Bitcoin is more efficient than all competing currencies. This will
drive its adoption in the same way computers were adopted, in
that computers made people more efficient in competing in the
marketplace. A currency has value by it being widely used.
Bitcoin is a startup currency with a deflationary bootstrapping
economy. Its use spreads by providing the speculator incentive.
Bitcoin is going to be the biggest opportunity for innovation that
the world has seen since the industrial revolution. An idea
whose time has come.
The History of Bitcoin
Bitcoin was introduced in 2009. From the very beginning
anyone was free to join the network and the code was open
source. All bitcoins have come into existence through an open
lottery called mining. To participate you only need to download
the software and keep your computer online.
In the beginning bitcoins were treated like monopoly money.
They had no real value apart from the thrill of transferring them
back and forth. This all changed in May 2010 when a Florida
programmer bought two Papa John's pizzas for 10,000 bitcoins.
At today's exchange rate that's more than five million dollars!
A year later drug dealers saw the potential in bitcoin. The online
marketplace Silk Road sold all kinds of illegal goods and
services, and dealt exclusively in bitcoin. In 2013 the site was
shut down. Its owner and some users went to jail.
In 2011 bitcoin saw its first bubble. The value peaked at $35 in
the summer and then dropped all the way down to $2 by the end
of the year. It slowly went up again but it was first in the spring
of 2013 that it was back at its 2011 peak.
Sparked by the Cyprus banking crisis of March 2013 the bitcoin
price rallied to more than $200 before falling down below $100.
Another rally occurred at the end of the year, pushing the price
over $1,100 and gaining bitcoin mainstream media attention.
In February 2014 the world's largest bitcoin exchange, Mt. Gox
lost 750,000 of its customers' bitcoins. At the same time
regulators around the world were scratching their heads,
wondering how to deal with the crypto-currency. This spring the
price fell almost to $400. At the time of writing, end of May
2014, it is slightly below $600.
The good news at the moment is that more and more businesses
adopt bitcoin, primarily since third party services offer technical
implementations and elimination of exchange rate risks, all at
very low fees. Consumers increasingly use it because it is safer
and more convenient than credit cards.
