What is Bitcoin?

What is Bitcoin?

In a nutshell, Bitcoin is a digital currency that is transferred from one digital wallet to another. It can be used as fluidly as cash, but it is not tangible. Meaning you can’t actually hold it in your hand, or forget where you put it. It is a series of 1’s and 0’s that is stringed together in a computer program. Or what is known as a “blockchain.”

Once upon a time, Bitcoin is nothing more than “geek” money. Although at the price that it is worth today for a single coin, it has become something far more valuable than gold. Many people see Bitcoin as the new currency. Several countries around the global are turning to Bitcoin and other cryptocurrencies as a fiat currency. Despite the popularity that Bitcoin has today, it had a rocky start.

The Beginning

As far as anyone knows, cryptocurrency started back in 1982 by a man named David Chaum. Dr. Chaum was a scientist who proposed the idea of e-Cash. e-Cash was to be a means for people to use an automated system to process payments and cut out the middleman.

Of course the middle man is considered to be the third-parties that process your credit card payments each time you swipe your plastic card. The idea behind a digital currency was to bring people back to working one-on-one or as the term goes ‘peer-to-peer’.

It took eight years for Dr. Chaum to see his idea turn into a reality with the introduction of DigiCash. Although, DigiCash was founded in Amsterdam and was later put under due to the company filing for bankruptcy. But that single idea spawned something no one expected.

You see, during this time, the internet was still fairly new. Only a handful of people understood the significance of the worldwide web. Those that saw the internet for its potential wanted a currency that could be easily transferred online.

It wasn’t until 1997 when HashCash was introduced by Adam Back. It was Mr. Back’s proof-of-work system that would eventually give birth to Bitcoin. While the system for Bitcoin was there, the digital currency was still just a dream. After some tinkering, and a long year, two digital currencies were proposed. B-Money and Bit Gold were introduced and Mr. Back’s concept of proof-of-work or PoW made it possible for digital currency.

You see, B-Money was the idea that a proof-of-work (PoW) system could create a currency by utilizing a mathematical computation. But later that year, Nick Szabo would introduce Bit Gold which would eventually cut out the middleman by solving the PoW which in turn would allow the user to gain bits, while the last bit on the blockchain would be created and attached to the string for the next transaction.

Both B-Money and Bit Gold couldn’t see that they were laying the groundwork for Bitcoin. However, without Bit Gold, B-Money, or the HashCash system, Bitcoin would have never been able to become what it is today.

Bitcoin was born August 2008 by Satoshi Nakamoto and introduced the world to a way for people to buy from people instead of going through a third party.

The Technical Aspect of Bitcoin

According to the white paper that was presented, Bitcoin allowed safe and secure peer-to-peer transactions by utilizing the PoW and hashing information from one operation in order to form a chain. This chain is what is called a blockchain, and it is the proof that the third parties are cut out of the transactions all together.

Cost of Bitcoin

While Bitcoin didn’t take off right away, it has become a household name. But the first transaction to take place was on January 2009. At the end of 2009, Bitcoin was worth a whopping $1 for 1,309.3 tokens or BTC.

The transaction was between two friends on the opposite side of town as a test to see if the transaction would take place. It wasn’t until May 2010 when people took notice the potential of BTC.

Two pizzas where purchased with 10,000 BTC. The price for 10,000 BTC in 2010 was roughly $25. Click To Tweet

Today however, Bitcoin is priced at $4,027.01 USD per coin. Bitcoin reached its peak December 2017 when a single token was worth $19,783 USD.

The Future of Bitcoin

Photo by: Crypto Soft Malaysia

Just where is this cryptocurrency going? Bitcoin has passed the test of time and doesn’t seem to be going anywhere any time soon. Although the price will fluctuate over the coming months, the technology that is in place for using Bitcoin or any cryptocurrency for that matter just seems to be growing in popularity.

With new digital currencies springing up all the time, several investors are wondering which new cryptocurrency will show promise. People are starting to take notice and are looking at digital currencies as a means of investing in the future. Others though are still on the fence about whether to jump on the band wagon.

However, with more and more people beginning to distrust their banking systems, it would seem the only logical step to take would be digital currencies. With cryptocurrencies cutting out the banking system that is flawed and going back to one-on-one transactions, Bitcoin and other digital currencies are here to stay.

Disclaimer:

The author of this article does not own any shares or tokens of Bitcoin or any other cryptocurrencies. This article was produced for educational purposes to help investors make a better decision about cryptocurrencies.

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