Since the beginning of the Internet age, companies have used this global platform to sell their products to an increasing proportion of the world's population. Most of us have purchased items on the Internet with credit cards or bank accounts. But over the years, developers have tried to find a way to create a single currency just for the digital market. In 2009, they did so with the introduction of Bitcoin.
The first Bitcoin transaction was for pizza
On May 18, 2010, Laszlo Hanyecz posted on a Bitcoin forum: Bitcoin Talk. At the time, Bitcoin was still in its infancy. It was incredibly volatile and each Bitcoin was worth only a few cents on the dollar. Hanyecz's post was for two Papa John's pizzas that he said he would pay 10,000 bitcoins for. This transaction would go down in internet history as the first time Bitcoins were used to buy something. On May 22, Hanyecz posted that someone had accepted the offer. At the time, he thought it was cool that he could get pizza for seemingly nothing. Hanyecz continued to buy pizza with Bitcoins until the summer when he ran out of Bitcoins. He didn't give any of this a second thought because he believed, as many others did at the time, that Bitcoin would never go anywhere as an internet currency. For the next several years, it seemed that what everyone thought about Bitcoin was true. But in 2013, investors and speculators became interested in Bitcoin and began trading with it on a much larger scale. Soon, the value of Bitcoin began to skyrocket as it became a popular commodity. In the next few months, a Bitcoin went from being valued at a few cents to $ 1,200. It was eventually placed between $ 500 and $ 700. If Hanyecz had spent 10,000 Bitcoins in mid-2014 on two pizzas, they would have been worth around $ 5 million.
The first major use of Bitcoin was on the Silk Road
For those unfamiliar with the Silk Road, it served as a way for anonymous Internet shoppers to order illegal drugs. Named after the famous trade route between Europe and the East, it operated clandestinely from its inception until it was withdrawn in 2013 after intense investigation by various government agencies. One of the keys to Silk Road's success was the use of a completely anonymous form of payment: Bitcoin. Due to the nature of its operations, Silk Road was only accessible via the anonymity network Tor. Once you entered the Silk Road, you could buy drugs from cocaine to LSD along with other items such as fake IDs, stolen credit card numbers, and hacking tools. Law enforcement agencies were unable to penetrate the Silk Road due to their smart users. The Tor network blocked any digital identification, and the use of Bitcoins only led to certain IP addresses that provided little to no real information. . To finally end the seemingly invulnerable Silk Road, a task force of various organizations, nicknamed "Marco Polo" in honor of the famous Silk Road explorer, was created with the cooperation of the FBI, DHS, IRS, DEA. , U.S. Postal Service, and the Department of Alcohol, Firearms, and Tobacco His target was a mysterious figure known as Dread Pirate Roberts, the founder and operator of Silk Road. This was the first time government agencies had gotten involved with such intricate digital technology, so they mostly did not know how they would approach the Silk Road. They started by making a series of arrests of various vendors and gradually gathering information. on the internal functioning of the organization. It wasn't until 2013 that the Dread Pirate Roberts (aka Ross Ulbricht) was captured. This episode taught a valuable lesson on how easy it could be to operate anonymous illegal trades digitally with the use of tools like Bitcoin.
Bitcoins have created an entire 'mining' industry
Bitcoin "mines" are where complex algorithms are solved and Bitcoins themselves are generated. Most of these mines are located in China, where they are often hidden facilities that operate outside the law. As a result, the operations have to be very secret. The Chinese government has not issued a policy for or against Bitcoins, so for the moment they have been used to generate fortunes for its miners. A facility called Bitbank, which is operated by businessman Chandler Guo, has generated $ 8 million a year and is considered one of the largest mines in the country. Workers at the facility solve cryptographic problems on computers to authenticate transactions around the world. Each transaction that is resolved adds a "block" to the "chain of blocks", and those who solve the problems receive Bitcoins in return. At Bitbank facilities, workers operating 24 hours a day generate around 50 Bitcoins each day. At one time, China only had about 40 percent of the world's Bitcoin mines, but by 2016, it controlled the majority with nearly 70 percent of all mines located in the country. Not all members of the community. Bitcoin are happy with this. Enthusiast Michael Hearn says the slow internet in China will weigh down the popularity of Bitcoins and lead to possible currency failure.
