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In this post, we will discuss on the overview of Bitcoin, Bitcoin history, and how it works for end-user.
Recently, Bitcoin has celebrated its 10th anniversary and got a huge attention of people, especially those of investors. On this occasion, we will give you an opportunity to explore the journey of Bitcoin that you need to know. Before diving directly into the history, it is important to introduce the term ‘Bitcoin’.
Overview of Bitcoin
Bitcoin is a digital currency / cryptocurrency that does not require any third party or financial institutions for transactions. It is global and independent of any countries’ currencies. Anyone connected to internet can use it. User can use Bitcoin Wallet to save their money and can do transaction using it.
The wallet comes with one or more ‘Wallet Address’. The address is unique and thus gives a full surety of protection. One can easily access the wallet, whether they use browser on computer or mobile apps on smartphone. After successful installation, user will get a wallet address, which is required for transactions from any locations across the world.
History of Bitcoin
Satoshi Nakamoto (a pseudonym whose identity is still mysterious) brought the concept of digital currency called Bitcoin into existence. Amid the global crisis due to collapse of Lehman Brothers, Bitcoin.org was registered on August 18. Nakamoto created a whitepaper and mentioned several steps to prevent it from misuse.
In 2009, Nakamoto created first block of transactions. It was block# 0, which was the foundation of all blocks of today’s block chains. During this year, the first transaction took place in block 170. It was just an experimental transaction done by Nakamoto and a programmer named Hal Finney.
After this, they established Bitcoin exchange rate, at very beginning a dollar was equivalent to 1,309.03 BTC. They released both versions of Bitcoin 0.1 and 0.2 during this year.
In 2010, Bitcoin market came into existence and the first real world transaction took place. Laszlo Hanyecz, a programmer, ordered pizza by offering 10,000 Bitcoins on this forum. During this year, Bitcoin launched version 0.3 and the first mobile transaction took place, using Bitcoin as a currency.
In 2011, the largest Bitcoin trade occurred and achieved parity with dollar. In 2013, Bitcoin surpassed the market cap of $1 billion. During the year, first Bitcoin ATM was setup in San Diego.
The year 2014 was not that great for Bitcoin – Charlie Shrem, CEO of BitInstant, was taken into custody for an illegal money laundering in connection with Silk Road. In the same year, MtGox suspended the withdrawals referring the technical issues. He later filed for bankruptcy protection. According to data, there was a theft of total 744 k Bitcoins. This was the main reason why Bitcoin collapsed during this year.
The year 2017, witnessed a major jump for Bitcoin currency. Remembered as a Bitcoin year in cryptocurrency domain, it achieved highest net worth of approximately $19,500 for a minor span, until date.
How Bitcoin Works?
The main purpose of inventing Bitcoin was to remove the necessity of any third party for financial transaction. If user has to transfer money globally, they have to pay heavy processing fee to bank or other financial institutions.
People using Bitcoin currency can do all types of transactions without any third party intervention. As mentioned above, user need to download the Bitcoin Wallet that comes with a unique address. Once downloaded, they get both public and private key, which are just as username and password. Those who wish to send money need user’s public key.
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The records of all transactions are stored in a database, which appears like an Excel Sheet. Since Bitcoin works on the decentralized network, its database is shared, which is most commonly referred as distributed ledger. User can access it with use of blockchain. In order to send Bitcoin, user have to first sign a message digitally. The message will then appear to all computers, which are in the network. And the message is finally stored in the database for final transaction.
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