History of Bitcoin

Tapas Kumar Basu || March 15, 2021 || Kolkata
Bitcoin has stopped hitting any news headlines since Sept 2020 as the price of one
unit of the cryptocurrency started it’s journey on a near vertical path from US$
10,000. Today, in a span of only 6 months it is ready to cross US$60,000. Oct,
2013 if you have invested US$ 100.00 in Bitcoin, you could have encashed it today
for US$ 48,000.00; an annual growth rate of nearly 7,000%. But, as is true for any
speculative game, especially in an unregulated market, investing in crypto coins goes
with the risk loose the entire investment in a span of few hours..
Bitcoin is an unbelievable tale about how imagination can create money. It may
sound like a fiction, but it’s actually a story of how the digital processes can change
our known non-digital life.
Bitcoin is a form of digital currency; There is no coin or a note or a cheque book.
There is no government, financial institution or any authority who controls it. The
owners who have Bitcoins have no account numbers, names, social security numbers
or any other identifying features that connect Bitcoins to its owners. And, just like
diamonds or gold, a Bitcoin is to be mined using blockchain technology. Encryption
keys connect buyers and sellers.
Satoshi Nakamoto—possibly an individual or may be a group, whose real identity is
still unknown—is behind the development of Bitcoin. His goal was to create a new
electronic cash system that was completely decentralized with no server or central
authority.
1998 – 2007: Crypto Currency of pre-Bitcoin years

Before 2008, there were many attempts of creating online currencies with ledgers
secured by encryption. Few examples of these are Adam Back’s Hashcash (1997),
Wei Dai’s B-Money (1998), Nick Szabo Bit-Gold (1998) and Hal Finney’s Reusable
Proof of Work. Adam Back, a British cryptographer and cypherpunk, who
developed Hashcash as a proof-of-work system used to limit email spam and denial-
of-service attacks; later this has been used in the mining algorithm. In 1998 Wei Dai,
a computer scientist aimed to develop an anonymous distributed electronic cash
system – he called it B-Money. During the same year, the pioneer of blockchain
technology Nick Szabo started the idea of Bit gold. In 2004, Hal Finney, a noted
cryptographic activist, created the first reusable proof of work system before bitcoin.
While the concepts were similar to Bitcoin, the ideas were not fully developed.
2008: The Mysterious Mr Satoshi Nakamoto
A paper called Bitcoin – A Peer to Peer Electronic Cash System was posted by
Satoshi Nakamoto in a mailing list discussion on cryptography. This paper explained
the idea of electronic cash for online payments which will allow the transaction of
money directly from one party to another without going through a financial
institution. But even today, the real identity Satoshi has remained a mystery.
2009 – Bitcoin begins its journey

In the year 2009, the Bitcoin software was released in the public domain. And the
‘mining’ process, through which new Bitcoins are created and transactions are
recorded and verified on the blockchain, started.
Mining requires the solving of computationally difficult puzzles in order to discover
a new block, which is added to the blockchain. Bitcoin mining adds and verifies
transaction records across the network. A variety of hardware can be used to mine
bitcoin. These elaborate mining processors are known as "mining rigs."
For adding blocks to the blockchain, miners are rewarded with a few bitcoins; the
reward is halved every 210,000 blocks. The block reward was 50 new bitcoins in
2009.
Jan. 3, 2009 the first Bitcoin block (Block 0) was mined.
2010 – Bitcoin is valued for the first time

In the beginning, it was impossible to assign a monetary value to the mined Bitcoins. In
2010, someone decided to sell their Bitcoins for the first time to purchase two pizzas for
10,000 Bitcoins.
May 22, 2010, Laszlo Hanyecz, decided to buy two pizzas, two to be exact
one for supper and one to eat the next day, use Bitcoin.
Logging on to BitcoinTalk, he went
on to offer anyone 10,000 BTC if
they could have two Papa John’s
pizzas delivered to him.
At that time BTC was trading under
$0.01 US, 10,000 BTC seems like an
ok deal. Months prior to the
transaction, people couldn’t even get
rid of BTC if they wanted to. We hope that Laszlo had enjoyed his pizza, but if he had
held onto those Bitcoins, they would be worth more than $100 million today.
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2011 – Rival cryptocurrencies emerge
In 2011, Nakamoto shared the source code and domains with the Bitcoin community
and no one has heard anything from Mr. Nakamoto again. As Bitcoin became popular,
the idea of decentralized and encrypted currencies started catching up;
The first alternative cryptocurrencies which were also known as altcoin appeared in the
market. These were designed to improve on the original Bitcoin by offering greater
speed and anonymity. In the word of Cryptocurrency, the first to emerge were
Namecoin and Litecoin. Currently there are over 1,000 cryptocurrencies in circulation
and a new variety appearing frequently.
The potential for this Bitcoin to cause a major disruption in the current banking and
monetary systems created a major concern for the government and financial
institutions. If bitcoin were to gain mass adoption, the system could surpass nations'
sovereign fiat currencies. This threat to existing currency and the lack of identity has
been a major cause for many governments, like India, who took legal action against the
concept of bitcoin and cryptocurrency.
May 2011, Bitcoin price started shooting up from $1 in mid-April to $30 in
early-June.
2013 – Rise and Fall of Bitcoin price.