Bitcoins are incredibly easy to steal
In 2014, the world's largest Bitcoin exchange, Mt. Gox, went bankrupt after claiming that hackers stole around 850,000 Bitcoins. At the time, the stolen Bitcoins were worth $ 450 million. Mark Karpeles, CEO of Mt. Gox, said that $ 27 million in cash was also stolen. This sent worrying shockwaves through the community because it exposed how easy it was to steal Bitcoins with very little effort.With a fair knowledge of hacking, one can easily access Bitcoin exchanges, which is exactly what the perpetrators did yet. unknown. Mt. Gox had long been the target of hackers, with 80,000 Bitcoins stolen by hackers before Karpeles took over the company in 2011. Karpeles is known to embezzle $ 2.7 million from the company, but the whereabouts of 650,000 Bitcoins (about $ 300 million) are still unknown. It's not just exchanges being hacked either - Sheep Marketplace, one of Silk Road's successors, was the victim of a £ 60 million heist that caused the site to crash shortly thereafter. Hackers were apparently able to fake balances on people's accounts until they managed to clean up the site within a week. Since bitcoins don't actually go away, they need to be laundered in a different way than real currency. They slowly fall down blockchains and mix with other Bitcoins until all the stolen ones have disappeared. As the process can really be traced, many Sheep Marketplace users managed to find where their Bitcoins were falling. In 2016, it was discovered that two Florida men had committed the robbery, but by then, the value of their Bitcoins was only $ 6.6 million.
Bitcoins are bargaining chips for extortionist hackers
In February 2016, Hollywood Presbyterian Medical Hospital was hacked and its system was held for ransom. With his system in the hands of hackers, none of the operations could move forward. With lives at stake, the hospital could do no more than comply with the hackers' demands: $ 17,000 in Bitcoins. The crime was despicable, but it is not an isolated incident. Before the hospital hack, there were other incidents of extortion but for considerably smaller sums. For example, a police department in Boston paid $ 500 in Bitcoins to extortionists and the sheriff's department in Maine made a similar payment. Although the extortionists have not yet been identified, a network based in Russia or Ukraine is known to have generated nearly $ 16.5 million in Bitcoin revenue from hacking victims in the United States. Extortion payments are usually worth $ 20,000 and always in Bitcoin. Since Bitcoin wallets do not have to be registered with any government, it has become the most popular currency for digital extortionists. A group known as DD4BC has recently become known among corporations for demanding $ 10,000 in Bitcoins. An email from DD4BC that was made public reads: “Don't ignore me as it will only increase the price. [. . . ] Once you pay me, you will be free from me for the life of your site. "Although various digital security sources have offered some solutions, such as digitally marking Bitcoins used
Bitcoins allow easy scam
Considering all the other crimes that can be enabled by Bitcoins, it can be assumed that scammers would naturally take the urgency of cryptocurrencies. According to a 2015 report, the Southern Methodist University identified several of the most common scams related to Bitcoins. From 2011 to 2014, 41 different scams occurred with a total of almost $ 11 million. Bitcoin investment scams are quite simple and are similar to Ponzi schemes. Investors are told that they can get excessively high returns, but ultimately they are simply throwing money into the scammer's wallet. For example, with fake Bitcoin mines, scammers claim to be mining Bitcoins for a fee, but from in fact they are only keeping the fare. There are also Bitcoin wallet scams where you are apparently depositing your money in a verified Bitcoin wallet, but all funds are transferred to the scammers at a certain point in time. The latest scam is a Bitcoin exchange in which low exchange rates are offered to convert Bitcoins into currency, but the scammers never comply with their side of the exchange. Interestingly, a scam emerged from the tragedy of the June 2016 mass shooting in Orlando in which the scammers opened a Twitter account claiming to be the Pulse club where the shooting occurred. The account accepted donations from Bitcoin. Since donations couldn't be traced, the scammers tried to cash in on the tragedy and well-meaning people. Fortunately, most Twitter users who followed the donation link provided by the account immediately realized that the page The one they were taken to was not related to Pulse because the domain used was only six months old and there were glaring spelling errors. The scam only cost $ 30 before it was removed.
