How to set up a wallet for cryptocurrency
Most people have undoubtedly heard the term “Bitcoin,” but remarkably, many people still have not had any direct dealings with the virtual currency. Experts in the field of what is called cryptocurrency sometimes refer to the original Bitcoin as the “gold standard.” It earned that name because it was the first digital money to catch on with the public. The news media seems to love covering its roller-coaster exchange rates. Aficionados of virtual money revel each other with epic stories of millions won – and lost – in the volatile crypto landscape. Continue reading to learn more about the history of Bitcoin.
Bitcoin history originates from a 2008 white paper posted to an online cryptography mailing list. Penned by a mysterious bitcoin developer going by the name of Satoshi Nakamoto, the treatise outlined the concept of blockchain and sparked a paradigm shift in the way people will forever think about money. No one is sure who Satoshi is or what group the name might represent. One thing is clear; the timing was right for the introduction of a secure way to create digital money.
Blockchain, a procedure that uses advanced cryptography algorithms to verify monetary transactions, eliminates the need for an overseeing third party to make the deal. Governments, banks and other financial administrators get cut out of the loop, thus saving the traders from having to give them a portion of the proceeds. With the public growing more distrustful of government fiat currencies and resentful of financial go-betweens in general, the idea of an independent method of trade validation begins to catch on widely, and the transparency of open source networks are becoming much more popular.
The Bitcoin network is beginning its second decade now, and by all estimates, it isn’t going away anytime soon. While it has come a long way since the first genesis block was mined, and it seems unlikely that you receive your paycheck, pay your bills and go shopping using bitcoin, that may be your reality someday. The concept of digital money is planted firmly in the collective imagination, and average citizens are starting to understand its advantages over government-backed money.
Two Very Special Pizzas
In 2010, the early days of Bitcoin, a Florida bitcoin user decided he would like the luxury of having some pizza brought to his house. He didn’t want to cook or order pizza. He just wanted someone to bring him two large pizzas, so he didn’t have to think about having to prepare anything for the next couple of days. No big deal, right? Well, what made this request special was that he offered to pay anyone willing to fulfill his request with bitcoins – 10,000 of them to be precise!
That may seem like a lot to pay just for having someone bring you dinner, but back then 10,000 bitcoins were worth a little over $40. So, it seemed like a fair offer. He posted his request on a Bitcoin discussion group, and someone took him up on it. The provider picked up two large Papa John’s pizzas, brought them to the requester’s house. He then, as promised transferred 10,000 bitcoin to his account for his trouble. Completing one of if not the most famous bitcoin transaction in history.
What makes this story remarkable in the scope of bitcoin value history is what happened next. The value of bitcoin shot up on a meteoric ride that still hasn’t ended. Every year on the anniversary of this first transaction, May 22, digital currency followers celebrate the historic deal by calculating the current value of the two pizzas. As of Bitcoin Pizza Day 2019, the amount of the two pizzas was $80 million.
As astonishing as that figure sounds, the value a few years ago surpassed $100 million. No one thinks any less of the man who made this ridiculously bad deal on what hopefully was some tasty pizza. In reality, fans of Bitcoin honor him as a pioneer in helping to realize the dream of using a digital currency like traditional money. Cryptocurrency advocates will remember Bitcoin Pizza Day as the moment in Bitcoins history when government fiat currency’s grip on the world first began to crumble.
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Bitcoin’s Explosive Growth Period
The Bitcoin Pizza Day story illustrates the rapid value increase the digital coinage experienced. Holders of bitcoins became millionaires just from the increase in the currency’s value. Experts estimate the number of Bitcoin millionaires to being in the tens of thousands. This alone is what makes Bitcoin history one of the most fascinating stories of all time.
In January 2011, bitcoins were worth about 30 cents each. The price had jumped to $31.91 for a brief time by June of that year. The spike was followed by a dip back down to $4.72 by the end of 2011. This up-and-down trend continued throughout the years.
Unlike government-regulated traditional currencies, Bitcoin is a peer-to-peer entity and rises and falls solely at the whim of market forces. The value of individual bitcoins is tied to supply, demand and competition from other cryptocurrencies, collectively known as “altcoin.”
As people began to become aware of the existence of Bitcoin, the demand for the limited number of bitcoins in circulation began to grow. Bitcoin exchanges (which is where most people purchase cryptocurrency) exploded. Bitcoin had a significant head start on other viable digital currencies, so their growth was slower. As more altcoins sprang up, they were able to make a showing against Bitcoin. To date, none have even approached the trade volume, name recognition or total value of the original cyber coin.
