BitCoin

In 2009, Satashi Nakamoto created the first cryptocurrency known popularly as bitcoin. The first financial denomination transaction took place on May 22, 2010. The famous transaction is celebrated under the name Bitcoin Pizza day because a man paid 10000 for 2 large pizzas. This Bitcoin Pizza purchase worth more than 12,300,000$ today.

In order to start trading a bitcoin, you must install a bitcoin wallet on your mobile phone or computer in order to create a Bitcoin address. Transactions are stored on a shared public ledger called a block chain. In order to make sure each transaction is secure, each bitcoin wallet keeps a private key to sign transactions. The private key ensures that the bitcoins come from the owner of the wallet. Transactions are usually confirmed within 10 minutes through a process known as mining. Bitcoin miners ensure chronological order of correct transactions in order to receive a small tip for the work.

This is currency has created controversy for a couple of reasons. An accidental flaw in the programming gave users the opportunity to create an infinite amount of bitcoin for a short period of time. A software update finished erased this program quickly.

In 2011, Wikileaks popularized bitcoin after giving readers the opportunity to donate bitcoin due to contract issues with paypal and credit card issuers.

Unfortunately after the creating of the darknet marketplace Silk Road launched in 2011, criminal activity using bitcoin on the website sprouted up.  Luckily, the Silk Road shut down in 2014.

 In August 2013, cryptocurrency finally became of a form of currency.

How to make Bitcoin

 

Bitcoin is produced using a process known as ‘mining’. An individual can produce a bitcoin by using a computer’s processing power in order to verify transactions by solving complex mathematical problems. Approximately every 10 minutes, individuals are rewarded with newly produced bitcoin after completion of the mathematical problem. The bitcoin protocol is designed with built in algorithms to adjust for the level of difficulty of the mathematical problem in order to make sure that on average the solution takes about 10 minutes to render no matter how many miners and cpu’s are working. In addition, the protocol makes sure half the amount of bitcoins are produced every 4 years. Consequently, the last bitcoin is expected to be mined in year 2140. A couple of reasons exists behind the 21 million bitcoin production limit. Back when bitcoin was originally created, a significant risk existed that the currency would never actually survive. Given that, the future scarcity of the currency would induce people to mine the coin even though economically inefficient.

Bitcoin Chart

In the last six months of 2016, Bitcoin became one of the best performing assets in the world. As of now, there are 1000 bitcoin currency machines around the world. The signals are a positive future for alternative currencies.