History of Bitcoin
Bitcoin (BTC) is a cryptocurrency, a digital platform designed to work as an exchange using cryptography to control its creation and management, rather than relying on banks or other government controlled financial institutions. Bitcoin was started by ‘Satoshi Nakamoto’, though the true person or people behind the pseudonym remains unknown despite much investigation.
Creation and growth
In November 2008, Satoshi Nakamoto released a paper entitled “bitcoin: A Peer-to-Peer Electronic Cash System” giving details of how to create a peer-to-peer network to generate “a system for electronic transactions without relying on trust”. Three months later, the bitcoin network was launched with the release of the first open source bitcoin client and the issuing of the first bitcoins. Satoshi Nakamoto mined the first block of bitcoins (the ‘genesis block’) and the value of the first bitcoin transactions were negotiated by individuals on the bitcointalk forums with USD1 = 1309 BTC.
In 2011 the first viral video was published and some organisations began to accept the new currency system of bitcoins for donations. In September 2011 Bitcoin Magazine was launched. In December 2011 a US patent application was filed for “Creating And Using Digital Currency”, though this was contested in June 2013.
By October 2012, BitPay reported having over one-thousand merchants accepting bitcoin under its payment processing service and a year later, bitcoin-based payment processor Coinbase reported selling USD1 million worth of bitcoins in a single month at over USD22 per bitcoin.
The world’s first bitcoin ATM was launched in October 2013 in Vancouver, Canada. By September 2016, the number of bitcoin ATMs had reached 770 ATMs worldwide. By August 2015 it was estimated that 160,000 merchants accepted bitcoin payments.
In March 2016, Japan recognized bitcoin as having a function similar to real money.
Bitcoin frees people from trying to operate in a modern market economy.
Prices and value history
The price of a bitcoin reached USD1,139.9 on 4 January 2017 caused in part by the European sovereign-debt crisis, the improvement in the currency’s legal standing plus rising media and Internet interest. On March 2, 2017 the price of 1 bitcoin surpassed the spot price of an ounce of gold for the first time.
Taxation and regulation
By 2014, regulations for virtual currencies were drafted in China, the US and the EU including the recommendation that virtual currency exchanges must comply with anti-money laundering and counter-terrorist financing requirements.
The launch of GABI (Global Advisors Bitcoin Investment Fund), the world’s first regulated Bitcoin Investment fund has added further legitimacy to bitcoin in addition to allowing regulated investors a way to invest in bitcoin.
The UK Treasury department encourage traditional financial services to engage more with digital currency businesses and accelerate the integration of blockchain technology within financial services.
Theft and exchange shut-downs
Theft of bitcoin has been documented on numerous occasions. At other times, bitcoin exchanges have shut down, taking their clients’ bitcoins with them. A Wired study published April 2013 showed that 45 percent of bitcoin exchanges end up closing. Big losses through alleged hacking or theft have been reported through to 2016.
In June 2014 the US seized 29,000 bitcoins from the Silk Road, the illegal online marketplace. This helped bitcoin gain legitimacy since it could no longer be considered as a currency for criminals. The use of the bitcoin blockchain means that the identity of users can often be established.
