You may have heard of the term bitcoin. In case you aren’t familiar with it, then you must know that this is the payment system designed for the Internet. It is created and held electronically. Unlike dollars and euros, bitcoins aren’t controlled by a central bank nor printed like cash.
The payment system was invented by Satoshi Nakamoto. No one knows if Nakamoto is really a person, or a group of individuals. What is known is that Nakamoto published a paper in October 2008 that outlined a peer-to-peer electronic cash system.
There are a lot of theories why Nakamoto proposed the system. But the most prominent theory is that it was in response to the global financial crisis of 2008.
The following year, Nakatomo released the first-ever bitcoin software. This paved the way for the launch of the bitcoin network, as well as the first units of bitcoins, the bitcoin cryptocurrency.
By May of 2010, a programmer from Florida named LasloHanyecz claimed to have used bitcoins to order pizza. The purchase was made three months after a marketplace was formed for the currency. The cost of the pizza was 10,000 bitcoins.
The use of bitcoins wasn’t smooth sailing at first. There were hints of safety concerns like hacking and theft. There was even a group that planned to gather donations in bitcoins but eventually dropped the plan because of potential legal problems.
By 2012, the use of bitcoins was growing. It was widely used in black markets selling illegal goods. Enterprising groups like the Paly Entrepreneurs Club in Palo Alto, California, organized a trading network for the currency. Even a Silicon Valley start-up named Coinbase provided non-technical assistance in using bitcoins.
In 2013, the first major theft was reported. A Bitcoin forum founder said he lost around 25,000 bitcoins from his digital wallet, with an equivalent value of $375,000. It caused the value of the currency to slide to $0.01 from $17.51.
But that proved to be a minor hiccup, so to speak. In August 2013, a federal judge ruled that bitcoins can be used for the purchase of goods and services. Several months later, the price of bitcoin climbed to $700 as the US Senate held the first ever hearings on digital currency.
In December of 2014, tech giant Microsoft began accepting bitcoin payments. The following month, the New York Stock Exchange became an investor in the $75 million funding round of Coinbase.
These days, bitcoins have been recognized legal in many countries. However, it is illegal in other territories like Russia, Vietnam, and Ecuador.