ORIGIN OF BITCOIN : 2008 - PRESENT

newera120 (29)in #bitcoin • 6 years ago

Prelude

As the title of the post suggest this is an origin story of BTC, if you are unfamiliar with the terminologies and are a complete and utter newb to cryptoworld, please consider doing your research before reading this article.

Events leading to the origin

All of the Cryptocurrencies had a start, so did Bitcoin, it arrived in the late 2008.

To explain the history and the events leading to the development of bitcoin you have to understand the problem with the world we are living in is. We are bound by rules and regulations, while that may be true and reasonable for most cases, it certainly wasn't for the paper currencies.

"Why?"

The U.S. could print unlimited money when Richard Nixon severed all the ties between the financial system & Gold, and the money was printed as credit. To prevent inflation, banks print excess money (i.e., +5% every year) and in the year 2007, the U.S. banks started giving out attractive loan & mortgage schemes without analyzing the risks, which attracted a lot of the public, but people couldn't pay the loan back. Hence many banks & financial institutions crashed. The U.S. government bailed out these banks and financial institutions so that they could resume their normal course of action.

But,

in the year 2007 and 2008 the bailouts failed and huge financial institutions like Lehman Brothers declared bankruptcy, Merrill Lynch, AIG, HBOS, Royal Bank of Scotland, Bradford & Bingley, Fortis, Hypo Real Estate, and Alliance & Leicester were all expected to follow, which caused wide spread fear, resulting the descent of the stock markets, people loosing jobs. This crisis ended in 2011 with government introducing new acts to stabilize the economy.

But why tf am I ranting this economic BS ? 'Cuz all of the above incidents were the key ingredients which brewed Bitcoin as we know and use. It combined cryptography and proof of work using hash algorithm, and removed the centralized authority by introducing peer-to-peer transaction model.

Understand that there were digital cash starting with the issuer based ecash protocols of David Chaum and Stefan Brands, long before Bitcoin. The problem was that any alternative currency proposed was rejected as it would undermine the existing currency system. Apparently, a currency alternative could only thrive if “nobody” launched it and if they was no central point of failure.

Satoshi Nakomoto, in response to the above cries of help introduced Bitcoin, by registering a domain " https://bitcoin.org " on 18th August 2008. Soon after that, on 31st October of the same year a paper named "Bitcoin: A Peer-to-Peer Electronic Cash System" was posted to a Cryptography mailing list. In January 2009, the bitcoin network came into existence with the release of the first open source bitcoin client & the issuance of the first bitcoins with Satoshi Nakamoto mining the first block of bitcoins ever (known as the genesis block), which had a reward of 50BTC(bitcoins). The best part about this block was a text embedded in the coinbase :

"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."

Hal Finney, was the first programmer to support, adopt and receive bitcoins(10BTC to be precise). Wei Dai, the creator of b-money which was predecessor to Bitcoin & Nick Szabo were also early supporters of Bitcoin. Later Nakomoto mined 1 million BTCs and vanished into thin air by handing over the controls to a developer Gavin Anderson, who became the lead developer at Bitcoin Foundation.

FunFact: The first notable transaction of 10,000BTC was done by ordering 2 pizzas at Papa John's.

Since it was still in the early stages, a major vulnerability was discovered in the bitcoin protocol. Transactions were being logged into the blockchain before it was verified which allowed users bypass bitcoin's economic restrictions and create an indefinite number of bitcoins and 184 billion bitcoins were created and was sent to two addresses on the network, but the irregularity was noted and fixed.

So Bitcoin was now up and running, but the bitcoin scalability debate led to a hard fork creating BitCoinCash(BCC). The reason for this hard fork was to increase the transactions a ledger can process, which is done by increasing the block size limit.

The chart below are notable Bitcoin rise and crash prices,

Period Dollar Change Percent Change

Today +$231.00 +2.05% ↑
Last 7 days -$2,331.07 -16.88% ↓
Last 30 days -$4,973.07 -30.22% ↓
Last 6 months +$8,787.36 +326.15% ↑
Last 1 year +$10,583.63 +1,178.55% ↑
Last 2 years +$11,062.91 +2,641.94% ↑
Last 5 years +$11,465.95 +73,031.52% ↑