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For many years the words ‘Bitcoin’ and ‘cryptocurrency’ were used interchangeably to mean the same thing. That’s because cryptocurrency really started with Bitcoin and for some time cryptocurrency was Bitcoin. But it was a subdued start, to say the least since Bitcoin wasn’t worth that much at the beginning. Instead, people preferred more lucrative investments in the stock market. So while it might be hard nowadays to imagine the financial world without Bitcoin and cryptocurrency, less than a decade ago BTC practically only existed on the hard drives of a handful of programmers. Back then digital currency and Paypal’s online money transfer were considered revolutionary concepts. So much has changed in a decade.
The Humble Beginnings Of Bitcoin
Before Bitcoin made its muted debut in early 2009 with the publishing of a paper called “Bitcoin – A Peer to Peer Electronic Cash System”, there have been other attempts at making cryptocurrency. The technology has been around since the 1990s. Blockchain, in a nutshell, is about distributed ledgers using a peer-to-peer network to record all transactions on the network with the help of secure encryption. Each transaction creates a new block in the ledger which is why it’s called blockchain. In 1998 two cryptocurrencies called B-Money and Bit Gold were built on the blockchain technology. Neither of them, however, made it past the development stage. So when a mysterious person using the pseudonym Satoshi Nakamoto released the Bitcoin code to the public officially starting the mining of the cryptocurrency, not many people took notice. For one thing, the newly minted Bitcoin had no value. For the first year of its existence, BTC was being mined with zero trading whatsoever. Without trading a currency’s value is unknown just like Mr. Nakamoto’s identity. But in 2010, a miner decided to trade their stash of Bitcoins (about 10,000) for two pizzas. It’s not clear which of the two considered themselves the winner in this little trade, the hungry miner or the pizza guy. But that little transaction, paltry as it was, gave Bitcoin a real market value for the first time. And by November of the same year, the market cap of Bitcoin had reached $1,000,000.
More Cryptocurrencies Emerge
Between 2009 and 2011 Bitcoin continued to operate on the fringes of the financial world; mainly on forums such as the Bitcointalk forum. During that period, the enigmatic Nakamoto managed to mine about 1 million Bitcoins before disappearing never to be heard from again. By the way, those one million Bitcoins remain unused to this day. But in 2011 change sure was coming. The first major event was a Gawker article in June 2011 about Bitcoin being the sole method of payment on the Silk Road, a website specializing in trading of illicit materials. It was the first time the mainstream media mentioned Bitcoin and the cryptocurrency, grateful for the publicity, peaked at $30 that same month.
The other big event in the history of cryptocurrency was the emergence of the altcoins. These alternative cryptocurrencies used the same open source code upon which Bitcoin was built but aimed with forking to improve on the security, speed, and anonymity of the original digital currency. Rival as they were, cryptocurrencies such as Namecoin, Litecoin, and Swiftcoin took advantage of the growing popularity of Bitcoin to quickly establish themselves in the market. From that point on, cryptocurrency no longer just meant ‘Bitcoin’ even if BTC was still the dominant coin in the crypto world.
Not All That Glitters Is Cryptocurrency
During those 9 years that is the lifespan of Bitcoin and cryptocurrency, there have been turmoils and upheavals as one would expect from a landmark event still in its infancy. Price peaks and crashes were common. More cryptocurrencies emerged, flashed and faded while others continued a steady march of success. And as cryptocurrency exchanges sprouted everywhere to facilitate the trading and holding of Bitcoin and altcoins alike, this flourishing market attracted all kinds of people. From the good to the bad and ugly. One such very ugly incident occurred in January 20014 when a major cryptocurrency exchange in Japan known as Mt Gox went offline. It took with it over 850,000 Bitcoins that belonged to the users of the exchange. But neither Mt Gox filing for bankruptcy nor the massive hack that happened that same month and cost investors millions in losses managed to dampen the popularity of cryptocurrency. A year before the Mt Gox debacle Canada had launched its first cryptocurrency ATM in Vancouver. Then Microsoft announced that it was accepting Bitcoin as a payment method for its games.
Meanwhile, more and more currencies kept emerging. Ethereum and NEO made their debut with totally different platforms from the Bitcoin one. These new platforms paved the way for more advances in the digital currency and the integration and acceptance of the cryptocurrency by the mainstream financial institutions around the world.
One of the main advantages of the new platforms was the development of smart contracts. These are pieces of code on the blockchain that are self-executing and can be replicated and monitored by the network running the blockchain. The applications of this technology in the real world are varied and far-reaching at the same time. By doing away with the middleman you can exchange in a transparent way anything of value from money to shares and property. Another exciting application in the world of bitcoin betting and online casinos is the transparent use of Bitcoin to ensure anonymity and security both for the user and the platform. Smart contracts verify the transactions and enforce the rules included in the contract with no room for conflict.
The history of cryptocurrency, brief as it is, has had its full share of dramatic events. It saw the obscure Bitcoin enter the mainstream. Cryptocurrency ATMs are in the thousands and more and more banks and financial institutions are either accepting Bitcoin and the altcoins or applying the underlying technologies of the blockchain in their daily operations. The future of cryptocurrency is looking brighter every day.