The history of Bitcoin-3 {Post-8}

The First block of 50 BTC was  mined by Satoshi Nakamoto. Over a period of months various vulnerabilities were discovered and patched resulting in the rectification of 185 million fraudulent Bitcoins. Since then no new vulnerabilities have been discovered in the protocol.

As the proliferation of the Bitcoin client, protocol and awareness of its system gained wider reach it began to garner a loyal following with various parties using it for payments online.

Bitcoin garnered lots of negative attention due to its use in the Silk Road - an online black market - as it became the currency of choice for darknet transactions involving various illegal trades and activities including drugs and hitmen.

Various legitimate online communities and businesses such as Reddit,WordPress,Pirate bay and nearly a thousand others have begun accepting Bitcoins as payment or donations. The faith of the online community in the use of Bitcoins is highly encouraging towards its promise as a future standard for digital currency.

Various nations have dealt with the Bitcoin phenomenon in different ways. The United States has closely monitored the evolution and use of Bitcoins but beyond the individual level. Their concern has primarily been with respect to how it is used in money laundering activities by criminals as well as the monitoring the role of private companies or groups in transacting real money which is in the contradiction with financial laws.

Countries like China and Thailand have aggressively discouraged the use of Bitcoins due to the lack of legal frameworks that govern it. Countries such as Germany have even begun considering Bitcoins as valid form of e-currency due to its exhibited properties as a unit of account but not as a normal currency in real world use. But the bulk of the force behind bitcoin comes from its users and merchants, with recent revelation in Bitcoin insurance by Lloyds of London and acceptance by mainstream online companies like Overstock and Zynga.

The history of Bitcoin -2 {Post-7}

The first significant name in true cryptographic digital currency came with Digicash which was founded far before all others in 1990 but declared bankruptcy in 1998 and was sold off to Ecash. David Chaum's Ecash was also an anonymous e-cash system secured by RSA signatures. By 2002 the company running he system failed again and was sold off to another company disappearing from public existence.

The only other digital currencies that found footing in the international market existed in virtual economies emerged out of a continuously ongoing virtual world where the exchange of goods took place within the context of a networked game. These massively multiplayer online role playing games(MMORPGs) created virtual words that connected millions of people who were the foundation of the economy. Players could use the currency of the virtual economies in these games to purchase virtual goods for use in the games to purchase virtual goods for use in the game. as time and engagement took over, players were able to leverage the virtual products against real world value and make real economic gains.

Life simulation games like "Second Life" also created virtual economies that made it easier to link virtual and real economic transactions using in-game currency convertibility. The Linden Dollars from second life are used to pay for assets created in the game as reward of intellectual property via in-world content creation and trade. This currency was able to trade for real world goods and currency via third party sites. conversely, other online games like "world of warcraft", "Warhammer" and "Final fantasy XI" became controversial settings where real money was used to make in-game  purchases between players. game companies attempted to dissuade this by reinforcing in-game currency to be convertible.

All these centralised and loosely based virtual currencies remained highly marginalised by their natural drawbacks until a cryptographic decentralised digital currency system was created - This was Bitcoin. The conceptual idea behind bitcoin was introduced by a mysterious figure using the pseudonym satashi nakamoto in a paper-Bitcoin: A peer-to-peer electric cash system - in November 2008. the paper outlined the logic method  of attaining an electric transaction protocol that could eliminate issues of trust. The first active Bitcoin network went live in january 2009 and was accessed using the first version of the open source Bitcoin client.   

The history of Bitcoins -1 {Post-6}

Before Bitcoins,various attempts had been made towards introducing a feasible digital currency. The earliest of these online currencies were based around the gold standard and came in market after the IT-Bubble had burst in the late 1990s.

Companies such as OS-Gold, standard reserve and INT Gold came to existence between 1999 and 2004. But they didn't last very long due to their externalised dependency on necessary reserves that needed to be held as gold.

Other companies such as e-gold and e-bullion also faced investigation by the US government with legal disputes still ongoing. Due to enforcement by the US government agencies these companies had their assets frozen and seized leading to the discovery of criminal acts as well as fraud. Although not all cases have resulted in clear violation of law, it has effectively placed gold based digital currency in shutdown.

Another form of digital currency that caught the public interest prior to 2001 was Beenz.Com's online currency called beenz. It was earned by individuals when they performed certain online activities and was then used as e-currency for purchasing services online. The marketing campaign was very successful and garnered nearly USD 100 million from venture capitalists from the international market. However, the legality of operating an independent currency led to numerous conflicts with many nations across America and Europe. 

