Short History
Bitcoin is a cryptocurrency and worldwide payment system.[8]:3 It is the first decentralized digital currency, as the system works without a central bank or single administrator.[8]:1[9] The network is peer-to-peer and transactions take place between users directly, without an intermediary.[8]:4 These transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto[10] and released as open-source software in 2009.[11]
In 2010, someone decided to sell theirs for the first time – swapping 10,000 of them for two pizzas. If the buyer had hung onto those Bitcoins, at today’s prices they would be worth more than $100 million.
In 20011, rivalry cryptocurrency emerge.As Bitcoin increases in popularity and the idea of decentralized and encrypted currencies catch on, the first alternative cryptocurrencies appear. These are sometimes known as altcoin and generally try to improve on the original Bitcoin design by offering greater speed, anonymity or some other advantage. Among the first to emerge were Namecoin and Litecoin. Currently there are over 1,000 cryptocurrencies in circulation with new ones frequently appearing.
In 2013, Shortly after the price of one Bitcoin reaches $1,000 for the first time, the price quickly begins to decline. Many who invested money at this point will have suffered losses as the price plummeted to around $300 – it would be more than two years before it reached $1,000 again.
Perhaps unsurprisingly for a currency designed with anonymity and lack of control in mind, Bitcoin has proven to be an attractive and lucrative target for criminals. In January 2014, the world’s largest Bitcoin exchange Mt.Gox went offline, and the owners of 850,000 Bitcoins never saw them again. Investigations are still trying to get to the bottom of exactly what happened but whatever the story, someone dishonestly got their hands on a haul which at the time was valued at $450 million dollars. At today’s prices, those missing coins would be worth $4.4 billion.
In 2016,One cryptocurrency came close to stealing Bitcoin’s thunder this year, as enthusiasm grew around the Ethereum platform. This platform uses cryptocurrency known as Ether to facilitate blockchain-based smart contracts and apps. Ethereum’s arrival was marked by the emergence of Initial Coin Offerings (ICOs). These are fundraising platforms which offer investors the chance to trade what are often essentially stocks or shares in startup ventures, in the same manner that they can invest and trade cryptocurrencies. In the US the SEC warned investors that due to the lack of oversight ICOs could easily be scams or ponzi schemes disguised as legitimate investments. The Chinese government went one further, by banning them outright.
In 2017, Bitcoin reaches $10,000 and continues to grow.A gradual increase in the places where Bitcoin could be spent contributed to its continued growth in popularity, during a period where it’s value remained below previous peaks. Gradually as more and more uses emerged, it became clear that more money was flowing into the Bitcoin and cryptocoin ecosystem. During this period the market cap of all cryptocoins rose from $11bn to its current height of over $300bn. Banks including Barclays, Citi Bank, Deutsche Bankand BNP Paribas have said they are investigating ways they might be able to work with Bitcoin. Meanwhile the technology behind Bitcoin – blockchain – has sparked a revolution in the fintech industry (and beyond) which is only just getting started. Will it succeed in doing what many early adopters and evangelists claim it is destined to – replace government-controlled, centralised money with a distributed and decentralized alternative, controlled by nothing besides market forces? Well, 2018 may yield some clues but we are unlikely to know the answer for some time yet.
Myth on Bitcoin
"Bitcoin is illegal in most countries."
Bitcoin is legal in most countries, however there are some that prohibit or restrict it's use. Bitcoin is illegal in 8 countries and restricted to some extent in 3. To our knowledge Bitcoin is illegal in the following countries:
- Bangladesh
- Bolivia
- Ecuador
- Indonesia
- Kyrgyzstan
- Russia
- Vietnam
Bitcoin is restricted to some extent in the following countries:
- China
- Iceland
- Taiwan
"Bitcoin is anonymous"
Bitcoin is pseudonymous not anonymous.
A simplified way to think of it is like writing under an alias. If anyone ever discovers the identity of the alias every transaction performed will be linked to that identity.
For more a more in-depth understanding of how this works see identification.
"Bitcoin can be hacked."
There are billions of dollars in the current bitcoin economy. It is highly unlikely there is a serious flaw in the system which hasn't been uncovered yet.
There are no indications that there are current vulnerabilities being exploited. If there were a flaw in the system (which everyone has access to all the code for) someone most likely would have exploited it by now.
Bitcoin protocol and most popular of Bitcoin clients are considered "safe" by today's standard.
Bitcoin thefts are always the consequence of badly secured computers or bugs in third party code which results in theft of Bitcoin wallets on those machines, not the entire Bitcoin network.
If there where a compromise of the Bitcoin network it could be patched and even restored to the previous state if so agreed between the users.
Bitcoin is not considered less safe then the electronic banking.
"Bitcoin has or will have insufficient amount of coins."
It is possible to trade in values less than the value of one bitcoin, therefore there is no need for more coins.
Currently bitcoin is divisible to 8 decimal places or at today's prices around $0.00004604.
Limited amount of coins means that this currency might suffer deflation by the pace that people lose cryptographic keys to their Bitcoin addresses.
There is no way to have a shortage of coins.
"Developers of Bitcoin have too much power over the network."
Development of most popular Bitcoin clients is open source. This means that there is no way that developers can sneak in any malicious code.Ultimately it is up to users of the system to choose who to trust and they all have the liberty to check the code.There is also no constriction in making your own Bitcoin client.Developers of Bitcoin clients have less power over your wallet then banks holding your money.
Creak-down on Bitcoin
South Korea began inspections at six banks including Industrial Bank of Korea, that provide virtual accounts to companies related to cryptocurrency trading, to clamp down on potential money laundering. The nation last month said it will restrictively allow cryptocurrency trading on only qualified exchanges and review a possible capital gains tax on crypto trading as a way to restrain the nation's frenzied speculation. Demand for cryptocurrencies in Korea is large enough to cause distortion on some prices. Ripple surged to almost $4 on some Korean exchanges, while it trades at around $2.50 elsewhere. Coinmarketcap.com is excluding Korean exchanges from its pricing, which helped cause ripple to tumble as much as 31 per cent today. Naeem Aslam, chief market analyst at TF Global Markets in London, said the increased regulatory oversight will weigh on prices in the short term, but should be positive in the longer term. "We need regulators to look into the space more closely, the Korean exchanges have become crazy in terms of price differences so these regulatory actions would help the price stability," Aslam said. "As for the mining operations, China is making the process more difficult for miners, but opportunist have started to focus on Canada which is more regulatory friendly and cheap on the energy front."
China banned bitcoin, ICOs and now it appears to be clamping down on Chinese miners, an important group estimated to produce some three-quarters of the world’s supply of bitcoin.According to a leaked January 2 memo from the ‘Leading Group of Internet Financial Risks Remediation’ — the country’s internet finance regulator which initiated the clampdown on bitcoin — bitcoin miners should make an “orderly exit” from China because they have consumed “huge amounts of resources and stoked speculation of ‘virtual currencies.”The situation is complicated by the fact that many miners, and particularly those in China, make use of cheap power, or flock to locations where there’s excess capacity. In some cases, mining businesses partner with local governments to ensure a steady supply of electricity at discounted rates, with a portion of the profits returned to the local authorities. That’s offered a welcome economic boost in regions where more traditional industries are struggling.But there’s no smoke without fire. It certainly seems like central government has a plan to stamp out the miners. Beyond today’s news, both Bloomberg and Reuters last week reported on the PBC’s plans to slowly cut down on the number of miners. That, apparently, includes dissolving any such agreements and deals that had previously been struck.
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