Bitcoin is the first decentralized digital currency and is controlled and managed using cryptography. Cryptography is a type of technology used for computer passwords, ATM cards and E-commerce where in it prevents third parties or the public to view private data. It means, Bitcoin is not controlled by any authority or anybody.
Lets take the roller coaster ride through recent time and see Bitcoin’s history.
Before bitcoin was released, there were already a number of digital currencies proposed. Stefan Brands and David Chaum invented an issuer based Ecash protocol. Also, hashcash was developed by Adam Back which is a proof-of-work scheme that prevents and controls spams. Then came the B-money, Bit gold and RPOW. These digital currencies used hashcash as their proof-of-work scheme. B-money and Bit gold were both proposed at around the same time by Wei Dai and Nick Szabo respectively. RPOW, a reusable form of hashcash, was then implemented by Hal Finney which is based on IBM secure TPM hardware and being attested remotely.
The Beginning of Bitcoin freewallet
Legend says, Satoshi Nakamoto started working on the concept of Bitcoin in 2007. Record also says that Nakamoto is a Japanese software developer but was speculated to be more than one person using a collective pseudonym Satoshi Nakamoto.
Satoshi Nakamoto posted a paper in the internet entitled Bitcoin: A Peer-to-Peer Electronic Cash System. It tackled a detailed instruction in generating a system of electronic transactions without depending on trust using peer-to-peer network. The project was then registered to Sourceforge.net.
The Bitcoin wallet network started and the first open source bitcoin client was released. The first bitcoins was issued with a number of 21 Billion through the year 2040. The first block of bitcoins called the “genesis block” was mined by the creator itself, Satoshi Nakamoto with 50 bitcoins of reward. The first transaction was also made by Nakamoto with Hal Finney.
Giving rise to the growth of Bitcoin – October 2009
An exchange rate was established by New Liberty Standards with 1 US dollar equivalent to 1,309.03 BTC. The rate was based on the cost of electricity used for computers that generates bitcoins wallet.
Also, in this month #bitcoin-dev channel hits freenode IRC which is a network for free and open source development discussions.
The first ever Bitcoin market was established by Dwdollar, which is not anymore existing.
A very notable transaction happened in one of the bitcointalk forums with the value of 10,000 BTC in exchange for two pizzas from Papa John’s.
Abundant growth comes at a price – August 2010
A major problem occurred in the bitcoin protocol. Bitcoin transactions were not completely verified before it reaches the block chain. This have caused users to avoid the economic restrictions of bitcoin and make a limitless amount of it. It was then exploited a few days later when an over 184 billion transaction sent to two addresses was spotted on the network. The bug was fixed and the transactions were erased in the Blockchain.
Bitcoin was then on the hot topic after the August hacking and the following blockchain vulnerabilities spotted in September. A report from an inter-governmental body was published on money laundering and suggested that bitcoin payment methods could finance terrorists.