Bitcoin was created out of the idea that a peer to peer exchange of electronic cash systems is something that should exist. It seeks to achieve this with the use of a blockchain, which is the first major development in Bitcoin. The blockchain is a shared cryptographically secure transaction log, and is a public ledger of all transactions. Every transaction has a timestamp and public key that allows the recipient to verify the legitimacy of the transaction.
A decentralized network of computers, which we know today as the Bitcoin network, are able to help prevent double-spending of the same Bitcoin. To summarize, the blockchain is a public registry of all the money transactions in the network.
While Bitcoin was first released in 2009, they didn’t start to gain traction until 2011 when they had a run of the market. It also did not gain widespread adoption until 2013 when it was able to scale to a global user base of over 13,500 users. The Bitcoin network is the first to deploy a blockchain network, and at the time of this writing the network size is 7.8 billion total Bitcoin.
The economic collapse of 2009-2011 was a key component in the adoption and increase in usage of Bitcoin.
The Great Recession is a period of economic decline that began in late 2007 and ended in June 2009. The US government had to institute numerous bailouts to stabilize and prevent the collapse of the banking and financial institutions. The 2008 financial crisis led to a contraction of credit and a reduction in consumer spending. This led to a decrease in the economy and speculation began.
As the economic crash began, the price of Bitcoin began to increase. In 2011, it hit $0.40, and by 2012 it was at $60. By January of 2015, it is worth over $2,500, and is a very common currency used as a store of value or a speculative instrument. It is important to note that the price of Bitcoin is not an accurate barometer of value. By utilizing crypto-currencies on a mass scale, we have seen a big increase in the usage of Blockchain technology in data retention and management.
The process of the Bitcoin network is complex and nuanced, and involves many components that work in harmony to facilitate a decentralized network. Of these components, the transactions on the network are verified and transacted through the use of the SHA256 algorithm which helps in creating the block, mining new blocks, and retaining the network.