Did you know how the idea for Bitcoins came about? Some may think that the seeds of peer-to-peer currency were planted when there was disruption in the Silicon Valley. There was the need to eliminate third parties in transactions. But the idea could have also been born out of the realization that fiat currencies are monopolies by governments and should be rejected.
The fact that Bitcoin has a finite supply means that there will never be more than 21 million Bitcoins in the world. Of this almost 18 million has already been mined and the rest will be generated at reasonable mining rates, thereby slowing down supplies. So, no central agency or government can control create inflation to benefit their political motives.
Another factor that may have contributed to Bitcoin’s popularity is the fact that it was possible to access parts of this blockchain since it was a distributed ledger and no institution was needed theoretically for confirming that transactions were indeed trustworthy. But the removal of this trust factor may lead to problems and that is exactly what happened. To convince the rest that your Bitcoin investments were worth it, it became necessary to convince others that investments were really worthwhile. This led to the formation of Bitcoin communities.
The most well-known of these was the dark marketplace called Silk Road. It was founded on the idea that you could trade anything, regardless of whether it was legal or not. But this trade came to be dominated by illicit drugs that were facilitated by Bitcoins. Ultimately, the US government seized the Silk Road and this marked the real beginning for the Bitcoin.
It became clear that eliminating financial institutions totally may not help to make the environment necessarily more secure. It also did not assure one of protection from states. Another infamous incident was the Mt. Gox incident in which people were being permitted to buy or sell Bitcoins freely through bank transfers but then a hack happened. Mt. Gox exchange filed for bankruptcy and Bitcoin prices soared in the following years. While this incident showed that exchanges would let Bitcoin holders easily buy or sell Bitcoins, it also brought to light the inherent security risks. People started to realise that digital currencies had problems distinct from paper currencies.
In spite of the double debacles of Mt. Gox and Silk Road, Bitcoin’s popularity survived and it entered the mainstream. By 2014 end, Microsoft started to accept Bitcoin payments. Soo, Ethereum emerged which marked another significant shift in the crypto wold. The focus now shifted to blockchain technology more than the Bitcoin.
Through 2017 Bitcoin prices soared to more than 100% and it became clear that it was a priority in the eyes of people keen to make money professionally. This rise in Bitcoin prices may have been due to manipulation. A DEA agent informed Bloomberg that most Bitcoin transactions were due to speculators and not the people who had dominated the Silk Road. But speculators faced a major challenge the year after when prices crashed 80%; this led to interests waning but experienced finance professionals used this opportunity to make more money. Today, the lack of confidence that people had in banks has passed and the real winners in this new era of Bitcoins are actually those whom the system had been introduced for bypassing, namely banks and institutional investors.