Bitcoins could be used for terrorist purposes
In 2014, someone using the name Amreeki ("American") Witness posted a .pdf on WordPress in which he claimed that it was difficult for most ISIS supporters to give money due to restrictions from the Iraqi government. Their remedy was for supporters to donate Bitcoins which, of course, could not be tracked if the process of "shuffling" the coin was used. Bitcoins could be a potential game changer for terrorist financing due to the anonymity the coin offers. While somewhat traceable, the currency can be effectively laundered (through sufficient "mixing") to any illicit group such as ISIS. While groups like ISIS would still need real currency to continue operating, the Pentagon has named digital currencies like Bitcoin a potential threat because they could be a potential source of income for terrorists, however, after the 2016 Paris attacks. , the European Union began to crack down on the possible financing of terrorism. His first goal was financing through Bitcoin. The European Commission, the financial arm of the EU, is considering adding regulations to Bitcoin in which there must be an identity attached to Bitcoins to prevent them from going to terrorist groups.Like the Silk Road, the deep web is the ISIS's preferred domain, and this is where sympathizers' Bitcoins go. Although removing the anonymity of Bitcoins would change one of its key aspects, most Bitcoin users and exchanges would not mind the changes because most Bitcoins are used for legitimate purposes.
The creator of Bitcoin is a mystery
All that is known about the creator of Bitcoin is that his name was Satoshi Nakamoto. Like the coin he invented, Satoshi is almost completely anonymous. As he progresses, he introduced the coin in 2009 and contacted early users via email, never over the phone or in person. Even after Bitcoin's spectacular rise, Satoshi continued in the shadows and completely disappeared in 2011. In 2014, Newsweek published a cover story claiming to have discovered Satoshi. They claimed that Satoshi was an unemployed engineer in his sixties living in a Los Angeles suburb. Those involved with Bitcoin made it clear that he was not Satoshi. Another theory that many in the Bitcoin community believe is that Satoshi is actually a lonely American man of Hungarian descent named Nick Szabo. However, Szabo denies being Satoshi, although he remains one of the key figures in Bitcoin. Satoshi hasn't been involved with Bitcoin since 2011, so his presence doesn't really matter in the grand scheme of things. But there are still those who speculate about his identity.In May 2016, an Australian businessman named Craig Steven Wright claimed to be Satoshi, but skeptics immediately said that he was not the real Satoshi and that if the real Satoshi wanted to be known, there would be no question. of your identity. Those who believe in Wright say that it doesn't matter in any way, as Bitcoin would stick with him or without him.In any case, by the time Satoshi left, he had up to a million Bitcoins, which could easily be worth hundreds of millions. dollars today.
Bitcoins are incredibly volatile for many reasons
Since Bitcoins were first launched, the price has gone from pennies on the dollar to several hundred dollars in mid-2016. However, even though the price is much higher in 2016 than it was before, it still fluctuates and it's still quite volatile. For this reason, many people still have reservations about the currency. Over the years, many have also come up with reasons why the price can both rise and fall dramatically. Bitcoins follow the economic principle of supply and demand, and this can determine the course of their price. In 2014, the price fell 60 percent and many took it as a sign that Bitcoin might finally disappear. That year, however, several Silicon Valley companies began investing in Bitcoins. Additionally, several other companies began accepting Bitcoins as a form of payment, causing the value of the coin to rise again. Although it may not have taken off as a common currency among average people, its technical innovations continued to allow it to flourish.In 2015, Bitcoins became volatile again due to an apparent Russian pyramid scheme that became incredibly popular in China. As Bitcoin was the only currency adopted in the Russian scheme, the Chinese started buying in droves, causing the price to go up. This year, Chinese demand drove the price of Bitcoins back up when the yuan was devalued. This caused prices to rise 20 percent. Although prices continue to fluctuate, experts agree that bitcoins are very likely to remain on the market for some time, as long as more companies adopt them as a form of payment and demand continues.
Bitcoins could crash in the future
As mentioned above, Bitcoin enthusiast Mike Hearn believes that Bitcoins could fail in the future if they continue to follow their current path. According to Hearn, those who control Bitcoin have lost track of the original purpose of the coin. Hearn was discredited by many, but his prophecy has caused some to deeply examine Bitcoin's functions and the reasons why he claimed that Bitcoins are doomed.His first reason was that Bitcoins were initially intended to be a decentralized currency, as opposed to most other physical currencies. However, Bitcoins are now controlled by a small group of people, the exact opposite of what was supposed to happen.Hearn also claimed that there is an internal divide in Bitcoin between those who want the technology to increase transactions and those who oppose it. this. Blockchain, the technology behind Bitcoin transactions, has become increasingly random in terms of the speed of transactions. Hearn said the transaction could take anywhere from 60 minutes to 14 hours, but his main problem was the small number of people (about 10) who controlled Bitcoin. As long as it is controlled by this small number, he said, Bitcoin will be an "inescapable failure." We don't know if Hearn will be proven right, but as it stands, Bitcoin has become one of the most interesting phenomena of the internet age.