Cryptocurrency is different from other kinds of legal tender in that cryptocurrency like Bitcoin isn’t regulated by any kind of federal reserve. Instead, cryptocurrency is a type of digital currency that is generated by encryption techniques, which are used to regulate the generation of new units of the cryptocurrency in question.
Encryption ensures that funds are accurately transferred without the need for interference from a central bank. The fact that cryptocurrency is decentralized is also seen as a tremendous asset to enthusiasts from around the world.
Bitcoin: The First Cryptocurrency
The supposed founder of Bitcoin, Satoshi Nakamoto, is a man shrouded in mystery. What is known about the creation of Bitcoin is that the first cryptocurrency came into being in late 2008 with the publication of a landmark paper by Satoshi entitled, “Bitcoin: A Peer-to-peer Electronic Cash System.”
In that paper, Satoshi outlined the ways in which Bitcoin would utilize the blockchain, a record keeping system for cryptocurrency transactions, in order to keep the nascent currency up and running. The first block of the blockchain wasn’t “mined” until early 2009 when Satoshi himself mined the aptly named Genesis Block.
A Year After Bitcoin, Rivals Appear
If you had purchased $1,000 of Bitcoin around the time that the Genesis Block was mined, you would have about $45,000,000 today.
Though that’s an impressive number, Bitcoin spurred a number of rivals that may have hampered its own success. Rivals to Bitcoin, sometimes known as altcoin, cropped up almost immediately after Bitcoin’s creation in 2008.
A few years after Bitcoin, rivals were purportedly offering altcoins with greater levels of anonymity, a key concern for those trafficking in altcoin, and faster transaction speeds. The Litecoin and Namecoin were early cryptocurrency rivals to Bitcoin.
Bitcoin Crashes Before Recovering
Bitcoin is today valued at around $9,500 per coin. It wasn’t always this rosy a picture. In 2013, Bitcoin had real problems. The price of Bitcoin dropped well below $1,000 for the first time, and eventually the price of Bitcoin would reach its all-time nadir of around $300 per coin.
Later in 2013, the value of Bitcoin would once again rise above $1,000. Four years later, Bitcoin would surpass the $10,000 mark for the first time.
Bitcoin is the first cryptocurrency, which opened the door to other cryptocurrencies. As the world begins to accept cryptocurrency as a legal form of payment, it will be interesting to see how it will be regulated.