This Bitcoin History Infographic shows Bitcoin’s production, mining, and value trends over its lifetime along with major milestones.
Bitcoin is the first and most popular purely digital currency. Its value is based on supply and demand. People call these digital currencies cryptocurrencies. Many people believe that they are the future of money. Decentralization is one of the key features of cryptocurrencies. Basically, this means they are fully independent of any single bank, economy, or government. As a result, over a million people have bought Bitcoin as an alternate form of investment in the future and as a security against an economic collapse. It became extremely popular in countries having major financial crises like Zimbabwe and Venezuela.
Anonymity is another popular benefit of using Bitcoin. People store them in digital accounts known as wallets. These wallets are long encrypted serial numbers instead of names. It is possible to find out who owns a particular wallet with enough research.
An anonymous person or group called Satoshi Nakamoto first published the concept of Bitcoin in a white paper called Bitcoin: A Peer-to-Peer Electronic Cash System. In the white paper, Nakamoto discussed how distrust in familiar financial institutions grew during the recession in 2008-2009.
Silk Road Era
The Silk Road online market operated from February 2011 to October 2013. It discreetly sold illegal items and services, like drugs, prostitution, and credit card numbers, on the Dark Web. Because traditional bank transactions are easily traceable they had to figure out another way to process payments. Ross Ulbricht, a UT Dallas alumni, using the pseudonym “Dread Pirate Roberts,” discovered the mostly unknown Bitcoin. Consequently, made his Silk Road marketplace process all sales using it. This helped give Bitcoin its first spurt in value and acceptance. For this reason, Bitcoin gained a bad reputation for being for online criminals. A couple of years later, the FBI found out about Silk Road and shut it down, and put Ulbricht in prison for life.
Current State of Bitcoin
Bitcoin’s value started off at 0 and took about 4 years to be worth over $20 each. 2017 was a critical year for its value. Incredibly, it skyrocketed to nearly $20,000 for each one. Because of this, 10s of thousands of Bitcoin millionaires were created. After a couple of months, it dramatically dropped in value. For the second half of 2018 Bitcoin’s value has hovered mostly around $6,500. Its volatility also contributed to Bitcoin’s bad reputation.
The code that creates the Bitcoins has a built-in total production limit of 21 million. An automated complex problem-solving algorithm called hashing mines and mints them. This hashing algorithm limits the production of them by half every four years. As a result, supercomputers automatically make them in an expensive and time-consuming process called mining. At the beginning of 2018, approximately 16.5 million, 85%, have already been created.
As time goes on, the supply becomes more and more limited. This is where the faith in its value comes from. Furthermore, as popularity grows and production declines, the more in demand it becomes, thus driving up the value like how this Bitcoin history infographic depicts.