007, but the original patent was registered August 15, 2008 by Neal Kin, Vladimir Oksman, and Charles Bry. And 3 days after filing an application patent the anonymousspeech.com domain was registered, which can be considered as true birth of Bitcoin.
Bitcoin for Dummies: How Cryptocurrency Works?
Although most people nowadays heard of Bitcoin and cryptocurrency in general, not many actually realize how it works.
First thing to know, is that all cryptocurrencies are designed in a way that gradually decreases production of currency, essentially mimicking the model of precious metals and creating ultimate ceiling on how much money can be in circulation.
Next on your mind – how does Bitcoin mining work? The Bitcoin network is a public ledger most commonly referred to as “block chain”. Essentially, the user who wishes to mine Bitcoin buys them by providing computational power for transactions processing. There is a fixed rate at which Bitcoin is created, and when competition (the demand) rises, so does the price, following the basic principles of economics.
The value of cryptocurrency lies not in the precious metals that are tied to the currency through national treasury, like traditional money. The value of Bitcoin comes from its “usefulness” as a form of money, as well as the demand and supply balance. The price is tied to pure mathematical algorithms and not the weight of gold in a vault. The fact that now, the network is widely spread is the reason why Bitcoin so expensive.
To put it simple, Bitcoin worth money, because people are willing to accept them as payment. Isn’t that how all currencies started?
Further Into the Future
In January 12, 2009 the was the very first Bitcoin transaction ever made. Soon afterwards, the mathematical algorithm was fully established and exchange rate was set. At this time, one Bitcoin was worth less than a US dollar, $1 = 1,309.03 BTC, to be precise. Those were the good old days.
Next significant step was in December, same year. The Bitcoin 0.2 is released and soon afterwards the difficulty of mining increases.
Up until that point, there was no official service that could actually convert your easily mined Bitcoin into traditional currency. Making BTC, pretty much useless for a general public. So, in february 2010 the Bitcoin currency exchange was officially established, followed by approved encryption patent.
Bitcoin Price History
You might not believe it but first 10,000 BTC (that’s right) were spent on pizza, of all things, the estimated price of a this amount was just about $25.
On July 7, 2010 there was an official release of Bitcoin 0.3. Then a single mention of BTC v0.3 on slashdot brought in a lot of new Bitcoin users. And just the day after that, the value of the cryptocurrency increases 10 times, from 8 tenth of a cent to 8 cents per coin.
Next, over a couple of months the entire network exceeded $1,000,000. We can go on and on about the following things that occur over next years, but it’ll take a long time, so here’s the breakdown for you:
- March 21, 2013 – Bitcoin value rises to $74.90/BTC
- March 28, 2013 – Market cap reaches $1 billion
- April 10, 2013 Bitcoin reaches an exchange rate of $266/BTC
- April 20, 2013 – Bitcoin Crashes
- May 23, 2013 – Bitcoin Central gets hacked
- October 2, 2013 – the price drops from $139/bitcoin to $109.71/BTC (If only we knew)
- November 6, 2013 – Bitcoin sets at $269/BTC
- November 17, 2013 – Bitcoin doubles in value
- November 19, 2013 – Bitcoin goes above $1000/BTC
- Up until, March 2017 Bitcoin has a bumpy ride, until it spikes again to over $1,000
- May 2017 – Bitcoin doubles yet again
- June 2017 – Bitcoin reaches $3,200+
- September 2017 – up to $5,000
- 12 September 2017 – Bitcoin goes down to $2,900
li<>December 2013 – Bitcoin crashes again, now to $650–$800 range.
After that the Bitcoin sees a constant increase until now, with top value ever reached of $8004.59/BTC.