June 15th, 2017

History of Bitcoin and the Future of Cryptocurrencies

Cryptocurrencies, also known as digital currencies, virtual currencies, or electronic currencies, are a relatively new and increasingly popular method of electronic payment available worldwide. Bitcoin is the first cryptocurrency ever created, and it was originally launched in 2009. Nevertheless, throughout the last eight years, other cryptocurrencies have been created. Each electronic or digital currency has its unique and specific features regarding electronic coding, cryptographic safety, and confidentiality. Some of the key elements that all cryptocurrencies have are that they do not exist physically, they are not issued or controlled by a central or national bank, and they involve a unique degree of confidentiality. This article explores the history of Bitcoin and other major electronic currencies.

History of Bitcoin and the Future of Cryptocurrencies

The first cryptocurrency was launched anonymously in 2009, following the publication in 2008 of a White Paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” outlining its concept and function. Both the Bitcoin and the White Paper were released under the pseudonym of Satoshi Nakamoto, whose identity, whether collective or individual, is still unknown. Under its complex electronic coding system, new coders, known as “miners”, are slowly creating Bitcoin units. However, the total amount of Bitcoin is limited to approximately 21 million units, of which some 16.4 million have already been created. Currently, Bitcoin are used in commercial transactions and traded freely in electronic currency markets. Furthermore, because Bitcoin is a community currency based in the worldwide web, its price fluctuates freely based on supply and demand. In April of 2011, Bitcoin (BTC or XBT) hit the price of US$1 per unit for the first time. Since then, the cryptocurrency has seen tremendous value growth and, today, it is valued at more than US$2.400 per unit. Therefore, Bitcoin’s market capitalization currently exceeds US$40 billion. Bitcoin units are divisible up to the eight decimal point into a subunit called Satoshi, which equates to 0.00000001 BTC.

In recent years, numerous cryptocurrencies have emerged and gained substantial popularity. Chief amongst these are Ethereum with over 92 million units and a market capitalization of almost US$33 billion as well as Ripple with more than 38 billion units and a market capitalization of little under US$11 billion. Even though all of these cryptocurrencies are meant to function and be used as tenders of payment, they are considered to be investment vehicles by tax and financial regulators in the United States because of their price fluctuation and because a governmental institution does not issue them.

Some of the key benefits of utilizing and investing in a cryptocurrency are the ease of electronic transaction, the “block chain” technology that records the full history of the currency, and the fact that it does not have maintenance costs. Meanwhile, cryptocurrencies also have downsides, such as the fact that, if unsecured, they can be hacked or stolen, they can also be used for illegal transactions, their value tends to fluctuate greatly, and they are not secured by financial authorities so the holder could lose large amounts of capital.

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