Bitcoin History

bitcoin

Bitcoin also faced its first and only network crisis in 2010 when a vulnerability was spotted and reported in August 2010. Later that month, someone exploited the vulnerability and generated in excess of 100B new Bitcoins. What is interesting is the Bitcoin community spotted and removed the rogue transaction, thus eliminating the stolen currency. The bug (it was actually an incompatibility that opened a vulnerability) was fixed and the network continued along the updated and universally accepted branch. The event is a big deal in Bitcoins history, it was the first attack on the infrastructure and the system responded rather quickly and gracefully. This event gives me confidence that Bitcoin is not only difficult to cheat, but robust in its ability to persevere.

You can setup a free online wallet at blockchain.info, plus you can see the most recent Bitcoin transactions

You can setup a free online wallet at blockchain.info, plus you can see the most recent Bitcoin transactions

In 2011, the Bitcoin infrastructure grew to over 5 million Bitcoins in circulation, which is notable because this is one quarter of the total number of Bitcoins that will ever be in existence (sometime around 2140, every last Bitcoin will be released – 21 million total). Bitcoin also reached the 1:1 ratio with the US dollar, meaning all that’s left of that 100,000x increase is 100x now (still good but I prefer the larger). Another event I consider significant was the first decentralized mining guild mined its first block in 2011, opening the door to the large mining establishments today.

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2012 was a quiet year for Bitcoin, which helps the stability of a growing currency. Miners experienced a setback as mined blocks stopped providing the 50 Bitcoin payout and started paying only 25 Bitcoins at a time. 2013 has also been relatively quiet. In February, 1 Bitcoin was $30 US which was the first all time high it had experienced in almost 2 years. But now in October 2013, Bitcoins are roughly $130 each – even after the Silk Road closure. In my opinion, this is another crisis the currency weathered. Some thought the closure of the Silk Road market meant the end of the Bitcoin market, but in the weeks since, we’ve learned the Bitcoin market was not dependant on Silk Road. Bitcoin is probably in enough markets now where it will continue to be functional and exist within the Internet (or different platform in the future).

One thing I think in Bitcoin’s favor is the fact that it won’t inflate compared to other currencies like the US dollar. I will talk about this further in another article.


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