A History of Bitcoin

Cryptocurrencies have dominated headlines for a very long time. It is desirable to learn more about the largest cryptocurrency in terms of market capitalization. 

The history of Bitcoin dates back to 2008, when it was first introduced as a decentralized currency without the need for a central bank or any intermediaries. Bitcoin can be sent to and from users via the bitcoin network, a peer-to-peer network where transactions are verified by nodes as well as recorded on a blockchain.

Nobody knows for sure who created Bitcoin. As a reminder, a paper titled Bitcoin: A Peer-to-Peer Electronic Cash System was posted on the last day of October 2008 to a cryptography mailing list with “Satoshi Nakamoto” as the author. 

Nevertheless, Nakamoto has never revealed any personal information about himself, and his identity has never been confirmed. Unsurprisingly, this has led many to believe the name is a pseudonym for one or more creators. 

In 2009, this cryptocurrency was first used after it was released as open-source software when its creator mined the starting block of the blockchain. Notably, this is referred to as the Genesis Block, and the Genesis Block contained the first 50 Bitcoins ever created. 

From there on, it continued to be mined by other enthusiasts until 2010. That’s when programmer Laszlo Hanyecz from Florida made the first known commercial transaction using Bitcoin by purchasing two Papa John’s pizzas for 10,000 Bitcoins. As you know, the price of Bitcoin skyrocketed compared to the time when Laszlo Hanyecz paid 10,000 Bitcoins for two pizzas.

Because of the black market use of cryptocurrency, regulation emerged in several countries, including China. For example, the People’s Bank of China initiated the most impactful regulations with three separate actions:

In December of 2013, the country’s central bank prohibited financial institutions from using Bitcoin.

In September of 2017, the People’s Bank of China issued a complete ban on using Bitcoin.

In June of 2021, the central bank implemented a crackdown on major cryptocurrency miners.

Bitcoin and other cryptocurrencies

Apart from Bitcoin, there are other interesting cryptocurrencies as well. For instance, Ethereum. It is a proof-of-work cryptocurrency that was launched in July 2015. 

Originally conceived as a ‘universal computer’ that could function as infrastructure for a decentralized internet, Ethereum is capable of running smart contracts, which execute pre-specified actions when certain conditions are met. 

Now, let’s discuss Tether (USDT). It is a stablecoin that was launched in July 2014 as RealCoin. Importantly, it is pegged 1:1 to the US currency and backed up by reserves equivalent to the value of its entire supply. 

Running on the Ethereum blockchain (and other chains), it normally records the highest 24-hour trading volume of any cryptocurrency in the market. Notably, this is because traders tend to exit into Tether during dips, even though some commentators have claimed that Tether isn’t fully backed, a charge given weight by the fact that Tether has never undergone a full audit.

We need to mention Ripple (XRP), a cryptocurrency that was launched in 2012 as OpenCoin. It has generally positioned itself as a remittance network, providing cross-border transfers between counterparties and financial institutions. 

Its ledger uses neither a proof-of-work nor a proof-of-stake consensus mechanism, instead using its own consensus algorithm that’s capable of over 1,000 transactions per second, as opposed to around 7 per second for Bitcoin.

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