Is Bitcoin the Digital Gold? The History of Electronic Money
Bitcoin is the most popular and the most expensive cryptocurrency for today. It was developed in 2009 by still unidentified Satoshi Nakamoto. We are suggesting turning to its background, discovering development steps and understanding the reasons for success.
Before Bitcoin: First Attempts to Create Cryptocurrency
Bitcoin is known as the first cryptocurrency. It is true if to only take the existing digital coins into consideration. However, in general, Bitcoin is not the pioneer in the world of crypto coins.
• DigiCash: First Crypto Steps
Back in the end of 1980s, American cryptographer David Chaum has been experimenting with digital money. His aim was to create a new type of currency for high-confidentiality transactions.
For the purpose, he has developed the so-called Blind Signature Technology – the formula for information encryption. It was created with the help of RSA algorithm, and public and private keys known today.
Chaum has moved to Netherlands, one of the most technologically developed countries at that time – it has already seen attempts of creating electronic cash for petrol stations. There, in 1990, Chaum has established his own company DigiCash where he could fully implement the technology.
However, Chaum and the National Bank had a dispute – as a result, bank has acquired the currency, and in 1998, it went bankrupt.
• E-gold: The First Advanced Digital Currency
E-gold is the gold digital currency which was developed by Douglas Jackson and started to be used in 1996 by the company Gold & Silver Reserve.
The unique feature of the currency – it allowed users to have their system accounts denominated in gold or other precious metals. This way, they could transfer value to other accounts, and the process was done anonymously.
The system was popular – there were around 5 million accounts created. In 2007, however, the currency was accused by the US Federal government for money laundering and other crimes. At the end, all accounts and transfers were blocked.
• B-money and Bit Gold
In 1998, developer Wei Dai proposed a new distributed and anonymous paying system – B-money. The currency has never reached success, however, it has impacted Bitcoin – Satoshi has implemented several elements of B-money into BTC.
In the same period, cryptographer Nick Szabo has proposed the idea of Bit Gold – the currency which reflects the properties of real gold. Although it was not successful as well, its PoW system can be noticed today in existing crypto coins.
Bitcoin’s Development: How Was the Coin Growing?
The domain and link to a paper about Bitcoin appeared in 2008, and a year later, BTC was released as an open-source software.
At first, the value of transactions was determined by negotiations between pioneer members of cryptocurrency community. The first payment with BTC has taken place in 2010, when Laszlo Hanyecz has bought two pizzas for 10,000 BTC – at that time, this amount was worth around $25.
Then, people started paying attention at the phenomenon – it has become clear that the coin has big future. As a result, hackers began to actively attack crypto wallets, while big companies were supporting BTC and using it for making payments.
In 2013, BTC has reached its first $1,000 price rate, and in two years, the coin has been traded by already 160,000 people on exchanges.
The record-breaking moment for the coin was in 2017 – in December, the price of 1 BTC was more than $20,000.
As for August 17, 2018, the price of the coin is $6,505. Crypto experts are making positive forecasts, mining is attracting people, and the number of DLT-based startups is growing – almost 10 years since its release, Bitcoin stays popular.
Secret of BTC’s Popularity
First, as Bitcoin is the oldest cryptocurrency among the existing ones, it has already gained trust from its users and proved to be reliable. The technology which serves as its base – blockchain – is not only used for virtual currencies creation but also for companies’ secure management and is implemented in various industries, such as healthcare, real estate, transportation and others.
Also, Bitcoin is accepted as a means of payment in many shops and is taken for various services – from getting education to renting a room in a hotel. Then, it is listed on high number of crypto exchanges and is also discussed by the media – it played a crucial role for its price raise in 2017.
The advantages the coin provides are also important. Here are the main ones:
• decentralized nature of the coin allows it to eliminate control by one central authority;
• BTC account can be set up in several minutes;
• users are allowed to hold several BTC addresses which provides high level of anonymity;
• the coin is transparent as all the transactions’ details are stored in the ledger;
• transaction fees are lower and speed is higher than in case of traditional money;
Compared to its ancestors, Bitcoin stays popular, has a better technology and shows positive development signs – these factors prove that Bitcoin may be called the digital gold of today.
Bitcoin, other cryptocurrencies and blockchain technology will be discussed at the Blockchain & Bitcoin Conference Malta. Meet the leading crypto experts and discover more about crypto at the event!