Bitcoin, the first decentralized cryptocurrency, has a relatively short but eventful history that has significantly impacted the world of finance and technology. Here's a brief overview of the key milestones in the history of Bitcoin.
Bitcoin was introduced in a whitepaper titled "Bitcoin: A Peer-to-Peer Electronic Cash System" published in October 2008 by an individual or group using the pseudonym Satoshi Nakamoto. The paper outlined the concept of a decentralized digital currency, powered by a blockchain, which would enable peer-to-peer transactions without the need for intermediaries.
On January 3, 2009, Satoshi Nakamoto mined the first block of the Bitcoin blockchain, known as the "genesis block" or Block 0. The Genesis Block on the Bitcoin blockchain has the original 50 bitcoins mined by Satoshi Nakamoto. The information from the Genesis Block is present in all blocks in a blockchain because of how information is encrypted and used in the following blocks.
In the early days, Bitcoin mining was conducted by a small group of enthusiasts using basic personal computers. The first recorded commercial transaction using Bitcoin took place in May 2010 when Laszlo Hanyecz famously paid 10,000 BTC for two pizzas, marking the first real-world purchase with the cryptocurrency.
Bitcoin gained attention and started to be adopted by various online platforms and merchants. Its value increased significantly during this period, reaching over $30 (USD) per BTC in 2011. The Silk Road, an online marketplace for illegal goods, also played a role in popularizing Bitcoin before being shut down by authorities.
The price of Bitcoin experienced extreme volatility during 2013, reaching over $1,000 (USD) per BTC in November before correcting. Mt. Gox, a major Bitcoin exchange, collapsed in early 2014, filing for bankruptcy and revealing that a significant amount of customers' bitcoins had been lost or stolen.
The price of Bitcoin stabilized, and it started gaining acceptance from mainstream businesses and financial institutions. Several well-known companies like Adidas, Microsoft, BurgerKing, Subway, Cheap Air and Express VPN began accepting Bitcoin as payment. The concept of blockchain technology also gained recognition, leading to increased interest in decentralized finance (DeFi) applications.
A scalability debate within the Bitcoin community led to a contentious hard fork resulting in the creation of Bitcoin Cash (BCH) in August 2017. Despite the fork, Bitcoin's value continued to rise, reaching close to $20,000 (USD) per BTC by the end of the year.
Institutional interest in Bitcoin grew, with major companies and financial institutions expressing support or investing in the cryptocurrency. In December 2020, Bitcoin reached a new all-time high, surpassing $23,000 (USD) per BTC. This trend continued into 2021, culminating in an all-time high above $64,000 (USD) in April 2021.
Increased regulatory scrutiny and concerns about the environmental impact of Bitcoin mining brought renewed attention to the cryptocurrency. Tesla's announcement of accepting and then suspending Bitcoin payments due to environmental concerns added to the volatility.
With the exception of paper cash (something that is increasingly rare as the world continues to go digital), traditional currencies require permission to use. This means that third-parties like banks, financial institutions, and governments stand between you and your money. Bitcoin requires no permission from anyone. It is free and open to use globally. There are no borders or limits with Bitcoin.
Since it is not housed at any central bank or company. Nobody can confiscate your Bitcoin. With Bitcoin, you can be your own bank.
Censorship resistance in Bitcoin refers to its ability to enable transactions that can't be blocked, altered, or reversed by any government, institution, or individual. This is possible because of Bitcoin’s decentralized nature and blockchain technology. The Bitcoin protocol operates on cryptographic principles ensuring that once a transaction is confirmed, it cannot be altered or erased.
The Bitcoin network is distributed globally among many thousands of nodes (computers) and millions of users where you don't have to rely on trusted third-parties. The decentralized nature of Bitcoin also makes it extremely anti-fragile. In other words, it’s next to impossible to destroy the Bitcoin network.
There will only ever be 21 million bitcoins created, and they are generated at a predictable rate over the next 100 years. This makes Bitcoin a scarce commodity, which is a big part of why it is valuable. By comparison, fiat currencies like the dollar have an unlimited supply. While the purchasing power of the dollar decreases year after year, the value of Bitcoin continues to increase.
The Bitcoin protocol (software) is open for anyone to see. Additionally, anyone can contribute to developing Bitcoin. This means that the way Bitcoin evolves over time is entirely up to the Bitcoin community, which is defined as anyone who holds Bitcoin or has an interest in its future. Bitcoin is the people\’s money.
If used correctly, Bitcoin can be used as an anonymous currency free from spying governments. When you use Bitcoin, you don't need to provide your email, name, social security number, or any other identifying information. Bitcoin is just numbers, 1s and 0s, traveling through the internet.
Because Bitcoin is anonymous, people all over the world use it to fight back against tyranny. When authoritarian regimes cut off the bank accounts of dissidents, Bitcoin can still be used to finance protests and support freedom fighters.
With Bitcoin, there is no risk of charge-backs because once Bitcoin is sent, the transaction cannot be reversed. Bitcoin is akin to cash -- once you give someone cash, you cannot get it back (unless they give it back to you).
