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Bitcoin – Everything you need to know.

By Alex Nimoy Oct. 12, 2019, 9:56 a.m.
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Due to the arrival of bitcoin and the blockchain it seems like we finally have a quick, secure and anonymous way to make online transactions. Wei Dei first presented the concept of digital currency in 1998. Nick Szabo, who is considered as a pioneer of the blockchain technology is the one who came up with the idea of digital currency. He called it ‘Bit Gold.’ Though these idea didn’t succeed in its early days, the concept of the blockchain technology led to the invention of BTC in 2008.

The history of Bitcoin:

The legendary creator of Bitcoin, Satoshi Nakamoto, supposedly started his work on the project back in 2007. Nakamoto is a mysterious figure which is speculated to be a collective pseudonym that could be more than one person. After a long-awaited work of Nakamoto, Bitcoin.org got registered on 18th August 2008. The Bitcoin domain was registered at anonymousspeech.com. This was the website that allowed users to register domain names anonymously. After it’s registration on the 31st October 2008, Nakamoto published a white paper that described its features and how it ran. This was the day that changed the course of the blockchain industry. Finally, the issue of double-spending was resolved, and the currency was safe from being copied. On January 3rd, 2009, Nakamoto mined the very first block, giving the cryptocurrency a new direction. Block 0, which was also known as ‘Genesis Block’ was mined at 18:15:05 GMT. Continuing the road to glory on January 9th, 2009, the first version (V 0.1) of Bitcoin got released. It was composed with MS Visual Studio for Windows and included a BTC generation system which could generate 21 million Bitcoins by 2040.

The rise in popularity

The very first transaction using this cryptocurrency was made on the 12th January, that took place between Satoshi and Hal Finney (a developer and crypto activist). Moving on, later in 2009 an exchange rate for Bitcoin was set at USD 1 = 1,309.03 BTC. By the end of the year, Bitcoin launched its second version, V 0.2. Entering 2010, on March 6 a new currency exchange was born on the name of Bitcoin by dwdollar. This was the first time Bitcoin made into the global market. On May 22, the first real-world transaction made using Bitcoins took place in Florida. It was a programmer that purchased a couple of pizzas for 10,000 BTC. This an excellent win for cryptocurrency, as it neared towards its goal that was the real-world usage Then later in Oct, the first public version of OpenCL miner was launched. And since then, Bitcoin has kept on moving forward and has proved its significance to the world with its improving technology.

The Blockchain and how it works:

It’s pretty much clear that a blockchain consists of blocks which are interconnected to form rows and columns. Once data is added to the block, it sends that data to the other blocks next to it and forms a chain. It is a distributed ledger that expands across a network while peering with the other blocks. The peers have a specific copy of an entire ledger. When a block is created, a node starts a transaction and then it sends a digital signal through its private key. The transaction data formation carries some logic transfer values, source, relevant addresses, destination addresses, and other valid information that is required in the process. A transaction is proliferated via a flooding protocol, also known as Gossip protocol. It allows to peer which validates the transaction formed on the preset criteria. Typically, for the verification of a transaction in the blockchain, more than one node is required. After the verification of the transaction, it’s added to the block that goes onto the network. This finally makes the transaction valid. After completion of the first block, a new block automatically becomes part of the ledger. At this moment, the transaction gets its second verification, and the block gets its first confirmation, and the process goes on. Six checks are usually needed to finalize a transaction.

How Bitcoin works:

Understanding how the blockchain works, means that you understand the fundamentals of bitcoin. The blockchain is a shared public ledger on which the whole Bitcoin network relies. Once the transactions are verified, they are added to the blockchain. It allows Bitcoin wallets to verify new transactions after computing the spendable balance. This is done to make sure that the spender makes the transactions. Bitcoin wallets have a private key, which allows signing transactions using mathematical proof. The transactions are verified in 10 to 20 minutes via mining. Mining is a process which uses a distributed consensus system to confirm the transactions in the process by adding them in a blockchain. Mining prevents any other users from quickly adding new blocks consecutively to the blockchain. This makes it secure, and no one can make any changes in the blockchain that has been created.

