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Crypto 101 Chapter #2 - Bitcoin Roots

Crypto 101 Chapter #2 - Bitcoin Roots
George Samprovalakis 15 September 2018

A Closer Look at Cryptocurrency and Bitcoin’s Roots

By their nature, Cryptocurrencies are digital currencies which are electronic stored data. They do not have a physical form like FIAT printed money or minted coins which you probably have in your wallet right now. You can't hold them physically, but like your loaded credit card you can buy things with them.

One or more than one cryptocurrency may accept as payment depending on the merchant you're doing business with.

There are more than 1,900 active cryptocurrencies right now according to CoinMarketCap (https://coinmarketcap.com). So, there are plenty of alternative cryptocurrencies to choose from If you’re looking to invest your hard-earned cash but can’t afford Bitcoin prices right now. These alternative cryptocurrencies, such as Ethereum, Litecoin, Ripple, Dash, Monero, Zcash, and more can be an excellent option if you know what you are doing.

Of course, we would, advise you to do some in-depth research on the cryptocurrency you want to invest in as not all cryptocurrencies are equal and some of them not even similar. Some by nature are more stable and some more volatile than others. So due diligence is strongly advised for better investments.

Trivia fact: Bitcoin is not the world’s first cryptocurrency, but it is the most successful.

There have been several similar experiments before it but all have failed. And the reason for failure?

All Virtual currencies before bitcoin had an inherent problem – they could easily forge to be double spend.

You could pay $100 to one merchant and use the same amount of money to pay a second merchant! Scammers and fraudsters simply loved this loophole.

And then, one fine day in 2007, a guy (?) called Satoshi Nakamoto started working on the Bitcoin concept. It was not out of the blue when on October 31st 2008, he released his white paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System” which described roughly a payment system that addressed that loophole. The double spending problem of digital currencies.

It was embraced as a brilliant idea that drew the attention of the cryptographic community. Just a little over a week after the white paper was published the Bitcoin Project software was registered in SourceForge by ‘someone’.

The first ever Bitcoin block called the ‘Genesis block’ was mined in January 2009. Several days later, block 170 recorded the first ever bitcoin transaction between Hal Finney and Satoshi Nakamoto.

Just a little more than a year later, in November 2010, Bitcoin’s market cap exceeded $1,000,000!

This beaconed as a shifting point in the development of Bitcoin as this pivotal moment lead to more people getting interested and investing in BTC. The price at this point was just $0.50 per BTC.

The prices started climbing for a year, and then, in June 2011, Bitcoin experienced the so-called “Great Bubble of 2011” after reaching an ATH (a.k.a. all-time high) of $31.91 per BTC. Four days later the exchange rate plummeted to just $10 per BTC.

Panic hit many investors that got scared at losing so much money and sold at a great loss. It would take almost two years for the exchange rate to recover and surpass the previous ATH. Those who kept their bitcoins (a.k.a. HODLers) made the right decision as the price has continued to climb and surpass everyone’s expectations.

What’s really intriguing about Cryptocurrencies and Bitcoin is that while nothing is hidden from anyone and all transactions are public, no one actually has a clue about who Satoshi Nakamoto really is.

There have been speculations that he is rather a collective pseudonym for a group of cryptographic developers than just one person. As always, some have come forward claiming to be Satoshi just to be ridiculed by the community. In fact, until today, his real identity remains a secret.

Read the next chapter:  The reason for the Cryptocurrencies Existence

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