Charges of operating an unlicensed bank plagued the company but were soon resolved. At it's peak Beenz operated in 12 countries including US, Japan, China and Australia. The company couldn't survive as a currency due to it's dependence on banks and airline points systems which suffered in past 9/11 America. The currency was integrated into their customer relationship management tool and phased out slowly. 

Till now secure(Hack proof) Bitcoin {Post-5}

   

  

The security of the open source code has been thoroughly tested and improved over time to ensure that it can't be "hacked". Cryptographic principles are also used in order to regulate the mining of the currency as well as it's authenticity. the possibility of digital counterfeiting is completely moot due to the system's design.

In conjunction to the cryptographic principles involved in it's production, Bitcoin is also administered in a decentralised network that can authenticate the validity of all Bitcoins produced using user keys and signatures in a distributed onlline registry, which ensure that duplication of transections does not happen and frauds are avoided. 

The nature of this cryptographic setup is based on ensuring that the computational cost of hacking such a system for outruns the possible gains that could be the possible gains that could be made. The processing power required to circumvent this cryptography extends far beyond the reaches of the largest multinationals such as google or Microsoft and are therefore well outside the reaches of the basement hackers. The technique used is known as a "proof-of-work" based system which can only be resolved through brute force application of computing power. This power is normally used by swarms of miners through pools of distributed processors over large periods of time resulting in the sharing of the discovered Bitcoins. This ensures that the effort of the miners is reworded and no single entity is capable of exploiting the system to unfair gain Bitcoins. 

Key features of bitcoins {Post-4}

The two most important features of bitcoins as successful digital currency are-decentralisation and cryptography. Unlike fiat currencies or theoretical fiat digital currencies, bitcoin is decentralised, which basically means that it isn't regulated or managed by a single institution or person. Bitcoin is based on a peer-to-peer distributed network and regulated by an open source network system that regulates the production of bitcoins on a clearly understood and transparent logic.

Since there is no single authority behind bitcoins management the fear of currency manipulation through increased production or institutional devaluation is removed. This allows the adoption of the currency to be more welcoming as users don't have to have trust in a bank or agency, but in the system itself that ensures no means of external manipulation.

Bitcoin is also a crypto currency which makes it an ideal digital medium of exchange as compared to other virtual currencies. It is also the first cryptocurrency to be so widely traded and adopted.     

Digital Currency {Post-3}

Digital currency or electronic money, exists as an alternative to normal currency and has seen various forms over the past few years. As of yet,it has not found any national or institutional backing across nations and has only been experimented with in smaller communities.

Other forms of virtual currencies like in-game money or closed system currencies are only valuable within the confines of their system in virtual economies. Bitcoin as a digital currency has found the widest acceptance to use for real world goods and services without virtual world limitations.

The most conventional form of digital currency has come to include web-based wire transfers, machine withdrawals, online credit card use and digital bill payments that use electronic means to make payments. However, these are based on a very broad definition of digital currency that is simply an extension of the traditional economic system(system of exchange) that is still rooted to fiat currencies and only transfers records of credit and dues using the internet as a communications protocol.  

Introduction to bitcions {Post-2}

What is bitcoins?

Bitcoin is the most widely used peer-to-peer  distributed decentralised digital currency in the world. The currency is based on the Bitcoin protocol that allows digital currency(Bitcoins)to be securely, efficiently and quickly transferred between people. It's widely accelerating form of digital cash that can be used to make online payments for products and services, as well as regular transfers of cash between people. It also traded online, like Fiat currencies, in an online currency exchange known as Mt.Gox . 

THE BITCOINS {Post-1}

The concept of currency

Before knowing anything about Bitcoins first we must understand the concept of currency and off-course how regular money works.

I guess the first question that will rise in your mind would be "What is the difference between money and currency?" So without investing your time in different kind of miths let's understand the difference between money and currency.

Money

Money is the general term used for any commonly accepted "medium of exchange". Money can exist in any form most commonly an object or maintained record of transaction which is acceptable by the significant majority of people as payment for goods and services.

Currency

Currency is the name for the commonly accepted form of money that is in circulation. In most cases currency is represented as banknotes and coins but it's definition can also encompass anything that is commonly held to represent values and is accepted on those terms. So basically currencies are rigidly defined by the system or economies they are commonly used in society.

Money & Currency

in everyday speak money and currency are interchangeable terms however in precise usage it's important to note the difference.Example- your friend has a lot of money but if he buys a suit in Italy he better make sure he has the right currency(Euro).

How does money came into existence ?

As societies grew and began trading with other societies the need for a universal "store of value" gave birth to minted money that was based on precious metals i.e gold & silver.