During the next two years from 2011
to Oct 2013, the Bitcoin slowly started
gaining popularity and acceptance.
Suddenly during Nov 2013, the
Bitcoin started on steep climb.
Nov 13, 2013 the Bitcoin
crossed US$ 1000.00
Shortly after this, the price quickly
began to decline. Many who invested
money at this point will have suffered
losses as the price plummeted below $300; It took more than two years for the Bitcoin
to reach $1,000 again.
2013 -14 Scams and theft, Risks and Return

Although Bitcoin was not designed as a normal equity investment, some speculative
investors were drawn to the digital currency after it appreciated rapidly in May 2011
and again in November 2013. Many people started purchasing bitcoin for its
investment value rather than its ability to act as a medium of exchange.
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Perhaps unsurprisingly for a currency designed with anonymity and lack of regulatory
control, Bitcoin has been an attractive and lucrative target for criminals.
July 2013, the Securities and Exchange Commission charged a Texas man Trendon T.
Shavers, the founder and operator of Bitcoin Savings and Trust (BTCST) with
defrauding investors in a Ponzi scheme raising at least 700,000 Bitcoin worth US $4.5
million based on the average price of Bitcoin in 2011 and 2012.
January 2014, the world’s largest Bitcoin exchange Mt. Gox went offline, and the
owners of 850,000 Bitcoins never saw them again. Investigations are still trying to get to
the bottom of exactly what happened but whatever is the story, someone dishonestly got
their hands on a haul which at the time was valued at $450 million dollars. At today’s
prices, those missing coins would be worth $4.4 billion.
April 2014, during a MarketWatch Investing Insights event titled “Bitcoin: boom and
bust,” held in New York, Barry Silbert, founder and CEO of SecondMarket and
founder of Bitcoin Investment Trust, said “It is pretty much the highest-risk, highest-
return investment that you can possibly make”. Quantifying the risk parameters of
Bitcoin, Mark T. Williams, a banking and risk management expert and a professor at
the Boston University School of Management said “(it) is seven times as risky as gold,
eight times as risky as the S&P 500 SPX, +0.10% and 15 times more risky than
traditional currencies”
2016 – Ethereum and ICOs.

One cryptocurrency came close to stealing Bitcoin’s thunder this year, as enthusiasm
grew around the Ethereum platform. This platform uses cryptocurrency known
as Ether to facilitate blockchain-based smart contracts and apps. Ethereum’s arrival was
marked by the emergence of Initial Coin Offerings (ICOs). These are fundraising
platforms which offer investors the chance to trade what are often essentially stocks or
shares in start-up ventures, in the same manner that they can invest and trade
cryptocurrencies. In the US, the SEC warned investors that due to the lack of oversight
ICOs could easily be scams or ponzi schemes disguised as legitimate investments. The
Chinese government went one step further, by banning them outright. Today there
only 16 countries where Bitcoin is Legal.
2017 –Bitcoin reaches $10,000 and continues to grow

A started gaining popularity with the common people as more and more places business
spaces started accepting Bitcoin. Gradually it became clear that more money was
flowing into the Bitcoin and Cryptocoin ecosystem.
Page 4 of 6
Legal status of Bitcoin and other cryptocurrencies
During this period the market cap of all cryptocoins rose from $11bn to its current
height of over $300bn. Banks including Barclays, Citi Bank, Deutsche Bank and BNP
Paribas started considering the options to work with Bitcoin.
Meanwhile the technology behind Bitcoin – blockchain – has sparked a revolution in

the fintech industry (and beyond) which is only just getting started. Blockchain is a
system of recording information in a way that makes it difficult or impossible to change,
hack, or cheat the system. It is essentially a digital ledger of transactions that is
duplicated and distributed across the entire network of computer systems on the
blockchain. Each block in the chain contains a number of transactions, and every time
a new transaction occurs on the blockchain, a record of that transaction is added to
every participant’s ledger. The decentralised database managed by multiple participants
is known as Distributed Ledger Technology (DLT).
Programmable
Secure Distributed
Properties of
DLT
Time-Stamped
Anonymous and
Immutable
Unanimous
Blockchain is a type of DLT in which transactions are recorded with an immutable

cryptographic signature called a hash. This means if one block in one chain was
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changed, it would be immediately apparent it had been tampered with. If hackers
wanted to corrupt a blockchain system, they would have to change every block in the
chain, across all of the distributed versions of the chain.
2020 and beyond

Blockchains such as Bitcoin and Ethereum are constantly and continually growing as
blocks are being added to the chain, which significantly adds to the security of the
ledger. The price of Bitcoin started another steep climb from the 4th quarter of 2020..
March 13, 2021 the Bitcoin crossed US$ 60,000.00….
Whatever be our opinion on Bitcoin and Cryptocurrency, its legality or illegality, being
future of money or an outright scam - it seems they are here to stay. We can keep
debating on, if these (metaphysical) coin or currency will be able to replace government-
controlled, centralised money with a distributed and decentralized alternative,
controlled by nothing besides market forces or it will vanish in the thin air when we will
tell this greatest scam-story to our next generation.
Page 6 of 6

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Tapas Kumar Basu || March 15, 2021 || Kolkata

1998 – 2007: Crypto Currency of pre-Bitcoin years

2009 – Bitcoin begins its journey

2010 – Bitcoin is valued for the first time

2013 – Rise and Fall of Bitcoin price.

2013 -14 Scams and theft, Risks and Return

2016 – Ethereum and ICOs.

2017 –Bitcoin reaches $10,000 and continues to grow

Meanwhile the technology behind Bitcoin – blockchain – has sparked a revolution in

Blockchain is a type of DLT in which transactions are recorded with an immutable

2020 and beyond

March 13, 2021 the Bitcoin crossed US$ 60,000.00….

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