What Is Bitcoin? Here’s a Little “Bit” of Bitcoin History For You

bitcoin mining

There’s so much talk about Bitcoin these days but some may not be that well versed in the topic.

Seriously, what is Bitcoin and what is its purpose?  Will it eventually be replacing the standard form of currencies in play, or will it be something that would soon fizzle and be forgotten?  Let’s look at the history of Bitcoin and the latest happenings in digital currency.

A Bitcoin For Your Thoughts:

Bitcoin is a complex and anonymous type of electronic or digital currency which can be traded for real money or local currencies such as dollars, yen and euros.  But the beauty of Bitcoin lies with it being “convenient and untraceable, liberated from the oversight of governments and banks.”

The currency uses cryptography or secret coding to control its creation and transactions to ensure that no fake Bitcoins go into circulation – unlike the standard currencies used in different countries which can easily be counterfeited.  This is also the reason why Bitcoin does not have a central bank to manage the currency, instead relying on an internet-based peer-to-peer network to process transactions.

Bitcoin is created by “mining.”  There are already 11 million Bitcoins in existence and once this number hits 22 million, “mining” or production of Bitcoin would cease.  People can buy Bitcoins using from various websites, known as “Bitcoin exchanges”, such as Mt. Gox.

Think of Bitcoin as something like Facebook Credits.  You purchase these virtual coins so you can buy goods on Facebook and the various games played on it.  Bitcoin is like a real-life version of Facebook Credits that can be used to pay for things we can actually use.

The Bitcoin Timeline

 

2008

2009

  • Genesis block was established
  • First and second versions of Bitcoin released
  • First Bitcoin transaction happened
  • Exchange rate published

2010

  • Bitcoin Market was established
  • 10,000 BTC was used to purchase a $25 pizza
  • Version 3 was released
  • Mt.Gox, currently the world’s largest and oldest exchange, was established
  • A major vulnerability was encountered wherein transactions were being blocked
  • Exchange rate increased

2011

2012

2013–

Bitcoin is all about the money and so it’s not surprising that it is currently under siege. Everything takes place in the virtual realm, which makes it seem like a tasty snack to hackers.

With all the current attacks on Bitcoin (see video clip below for the latest on this), and increased speculation that it’s bubble could be about to burst, are you still willing to gamble purchasing this virtual currency? Or do you still prefer keeping your cash on hand or your credit card in your wallet?