Evolution of Bitcoin over the Past Five years:

Bitcoin is a digital currency which is in the form of electronic cash. It is a decentralized platform that is independent of any central organization. Bitcoin provides with fast, secure, and reliable online transactions that have evolved a new system in the banking world. Within no time, users can send money from one end of the world to the other using Bitcoin. Since the discovery of Bitcoin in the global market, it has achieved so much attention from different organizations, vendors, and world’s top financial firms. Over the past five years, Bitcoin has seen some exciting times, where at one point it reached the peak of Mount Everest, and at the other point, it dropped to the base of Mariana Trench. In overall regard, Bitcoin has improved its emergence. The way it has revolutionized the world with blockchain technology, it seems to be one of the leading technologies of the future. By the end of 2014, Microsoft began to accept Bitcoin payments. This was undoubtedly one of the most significant milestones of Bitcoin that opened the gate to the real-world adoption. During this time period, Bitcoin started to evolve, and the world began to accept Bitcoin. Among these constructive developments, Bitcoin made progress in the market and went through relative stability over these two years. On 9th July 2016, the second halving of BTC mining rewards occurred, where Bitcoin reward dropped to 12.5 for each blocked mined.

The rise of bitcoin

The next year was a rise of dawn for Bitcoin, where many things changed for the digital asset. This year marked the biggest bull run in bitcoin history. After reaching the USD 1000 price mark three years ago, BTC touched the USD 1000 mark one again on 2nd Jan 2017. Bitcoin kept on moving up as on 11th June; it crossed USD 3000 price mark, which was something astonishing for the crypto world. A new twist to the tale came when a few users from the Bitcoin community rejected to accept the new protocol. This incident ended in a hard fork from the original BTC blockchain and in consequence, it gave birth to new crypto named Bitcoin Cash (BCH). A couple of weeks later, the SegWit soft fork took place, which initially led to the BCH hard fork and also opened the way which made support to SegWit. All this happened in a minimal time period of August. Despite some tensions occurring, Bitcoin kept on rising as it breached the USD 5000 mark on 2nd Sep 2017. All was going good for Bitcoin, yet came to another twist when China banned ICOs and crypto exchanges. Due to this incident, BTC dropped to USD 3000. But the odds remained in favor of BTC when it surpassed the USD 10,000 price mark on Nov 29 and reached USD 11,000 couple of hours later. There was no stopping Bitcoin, and it marked the history for Bitcoin when it crossed USD 20,000 mark. Unfortunately, Bitcoin didn’t remain there for a longer time as it dropped back to USD 13,000 by 31 Dec 2017. After having a fabulous 2017, things didn’t seem to work out for Bitcoin. As a wave of FUD entered the market, ending Bitcoin’s price to $10,000. Things didn’t look well for Bitcoin, as its price kept on dropping, as on Feb 6th it touched USD 7,000.

After the bubble

After Bitcoin was already in a crisis’s situation in the market, SEC and Commodities and Futures Trading Commission held a highly anticipated meeting on the prospect of cryptocurrencies, blockchain technology, and ICOs. After a comprehensive discussion, things finished on a positive note for the blockchain and crypto world. Later in March, Twitter banned crypto advertising, while Google also planned to follow the footsteps of Twitter. This led a damaging effect to Bitcoin’s performance in the market, where it bleeped carelessly dropping below $6000 mark. Despite 2018 being a poor year for the crypto market, there was still a lot of hope for the crypto community. As 2019, began with a positive start. On June 26th BTC traded at USD 12,689. The slow and steady progress in 2019 has shown that Bitcoin still a lot left in the tank. This has added agility to the investor’s mindset, and we have again seen massive capital coming into the market. As of the time of writing, Bitcoin was dominating with 65% in the market. Despite the ups and downs of the market, Bitcoin adoption across different firms have increased. Bitcoin is now averaging 350,000 transactions per day at around 15,000 transactions every hour, which is about four a second. Every passing day, new companies are adopting Bitcoin, knowing how important it will turn about to be for them in the future.

Bitcoin and Dark Web:

Being anonymous in many regards, it has attracted many to use the the technology for purchasing illegal items or content online. According to a report, a high number of bitcoins are being traded for illegal stuff online but the numbers have declined a bit over the last couple of years. But what is the dark web? Is it illegal or what? Actually, all dark webs aren’t illicit. They are simply a digital marketplace, where users can come and buy stuff as usual. But due to the sellers making detrimental use, it has become an illegal market on most occasions. These markets do accept Bitcoin payments because of its quasi-anonymous features. Recently, Drug dealers in the U.S. were arrested for being convicted that they used Bitcoin as a mean of financial transactions. The U.S. authorities recovered 2000 BTC’s worth $12 million, at that time.

Conclusion:

Bitcoin has changed the financial world with its breathtaking technology. With certain drawbacks, it still has much to offer, and crypto users look up to that. The currency has advanced in aspects, and its adoption keeps increasing as the world comes to knows the significance of blockchain technology and cryptocurrencies.

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