The Internet, what an amazing invention. If you have the skills of a brilliant programmer, all the doors of cryptography are open to you. Who could have imagined 20 years ago that you could pay for your groceries in the supermarket, your drink in the bar or your ticket to an event with your mobile phone?
But what about all this data? With every transaction, there is always a third party who reads it - the bank.
Cryptographers have been thinking about this topic since the 1990s.
Eric Hughes said: "Data protection is necessary for an open society in the electronic age".
Since then, data protection in payment transactions has been a key issue. Because before the internet age, there was a higher level of data protection for transactions between two parties - cash.
Digitalisation made it possible for a third party, e.g. a bank, to observe, if not monitor, the exchange of money between two parties by the simplest of means.
At the end of the 1990s, various cryptographers attempted to make a cryptocurrency work:
The DigiCash principle, which was developed by David Chaum.
The proof-of-stake principle was developed by Adam Back in 1997.
The proof-of-stake principle was later adopted and further developed by two other cypherpunks. Nick Szabos developed the BitGold concept and Wei Dai the B-Money.
However, it must be mentioned that many of these concepts remained pure mind games.
The 2008 financial crisis
On 15 September 2008, Lehman Brothers filed for bankruptcy. In the same year, unemployment rose dramatically and the mortgage crisis caused the population to lose confidence in the banks. This heralded the peak of the crisis.
The white paper on Bitcoins.
Bitcoin.org was registered by an unknown person in the crisis year of 2008. Bitcoin: A Peer-to-Peer Electric Cash System was later the title of the white paper, which was sent specifically to a mailing list of cartographers. A new era begins with the founding father: Satoshi Nakamoto.
One of the most famous and mysterious people in the digital world is probably Satoshi Nakamoto. Even today, it is still unknown who Satoshi actually is. No one can say for sure whether Satoshi is a real person, a group of programmers or even an organisation. Of course, there is a lot of speculation and conjecture about Nakamoto.
There are always people claiming to be the father of cryptocurrencies:
In 2014, the Japanese American Dorian Nakamoto was labelled Bitcoin Nakamoto.
In 2015, Craig Wright claimed that he had used Satoshi Nakamoto as a nickname and was the real Nakamoto. But when it came to evidence, Wright refused to hand it over.
According to the digital media, Samsung, Toshiba, Nakamichi and Motorola could be hiding behind Satoshi.
Satoshi disappeared from the scene on 23 April 2011 and has not reappeared since. It is still not known who Satoshi Nakamoto really is.
On 3 January 2009, the first Bitcoin was mined and thus the first block of the blockchain was solved - the Genesis block.
The first person-to-person transaction was carried out on 12 January 2009. Satoshi sent 10 Bitcoins to Hal Finney.
On behalf of Satoshi Nakamoto, Hal Finney was tasked with the continuous improvement of the Bitcoin protocol. Hal worked closely with Satoshi from the beginning until 2014. Hal himself did not know who Satoshi was personally, as the two only kept in touch by email.
The first product to be paid for with Bitcoin in the real world was a pizza.
On 22 May 2010, the American Laszlo Hanyecz made this possible. At the time, he had to pay 10,000 bitcoins for these two infamous pizzas.
Hanyecz was one of the first Bitcoin miners at the time. At that time, it was not yet possible to pay with bitcoins, which Hanyecz naturally wanted to change.
To get round the problem, he posted a request in a Bitcoin forum asking who would like to pay 10,000 Bitcoins for two pizzas. After about four days, a student got in touch and assured Hanyecz that he would send two pizzas. After receiving the pizzas, Hanyecz proudly announced: "I just want to say that I have successfully exchanged 10,000 Bitcoins for pizza. Thank you, Jercos"
This has since been recognised as the first Bitcoin transaction for the purchase of a good. At the time, 10,000 bitcoins were worth around 41 dollars. Anyone can work out today's equivalent value for themselves.
Initially, Bitcoin was only known among computer geeks and nerds. This changed on 18 July 2010 with the company Mt Gox, which made it possible to trade Bitcoin alongside playing cards and Magic cards. The value of a Bitcoin at the time was 6 dollar cents. But in 2014, Mt Gox was hacked and 750,000 bitcoins were withdrawn. This had a huge impact, as Mt Gox was the largest Bitcoin exchange at the time. As a result, the Bitcoin price fell drastically.
In 2013, 1 Bitcoin was traded for around 1200 dollars. After the collapse of Mt Gox, the price fell by 60 per cent to 450 dollars.
The financial regulator in New York reacted and wanted to regulate Bitcoin trading.
The price development of Bitcoin.
One dollar was the price of Bitcoin in February 2011.
In summer 2011, the time had finally come and 31 dollars was reached before the value fell back to that of the early years - the first bubble burst.
The second hype came in November 2013, when the price rose to 1100 dollars and then quickly fell again.
In November 2017, Bitcoin was worth USD 10,000 and even reached more than USD 19,000 in December of the same year.
The global demand for Bitcoin has increased not only because of its high volatility, but also because of the global loss of confidence in other financial institutions.
We all observe how the Bitcoin price changes from year to year and keeps reaching new highs.
The number of bitcoins
It is firmly anchored, or programmed, in the blockchain that a maximum of 21,000,000 BTC can be put into circulation. The last block is expected to be mined around the year 2140.
All information about Bitcoin at a glance on CoinMarketCap
Cryptocurrency trading is not a sure-fire success, so I recommend that anyone who wants to get started should familiarise themselves with the risks beforehand.
Where can you buy bitcoins?
If you are a beginner and want to know where and how you can buy bitcoins, you can find out in my online course Bitpanda, Bitvavo and Blockpit.
If you want to learn more about Bitcoin and altcoins, you can find detailed information in my various online courses.
If you are interested in the topic of digital assets and would like to delve deeper into the subject, my basic training offers the perfect introduction to the world of cryptocurrencies.
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