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November 3, 2020

How Did Bitcoin First Begin?

Cryptocurrencies are constantly evolving over the last couple of years. Bitcoin, the leading cryptocurrency on the market right now, continues to disrupt the financial world today.  

Even though there are now hundreds of bitcoin trading platforms, each of them having their own independent review about the digital currency and welcomes new Bitcoin investors every day,  Bitcoin still faces numerous issues and concerns.  

Bitcoin has faced a lot of criticism from many financial institutions and organizations. There’s a lot of confusion about bitcoin, especially where it came from and how it managed to get where it is today. In fact, there are still a lot of people who don’t know what bitcoin actually is or how it first began.  

In this article, we’ll talk about the history of Bitcoins. We’ll also talk about the origins of Bitcoin and shine a light on its early years.  

Origins of Bitcoin 

1. E-Cash 

The concept of digital currency is not new. Before Bitcoin and other cryptocurrencies emerged, there have been many previous attempts of creating a digital currency.  

We can trace the origins of Bitcoins from 1982 when a computer scientist named David Chaum introduced a concept called “e-cash”. It’s an automated form of digital money that preserves the identity of a user when using it. Chaum, then, tried to make this concept come true and put it to practical use by creating a company called DigiCash.  

But, Chaum’s idea was never fulfilled, and by the late 1990s, his company went bankrupt. Nevertheless, Chaum opened the floodgates for other people who have similar ambitions as him, which is to create a digital currency that’s totally safe and secure to use for users. 

2. B-money and Bitgold 

It was in 1998 that a computer engineer, named Wei Dai, published a paper that introduces “B-money”. It’s a type of cryptocurrency that has the same anonymous, distributed electronic cash system as the blockchain technology introduced alongside Bitcoin.  

Also in 1999, Nick Szabo published a paper that details a decentralized digital currency that he called “bit gold”. Its proof-of-work system is pretty much the same as Bitcoin. To create bit gold, one must have the computer power to solve cryptographic puzzles. Although bit gold was never implemented, it served as a precedent for Bitcoin’s architecture. 

Both of these digital currencies were just concepts, and they were never officially launched. However, these two digital currencies served as the inspiration for the creation of Bitcoin. 

Creation of Bitcoin 

1. Genesis Block 

Bitcoin was introduced in a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” on October 31, 2008. The paper was authored by a mysterious pseudonym “Satoshi Nakamoto,” which still remains to be unidentified today.  

By January 2009, Satoshi Nakamoto launched the first Bitcoin software, which also started the whole network, along with the first units of the cryptocurrency called Bitcoin. Nakamoto was also the first to create bitcoins.  

The Genesis block, which is the first block of cryptocurrencies on the blockchain, resulted to the creation of the first 50 bitcoins. The introduction of the Genesis block was also noted for a message that reads “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks, ” which was left by Nakamoto. Nakamoto never clearly stated the meaning of his message but many cryptocurrency experts believe that it refers to why he created Bitcoin. To eliminate the need for banks and middlemen that are usually unreliable and deceitful when making transactions. 

2. Bitcoins 

Bitcoin is different from traditional currencies. With fiat currency, you can trade your dollars for a set amount of gold when you go to the bank. Bitcoin, however, is not based on silver or gold. It is based on a series of mathematical proofs that are validated by a decentralized public digital ledger called the Blockchain.  

No single bank, government, country, or other financial institution has control over the Bitcoin network. Bitcoin remains to be decentralized. Everyone can access the open-source software that Satoshi Nakamoto launched. Those individuals who are interested in Bitcoins are also the ones who maintain the network.  

Early Bitcoin Transactions

Bitcoin wouldn’t have its mainstream success today without the early efforts of its supporters and adopters. One of the earliest supporters and adopters of Bitcoin was Hal Finney.  

Upon the release of the Bitcoin software on January 12, 2009, Finney immediately downloaded it and directly received 10 Bitcoins from Satoshi Nakamoto, making it the world’s first Bitcoin transaction.  

This was also the time where mining was the only way to get bitcoins. Satoshi Nakamoto was said to have mined around 1 million Bitcoins. After a couple of months, Nakamoto disappeared from the scene and gave the reins to Gavin Andresen, who then became one of the leading Bitcoin developers in the world, and was also among the developers of Bitcoin Foundation.  

At first, Bitcoin was considered to have zero monetary value. Its value was even decided by Bitcoin owners on the forum. The first-ever transaction using Bitcoin was in 2010 when a certain individual used 10,000 BTC to purchased two pizzas from Papa John’s.  

Conclusion

Bitcoin has managed to grab the attention of everyone over the last decade because bitcoin trading is profitable. And even though it faced some serious problems and concerns, it still managed to survive.  

Over the last couple of years, we’ve seen its value rise up or fall down significantly. But despite all that, many people continue to believe that Bitcoin has a bright future ahead. This cryptocurrency continues to be adopted and accepted across the world. This means that the public’s confidence and interest in Bitcoin are continuously growing.  

It’s important to remember that Bitcoin is a relatively new technology, and nobody likes to miss out on new technology. Like all new technologies, it takes years before it’s fully and widely embraced by the public.  

Bitcoin could become the next big thing. It’s also constantly evolving thanks to its steady updates, which ensures that it’ll continue to grow until it reaches critical mass. Maybe in the future, all people would become knowledgeable about cryptocurrencies, specifically Bitcoins, to the extent that everyone starts utilizing them.  

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