Online money has become more expensive than gold, and some already dream of a digital, world-wide payment tool. Will Bitcoin rise to this monumental challenge? Here’s a look back at the history behind this virtual currency.
A Quick History of Bitcoin
The actual inventor of Bitcoin is still a mystery. In 2007, someone started working under the pseudonym «Satoshi Nakamoto». Shortly after the US investment bank «Lehman Brothers» went bankrupt and triggered the global financial crisis, a story appeared on the internet, touting a virtual currency called «A Peer-to-Peer Electronic Cash System.» The document described the technical and economic fundamentals of the currency in detail. According to the description, the transfer of funds would be carried out directly from subscriber to subscriber (peer-to-peer), while cryptographic techniques would be used to ensure security.
Bitcoin is born
Soon after the appearance of the article, the term «Bitcoin» was introduced. The founding document, full of mathematical formulas, was written in English. This led to the assumption that the author or the authors came from a university or from the world of computer scientists and math. On January 12, 2009, a Bitcoin was transferred for the very first time.
Bitcoin transfer via smartphones
In February 2010, the first Bitcoin exchange office was brought online. The first real Bitcoin payment took place in May of that year when a programmer in Florida paid 10’000 Bitcoin for two pizzas. According to the current market price of Bitcoins, this corresponds to a price of 20 million Swiss francs, making those the most expensive pizzas in the world. By the end of 2010, the first Bitcoin transaction between two smartphones had successfully been made.
1 Bitcoin = 1 US Dollar
At the beginning of February 2011, 1 Bitcoin was worth 1 US Dollar. Various Bitcoin exchanges outside the USA popped up and the topic of Bitcoin began to arouse the interest of the media. «Time Magazine» was the first well-known medium to report about the virtual currency. A second article in the economic magazine «Forbes» was distributed worldwide and translated into various languages, resulting in notable increases in the value of Bitcoin. At the end of April, one Bitcoin climbs in value to 1.20 US dollars. By the middle of May, it catapults up to almost 6 US Dollars.
The first Bitcoin bancomats were established in 2013. The brothers Winklevoss, who became well-known due to their legal dispute with Facebook boss Mark Zuckerberg, were some of the first celebrities to invest in Bitcoin. In that same year, entrepreneur Richard Branson announced that his start-up, «Virgin Galactic», plans to accept Bitcoins as a form of payment to send tourists into space. Around the same time, the Bloomberg economic news agency created a Bitcoin-ticker with the currency’s latest news. At the end of 2013, a Bitcoin center opened in the middle of Manhattan, serving as a place for meetings, education and as an attraction for tourists.
The media attention and the ever-increasing distribution continued to fuel the value of Bitcoin. In the first half of April, Bitcoin reached its all-time high of 266 US Dollars. Then the course fell within one week by over 80 percent, down to 50 Dollars. Fluctuations of about 20 percent a day were not a rarity. In mid-April, the fourth largest Bitcoin’s stock exchange, BitFlor, closed because their bank accounts were frozen and were insufficiently liquid.
At the end of February 2014, the largest online stock market «Mt. Gox» goes bankrupt. «Mt. Gox» says that about 850,000 Bitcoins are lost, and they claim that a hacker attack is responsible for the disappearance of the Bitcoins. The scandal around «Mt. Gox» results in a massive currency collapse. At the beginning of the year, one Bitcoin was traded for around 1200 dollars. In the aftermath of the «Mt. Gox» bankruptcy, the price falls by 60 percent, to 450 dollars. The New Yorker financial supervision wants to regulate the Bitcoin trade.
The newborn Bitcoin
Bitcoin’s value has been growing steadily, up +239,60 percent since the beginning of 2017. Japan recently announced Bitcoin as a viable form of payment. Soon there might be a new Bitcoin fund. The result? The currency is as expensive as ever. What will happen next? We will see.