EVOLUTION OF BITCOIN

 

HISTORY OF BITCOIN

Bitcoin is a cryptocurrency, a digital asset that uses cryptography to control its creation and management, rather than relying on central authorities.[1] Originally designed as a medium of exchange, Bitcoin is now primarily regarded as a store of value. The history of bitcoin started with its invention and implementation by Satoshi Nakamoto, who integrated many existing ideas from the cryptography community. Over the course of bitcoin's history, it has undergone rapid growth to become a significant store of value both on- and offline. From the mid-2010s, some businesses began accepting bitcoin in addition to traditional currencies.

BACKGROUND

Prior to the release of bitcoin, there were a number of digital cash technologies starting with the issuer based ecash protocols of David Chaum and Stefan Brands.[3][4][5] The idea that solutions to computational puzzles could have some value was first proposed by cryptographers Cynthia Dwork and Moni Naor in 1992. The idea was independently rediscovered by Adam Back who developed hashcash, a proof-of-work scheme for spam control in 1997.[6] The first proposals for distributed digital scarcity based cryptocurrencies were Wei Dai's b-money[7] and Nick Szabo's bit gold.[8][9] Hal Finney developed reusable proof of work (RPOW) using hashcash as its proof of work algorithm.

In the bit gold proposal which proposed a collectible market-based mechanism for inflation control, Nick Szabo also investigated some additional aspects including a Byzantine fault-tolerant agreement protocol based on quorum addresses to store and transfer the chained proof-of-work solutions, which was vulnerable to Sybil attacks, though.

CREATION

On the 4th of January 2008, the domain name bitcoin.org was registered.[11] Later that year, on 31 October, a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System[12] was posted to a cryptography mailing list.[13] This paper detailed methods of using a peer-to-peer network to generate what was described as "a system for electronic transactions without relying on trust".[14][15][16] On 3 January 2009, the bitcoin network came into existence with Satoshi Nakamoto mining the genesis block of bitcoin (block number 0), which had a reward of 50 bitcoins.[14][17] Embedded in the coinbase of this block was the text:

SATOSHI NAKAMOTO

"Satoshi Nakamoto" is presumed to be a pseudonym for the person or people who designed the original bitcoin protocol in 2008 and launched the network in 2009. Nakamoto was responsible for creating the majority of the official bitcoin software and was active in making modifications and posting technical information on the bitcoin forum.[14] There has been much speculation as to the identity of Satoshi Nakamoto with suspects including Dai, Szabo, and Finney – and accompanying denials.[27][28] The possibility that Satoshi Nakamoto was a computer collective in the European financial sector has also been discussed.[

Investigations into the real identity of Satoshi Nakamoto were attempted by The New Yorker and Fast Company. The New Yorker's investigation brought up at least two possible candidates: Michael Clear and Vili Lehdonvirta. Fast Company's investigation brought up circumstantial evidence linking an encryption patent application filed by Neal King, Vladimir Oksman and Charles Bry on 15 August 2008, and the bitcoin.org domain name which was registered 72 hours later. The patent application (#20100042841) contained networking and encryption technologies similar to bitcoin's, and textual analysis revealed that the phrase "... computationally impractical to reverse" appeared in both the patent application and bitcoin's whitepaper.[12] All three inventors explicitly denied being Satoshi Nakamoto.

In May 2013, Ted Nelson speculated that Japanese mathematician Shinichi Mochizuki is Satoshi Nakamoto.[32] Later in 2013 the Israeli researchers Dorit Ron and Adi Shamir pointed to Silk Road-linked Ross William Ulbricht as the possible person behind the cover. The two researchers based their suspicion on an analysis of the network of bitcoin transactions.[33] These allegations were contested[34] and Ron and Shamir later retracted their claim.[35]

Nakamoto's involvement with bitcoin does not appear to extend past mid-2010.[14] In April 2011, Nakamoto communicated with a bitcoin contributor, saying that he had "moved on to other things"]

Stefan Thomas, a Swiss coder and active community member, graphed the time stamps for each of Nakamoto's 500-plus bitcoin forum posts; the resulting chart showed a steep decline to almost no posts between the hours of 5 a.m. and 11 a.m. Greenwich Mean Time. Because this pattern held true even on Saturdays and Sundays, it suggested that Nakamoto was asleep at this time, and the hours of 5 a.m. to 11 a.m. GMT are midnight to 6 a.m. Eastern Standard Time (North American Eastern Standard Time). Other clues suggested that Nakamoto was British: A newspaper headline he had encoded in the genesis block came from the UK-published newspaper The Times, and both his forum posts and his comments in the bitcoin source code used British English spellings, such as "optimise" and "colour".

An Internet search by an anonymous blogger of texts similar in writing to the bitcoin whitepaper suggests Nick Szabo's "bit gold" articles as having a similar author.[27] Nick denied being Satoshi, and stated his official opinion on Satoshi and bitcoin in a May 2011 article.[36]

In a March 2014 article in Newsweek, journalist Leah McGrath Goodman doxed Dorian S. Nakamoto of Temple City, California, saying that Satoshi Nakamoto is the man's birth name. Her methods and conclusion drew widespread criticism.[37][38]

In June 2016, the London Review of Books published a piece by Andrew O'Hagan about Nakamoto.[39]

After a May 2020 YouTube documentary pointed to Adam Back as the creator of bitcoin,[40] widespread discussion ensued. The real identity of Satoshi Nakamoto still remains a matter of dispute.

PRICES AND VALUE HISTORY

Among the factors which may have contributed to this rise were the European sovereign-debt crisis – particularly the 2012–2013 Cypriot financial crisis – statements by FinCEN improving the currency's legal standing, and rising media and Internet interest.

Until 2013, almost all market with bitcoins were in United States dollars (US$).

As the market valuation of the total stock of bitcoins approached US$1 billion, some commentators called bitcoin prices a bubble. In early April 2013, the price per bitcoin dropped from $266 to around $50 and then rose to around $100. Over two weeks starting late June 2013 the price dropped steadily to $70. The price began to recover, peaking once again on 1 October at $140. On 2 October, The Silk Road was seized by the FBI. This seizure caused a flash crash to $110. The price quickly rebounded, returning to $200 several weeks later.[153] The latest run went from $200 on 3 November to $900 on 18 November.[154] Bitcoin passed US$1,000 on 28 November 2013 at Mt. Gox.