Bitcoin is used around the world to pay for things such as coffee, food, electronics, travel, and more. Some even like to call it magical internet money because of all its amazing properties, and its ability to not be double-spent.
You can buy and sell Bitcoin from your phone or computer. You can even use it to pay for things directly from your Bitcoin wallet in establishments that accept it as a form of payment. Moreover, people who can’t access traditional banking systems, can make use of Bitcoin instead – as long as they have a device that can connect to the internet. More recently, bitcoin credit cards have become available, meaning you don’t even need the internet to spend your Bitcoin.
All information regarding the Bitcoin money supply is available for anyone to view on the blockchain. Every transaction made with Bitcoin is available for anyone to see too, although personal information is hidden. This radical transparency helps ensure that Bitcoin remains open and free from corruption.
Using Bitcoin gives you the financial freedom to transact globally using all the properties mentioned above. As such, Bitcoin provides economic stability and newfound freedoms to the world, making it a truly game-changing technology.
Bitcoin has the potential to provide financial services to individuals who may not have access to traditional banking systems. With a smartphone and internet connection, anyone can participate in the Bitcoin network, enabling financial inclusion for unbanked and underbanked populations around the world.
Bitcoin transactions are secured through cryptographic techniques, and the blockchain is maintained through a consensus mechanism called Proof of Work (PoW). The combination of these elements enhances the security of the network, making it resistant to fraud, hacking, or unauthorized alterations to transaction history.
Bitcoin transactions can be conducted across borders without the need for traditional banking intermediaries. This makes cross-border transactions more efficient and cost-effective, particularly for individuals and businesses operating in regions with limited access to traditional financial services.
Bitcoin provides users with greater ownership and control over their funds. Individuals have direct control of their private keys, which are used to access and manage their Bitcoin holdings. This reduces reliance on third-party financial institutions and empowers users to be their own custodians.
Every Bitcoin transaction is recorded on the blockchain, a public and transparent ledger. This transparency contributes to the immutability of the transaction history, meaning that once a block is added to the blockchain, it is extremely difficult to alter or tamper with the information.
While Bitcoin transactions are recorded on the public blockchain, the level of privacy can be enhanced through practices such as using multiple addresses or employing privacy-focused technologies like CoinJoin. However, it's important to note that Bitcoin transactions are pseudonymous rather than fully anonymous.
Bitcoin has paved the way for various financial innovations, including the development of decentralized finance (DeFi) applications, blockchain-based smart contracts, and the exploration of alternative consensus mechanisms beyond Proof of Work.
Bitcoin is often referred to as "digital gold" due to its scarcity and perceived store of value characteristics. Some investors view Bitcoin as a hedge against inflation and economic uncertainties, similar to the way gold has been traditionally used.
Cashing out or converting Bitcoin into traditional fiat currency involves several methods, and the choice of method depends on various factors, including your location, preferences, and the available options. Here are common ways to cash out Bitcoin:
Cryptocurrency exchanges are platforms where you can trade Bitcoin for fiat currency. Popular exchanges such as Coinbase, Kraken, and Binance allow users to sell their Bitcoin and withdraw the proceeds in their local currency. The process typically involves creating an account, verifying your identity, and initiating a withdrawal.
You can sell Bitcoin directly to another individual through peer-to-peer (P2P) platforms. OKX, Paxful, Binance P2P, Bisq are examples of P2P platforms where you can find buyers willing to purchase Bitcoin with fiat currency. The transaction is usually facilitated through an escrow service to ensure security.
Bitcoin ATMs, also known as BTMs, allow you to sell Bitcoin and receive cash. These machines are available in various locations worldwide. To use a Bitcoin ATM, you'll typically need to scan a QR code from your wallet, insert the amount of Bitcoin you want to sell, and then receive cash or a redemption code. When you buy a bitcoin via an exchange, you purchase the coins themselves. You’ll need to create an exchange account, put up the full value of the asset to open a position, and store the cryptocurrency tokens in your own wallet until you’re ready to sell.
OTC trading desks cater to larger transactions and are suitable for institutional or high-net-worth individuals. OTC desks facilitate direct trades between buyers and sellers, often providing more personalized service and handling large order sizes. Bitmachina offers this service to the public.
Some companies offer Bitcoin debit cards that allow you to spend your Bitcoin balance in the form of traditional currency. You load the card with Bitcoin, and when you make a purchase or withdrawal, the equivalent amount in fiat currency is deducted. This provides a way to indirectly use your Bitcoin for everyday transactions.
Some payment processors and merchant services allow businesses to accept Bitcoin payments and instantly convert them into fiat currency if desired. This can be a convenient way for merchants to accept Bitcoin without being exposed to its volatility.
Cryptocurrency brokerage platforms provide a user-friendly interface for buying and selling Bitcoin. Platforms like eToro or Coinbase offer a simple process for selling Bitcoin and withdrawing funds to your bank account.
If you have a bank account linked to a cryptocurrency exchange, you can sell Bitcoin on the exchange and withdraw the funds directly to your bank account via a bank transfer.