Virtually everyone has heard of Bitcoin, but not a lot of people can answer a seemingly simple question: "What is Bitcoin?" You may have heard how we will use Bitcoin in the future, but how do you get some of this digital currency and how much is Bitcoin worth? The answers to all of these inquiries are as complicated as the history of currency itself.
There's a tendency to be wary of cryptocurrencies like Bitcoin - and that's valid, as people can buy almost anything with it, including bad, bad things, in bad, bad places. More people are looking into Bitcoin for larger, more expensive purchases, as the value of Bitcoin has skyrocketed since its inception in 2009. That said, Bitcoin isn't inherently bad, and if its creator is to be believed, it was actually created with good intentions.
Feel like diversifying your investment portfolio with some cryptocurrency? Learn everything you need to know about why Bitcoin is so important and how this digital, peer-to-peer money works.
The Basics Of Bitcoin
Jerry Brito and Andrea Castillo of George Mason University define Bitcoin as "an open-source, peer-to-peer digital currency... the world’s first completely decentralized digital-payments system." What makes Bitcoin revolutionary is that it's a cryptocurrency, which essentially means that due to advanced cryptography that identifies every unit, Bitcoin cannot be double-spent. Before its advent, a third-party contractor was required to keep track of every monetary unit spent online, as the digital representation of money did not carry with it unique identifiers. Bitcoin eliminated that problem, which also makes it impossible to illegally duplicate the currency.
Bitcoin Has Been Heavily Used For Illegal Activities
Part of what helped Bitcoin rise so quickly was its ability to be used for illegal activities with no means of tracking any party involved in the transaction. They were purchased in large quantities between 2011-2013 by criminals spending millions of dollars so as to have an untraceable currency. Forbes also reported in 2011 that illegal drugs quickly became a hot commodity to purchase with Bitcoin for the same reason. There's really no limit to what can be purchased with the cryptocurrency, and there are some truly disturbing products and services for sale on the dark web.
The Creation Of Bitcoin In 2009
An anonymous person or group of people under the moniker Satoshi Nakamoto created Bitcoin in 2009 and released it to the world as open-source software. According to Bitguru, the first transaction was made by a Florida man in 2010 who purchased a pizza for 10,000 BTC. It spread quickly via networking, first through the esoteric community of those deeply interested in computer programming, but then to a larger audience soon after. Banks and regulators were immediately concerned about the cryptocurrency, fearing that it was a pyramid scheme, but also that it would be nearly impossible to regulate due, in part, to the advanced cryptography.
Who Is The Mysterious Creator Of Bitcoin?
Though the creator of Bitcoin went by the name Satoshi Nakamoto, it is generally accepted that this is a pseudonym. It is still unknown who this Nakamoto is - some believe him to be a true genius, while others believe it is actually a group of highly talented computer programmers, as it seems highly unlikely that one person could create something so advanced. Different theories have people believing the creator of Bitcoin to be British, or Japanese, or Irish, or Finnish, or a California man named Dorian Prentice Satoshi Nakamoto, or a now-deceased programmer named Hal Finney. Given the many theories as to who is behind the creation of Bitcoin, the public may never find out who Satoshi Nakamoto truly is.