As a look at the launch date of some current viable altcoins shows, most came on the scene after Bitcoin had already established market dominance. In the history of Bitcoin and other cryptocurrencies, these altcoins have been the most popular:
- Litecoin (LTC) 2011
- Ripple (XRP) 2012
- Monero (XMR) 2014
- Dash (DASH) 2014
- NEO (NEO) 2014
- Ethereum (ETH) 2015
- Zcash (ZEC) 2016
- Bitcoin Cash (BCH) 2017
- Cardano (ADA) 2017
- EOS (EOS) 2018
The crypto market is relatively young, and the technology that drives it is still in its infancy. Considering the history of Bitcoin, even the experts do not fully understand all of the wild swings in value. Some have claimed maleficent influencers are manipulating the market while others do not give much credence to these theories. One thing is for sure; future Bitcoin values are difficult if not impossible to predict with a sure measure of accuracy.
In 2017, Bitcoin prices started an extreme fluctuation period. In November, the price of a bitcoin climbed to $10,000 then, a day later, it was at $11,000. This trend continued until the price peak on December 17 when the value hit $19,783 per bitcoin (that’s over $100 million for the two pizzas, by the way).
After the excitement of the astronomical rise, the reality seemed to set in, and the currency began a long downhill slide. February of the following year saw the price down to $10,074 representing an almost $10K loss per bitcoin in only two months. By June, the value was down to $6,166. In February of 2019, a single bitcoin would set you back $3,887. When you do the math, you see an almost $16,000 decrease in value per bitcoin in just a little over a year.
When Bitcoin set its record at the end of 2017, financial experts began warning of a cryptocurrency “bubble.” The frenzied trading in bitcoins was a market fad they warned, and the inevitable “burst” was about to happen. No one is sure what caused the crash. Understanding the behavior of crypto markets is an evolving science, but some say the rapid rise was due to FOMO (Fear of Missing Out). Most advisors warn investors not to rely on rapid growth for wealth development. Slow and diversified is still the preferred strategy.
Bitcoin’s value started rapidly declining after the December 2017 high point. In a long series of dives and climbs resembling a staircase on a graph, the currency continued a downward trend throughout 2018. Price swings of 20%, 30% or 40% in a month were not uncommon during this time.
From August of 2018 until February of 2019, the currency steadily declined from just over $7,500 to barely under $3,500. Then, without much solid explanation from the experts, the price of Bitcoin began to climb steadily. Experts predict that 10K represents the new baseline for Bitcoin. However, only time will tell.
The continuously changing nature of the cryptocurrency market makes values impossible to predict. Since the crypto market is technology-driven, no one knows what new developments are just around the corner. New software or hardware designs could render current systems obsolete overnight. When developers of a cryptocurrency disagree about how to operate a platform, more upheaval can result.
One offshoot of the volatile years for Bitcoin was a hard fork to create Bitcoin Cash. The split resulted when users of the Bitcoin began to see investors using it primarily as a tool instead of what its creators intended, a form of currency. These types of contentious splits, or hard forks, cause unpredictable results in both the newly formed digital money and the existing one.
The Wave of the Future
The unpredictability of Bitcoin and altcoins being used as a global payment system is legendary. Fortunes have been gained and lost in the short bitcoin history so far. However, the proverbial genie is now out of the bottle. Individuals worldwide have had a glimpse of how genuinely free economies could operate. The concept seems to be catching on as more and more people are getting in the cryptocurrency wagon and buying Bitcoin.
Don’t get too carried away though. Governments will still likely exert some control over the new form of money. In the US, the IRS has stated that they will view cryptocurrency holdings as taxable property. Other governments have taken steps to make sure that digital currencies are not being used to avoid taxes are otherwise break the law. Centralized currency doesn’t seem to want to die off quietly, but the invention of peer-to-peer money is definitely a game-changer in the world of financial markets.
Nonetheless, a world where impartial, trusted algorithms govern financial transactions seems to be the preference of a growing number of people and institutions. Blockchain as a concept is growing in its own right, and leaders from a broad spectrum of industries are finding uses for this innovative technology.
Bitcoin, as the forerunner of all successful digital coinage, is in a unique position of continued success. Considering the history of Bitcoin, it is obviously resilient, in spite of massive fluctuations, helps to build the platform’s solidity. It was the first to market and has enjoyed a steady overall rate of growth year after year. Undeniably, Bitcoin has helped to solidify the idea of digital currency in the mind of the public. For these reasons, Bitcoin will likely remain the “gold standard” of digital currency for some time to come.