BTC UP For Trading

The History of Bitcoin

Bitcoin (sometimes known by its generally accepted ticker BTC) is an online payment 

system launched as on open source software in 2009. Its creator (or creators), whose identity to this day remains unknown, goes by the name Satoshi Nakamoto. Nakamoto published a paper 

describing his or her creation entitled “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008.

In many ways it functions as a currency, whereby one party can send a unit of currency 

(in this case a string of code) to another party in exchange for a good or service. As such, bitcoin 

is often referred to as a “virtual currency” or “cryptocurrency.” All transfers of bitcoin are 

verified and then recorded on a public ledger known as the block chain (Velde 2013). 

Potential users can purchase bitcoin by using an online exchange. These exchanges act 

as either brokers or dealers in allowing users to convert a major currency such as the U.S. dollar 

into bitcoins. The first of these exchanges, Bitcoin Market, open in February 2010. Another 

exchange, MtGox, first launched in July of that same year.

1

Based on the dollar values at these exchanges, the market capitalization of bitcoin (the 

number of bitcoin in circulation multiplied by the market price in dollars) exceeded $1 million 

by October 2010. By March 2013, the market cap surpassed $1 billion. 1

 During that time, 

bitcoin had come to be accepted as payment by a variety of businesses and organizations, from 

Baidu in China to coffee shops in Palo Alto and antique shops in New Orleans (Fung 2013, Hill

2013). One writer for Forbes, Kashmir Hill, was actually able to live for a week in San 

Fransisco in May 2013 using nothing but bitcoin to make purchases (Hill 2013-2). In October 

and November 2013, interest in bitcoin in China surged, making BTC China, a Shanghai based 

bitcoin exchange, the largest in the world for a brief time (Hill 2013-3). The price of a bitcoin 

surged to over $1000 as many users in China begin to invest in bitcoin, but has since declined to 

the 200’sOne reason for the growth in bitcoin’s popularity (and notoriety) is the anonymity of its 

users. Although all transactions are recorded on a public ledger, only one’s public address is 

associated with the transfer’s one makes. One’s public address contains no identifying 

information in and of itself, and so as long as the public address is not associated with any 

identity, transactions remain anonymous. This anonymity has made bitcoin the currency of

choice for the so-called “darknet”--websites that sell illegal commodities such as drugs and 

weapons. One such notable website was “Silk Road,” which was shut down by the United States 

government in October 2013. Since its closure, a number of new websites have emerged to take 

its place and have adopted the model of using bitcoin as a medium between buyers and sellers 

(Power 2014).

How Bitcoin Works

To transact in bitcoin, one broadcasts to the bitcoin network the public key of the payee 

and the amount of bitcoin one intends to transfer. Every bitcoin address has an associated 

private key that acts as a password to ensure that all transfers are authorized. The private key is meant to remain secured, and along with one’s own public key, it allows one to digitally sign 

bitcoin transactions. A graphical representation of a series of bitcoin transactions from Satoshi