History Overview

 

            Bitcoin was conceived and subsequently published in an Academic Paper  in 2008 by an individual using the pseudonym, Satoshi Nakamoto.  The paper was titled, Bitcoin: A Peer-to-Peer Electronic Cash System.  Bitcoin is one of the first implementations of a concept called crypto-currency.  It is designed around the idea of a new form of money that uses cryptography to control its creation and transactions, rather than relying on central authorities.1  Bitcoin is maintained by a globally distributed peer-to-peer network running on open-source software.  A blockchain is the public ledger of all transactions in the Bitcoin network.

 

            In January 2009, the first Bitcoin transaction took place.  It was a person-person transaction between Satoshi Nakamoto and Hal Finney.  Finney notes, “When Satoshi announced the first release of the software, I grabbed it right away. I think I was the first person besides Satoshi to run bitcoin.  I mined block 70-something, and I was the recipient of the first bitcoin transaction.”2

 

            Nakamoto stepped down from the project towards the end of 2010.  Things have come a long way since then. Bitcoin project is now managed by a group of core developers, with Gavin Andresen, Jeff Garzik and a core group of others managing the Github (building software together) pulls. Jeff Garzik was involved in many of the early forum discussions with the mysterious Satoshi.   “Bitcoin is out of its infancy and starting to mature. There are increasing numbers of merchants at BitPay, and people are starting to see it as money over IP,” says Garzik.3 

 

            There’s good press and bad press, many proponents and just as many doubters of Bitcoin. Perhaps some of the doubt is because of the complexity of Bitcoin. It uses an elliptical curve digital signature algorithm (ECDSA) to transfer and secure payments. Garzik notes, people are starting to see it as more than internet protocol.  While there wasn’t an abundance of attention given to this new currency in its infancy stage, it has been gaining media attention over the last 12 months. 

 

            For more than 48 months, the Bitcoin network has been running continuously.  The cryptocurrency’s market trends have experienced several peaks and valleys in recent years. Bitcoin market value peaked at $32 in June 2011 and bottomed out at $2 in November the same year.  Moving forward through 2012 and up until April 10th of 2013, the currency continued gains and losses and entered 2013 doubling its 2012 high.6  But April 10th produced an all time high of $266 with the value stabilizing over the coming days. 

 

            The Bitcoin client (initial step to purchasing Bitcoins) was downloaded more than 1.5 million times between January and June, representing 48% of the 3.4 million total downloads over Bitcoin’s four and half year existence. The US remains the standout leader in downloads, crossing the 1 million mark in June, though China has been closing that gap, particularly in the second quarter of this year. 5

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