It’s been more than half a dozen years since it all began, and Bitcoins are gaining it’s attention through out the internet community redefining the definition of money in your digital wallet with the actual one. There have been some myths and major truths behind how bitcoins work, but in order to understand how bitcoins came into play we need to go back and take a look at it’s origins. By going back, I mean really way back right upto how money came into existence. Here’s a small video, that explains the history of money and role of bitcoins in keeping the history alive.
Here are the top 10 facts that every Bitcoin enthusiast must know (not in any particular order) . Even if you are not one, just read them and you’ll end up one bitcoin mine digger.
1. Bitcoin Legend
Image Source: kernelmag.dailydot.com
According to legend, Satoshi Nakamoto, began working in bitcoins concept in 2007 and has been living in Japan. It is speculated that Nakamoto might be a pseudonym for more than one person, this might be due to the fact that on August 15, 2008 Neal Kin, Vladimar Oksman and Charles Bry filed a patent for an encrypted application, and three days after that bitcoins.org was registered in the anonymousspeech.com. However, the actual white paper on Bitcoins was published only on 31st October, 2008 by Satoshi Nakamoto and all three denied any link to him, since then there seems to be a lot more researches on Satoshi compared to the bitcoins. They are believed to have more than 1 million bitcoins in possession
2. Bitcoin Mining
Image Source: cryptocoinsnews.com
Mining is conventionally defined as the process of adding new currencies into the system at a rate that resembles the rate at which the commodities like gold are mined from the ground. Similarly, bitcoin mining is the mechanism of introducing bitcoins into the system, the miners not only mine the bitcoins, but also verify the existing transaction for it’s validity. Every transaction is stored in a transaction log called “block”. The first bitcoin mining was done by Satoshi Nakamoto on 3rd January, 2009 at 18:15:05 HRS with a reward of 50 coins and this was called the Genesis Block
3. Bitcoin Value
Although the bitcoin transaction happened in block 170 between Satoshi and Hal Finney, a developer and cryptographic activist on January 12, 2009 at 03:30:25 GMT, the first bitcoin value was set at 1 USD = 1309.03 BTC on October 5, 2009 only.
On May 22, 2010 the first real world transaction of bitcoin happened, where Laszlo Hanyecz, a programmer reportedly paid 10,000 BTC for a pizza worth $25. However, the present rate of Bitcoins stand at $420.26 (it’s varying even as I write this, so check latest here!)
4. Bitcoin Vulnerability
Image Source: cointelegraph.com
On 6 August 2010, a major vulnerability in the bitcoin protocol was spotted. Transactions weren’t properly verified before they were included in the transaction log or “block chain” which let users bypass bitcoin’s economic restrictions and create an indefinite number of bitcoins.
On August 15, 2010 the vulnerability was exploited; over 184 billion bitcoins were generated in a transaction, and sent to two addresses on the network.
Within hours, the transaction was spotted and erased from the transaction log after the bug was fixed and the network forked to an updated version of the bitcoin protocol. This was the only major security flaw found and exploited in bitcoin’s history.
5. Bitcoin Safety
Although the fundamental idea behind bitcoins is to decentralize the monetary system, in order to avoid illegal and fake transactions, every transaction is monitored. Unlike regular money, each bitcoin has a detailed history, one as long as 31,000 lines of computer code, which makes it hard to fake or replicate.
6. Silk Road
The Silk Road was the online black market for illegal drugs, it was shutdown in 2013 by the FBI and other agencies. The site’s founder Ross Ulbricht was jailed for life in 2015.
The site had bitcoin transactions enabled and when it was shutdown around 1,75,000 bitcoins were confiscated which is rumoured to be just 20% of the Ross’s collection. The confiscated bitcoins were grouped into different numbers and auctioned for a sealed amount amongst various buyers.
7. Satoshi Value
Image Source: blog.thestateofme.com
Since the price of bitcoins have larger values, it does not necessarily mean that BTC’s cannot be used for buying daily products like pizzas, movie tickets, etc., In fact, the actual advantage of using digital currency is that it can be used upto 8 decimal places, called a Satoshi, which is not practically possible with conventional system.
8. Bitcoin Evangelists
It doesn’t matter how great your product is, it doesn’t have a value until people are ready to buy it. This doesn’t stick to products alone, but currency too.
Imagine, you’re having all the whole of federal reserve in your wallet and no one is ready exchange anything for that amount, then it’s equivalent to having a huge hole in your wallet. Even bitcoins gained it’s value only after big names started accepting it.
- Actor Jet Li’s charity received bitcoins as donation, and this brought the country’s attention towards bitcoins.
- Mel-B the former Spice Girl started accepting bitcoins as payment for her music.
- Lamborghini was the first car company to accept bitcoins for cars.
- The Winklevoss twins (the Facebook twins have a huge reserve of bitcoins) purchased tickets for a space flight Virgin Galactic using Bitcoins.
- Wikileaks, the major whistle blowing company accepted bitcoins for donations when leading money transfer companies refused to deal with it.
9. Bitcoin Investments
It is not just common people buying or rather the technical term would be investing in bitcoins, even professional investors have shown keen interest in the bitcoin industry. There have been numerous startups both supporting and working in the bitcoin industry, the investment in the industry recorded from the start of January 2011 to the first half of 2015, stands at $807 million. The largest single funding in the space was 21 Inc’s $116 million which included big investor names like Andreessen Horowitz, Cisco Investments, Qualcomm Ventures, RRE Ventures and Khosla Ventures.
10. The Last Bitcoin
Image Source: time.com
When someone is ready to offer you 22 million bitcoins, then it’s time to be refuse, no matter how big the number might sound.
As, the number of bitcoins that can exist is limited to 21 million. Also, the production rate is scheduled to be halved every year to ensure that the value of the bitcoin is not lost.
If we do the math, the supply is expected to run out by 2140. If you feel, 21 million won’t be enough, that’s where Satoshi comes into play, again if we do the math properly there are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bitcoin system.
The Honorable Mentions
The above list is not in any particular order, but it doesn’t hurt to know a little more about the bitcoins, after all the value of a does keep increasing. So, here are some of the facts, that almost made it to the list.
- Physical began to be marketed by a company in the United States, but they have been shutdown once the treasury got wind of it’s actions.
- A journalist from Bloomberg was given Bitcoin on live TV in December 2013, and it was promptly stolen by a viewer.
- In 2013, James Howell threw his broken hard drive containing 7,500 bitcoins in a dump yard by mistake without a backup.
- Vancouver, the Canadian city boasts of it’s first bitcoin cash machine.
- In November 2013, a single value of BTC came a little over an ounce of gold for a brief period of time.
- 200,000 is the lowest amount of bitcoins that are used in transaction each day.
With so many people rooting for the bitcoins, it is evident that it is going to shape our future at least the next century and no matter, how much facts we add, a technology that is ever increasing it’s value on a hourly basis (literally!) cannot be covered in a single day. For further updates on Bitcoins industry, check out Techstory’s Bitcoin space!