The History of Bitcoin, the First Cryptocurrency

Is steadier growth on the horizon for Bitcoin after the roller-coaster ride of the past year?
Cryptocurrency has had a short, but volatile and exciting history. It continues to be one of the most hotly debated global financial topics, with 2023 adding more marquee news headlines. Some key moments in the crypto's timeline include:

• In the earliest days, the FBI was working to shut down crypto-funded darknet black markets.
• In 2013, Forbes named Bitcoin (BTC) the year's best investment.
• In 2014, Bloomberg countered with its proclamation of Bitcoin being the year's worst investment.
• In October 2021, the Securities and Exchange Commission approved ProShares Bitcoin Strategy (ticker: BITO), the first U.S. Bitcoin futures exchange-traded fund.
• In November 2022, FTX – the leading cryptocurrency exchange by trading volume – declared bankruptcy, creating some of the darkest days in the crypto history timeline.

Bitcoin Core Concepts

BLOCK: A block is a group of Bitcoin transactions over a certain period of time. The transactions are verified by "miners," who are rewarded for verifying the transactions with newly created BTC.
Bitcoin units: Each Bitcoin is divisible to eight decimal places. A millibitcoin (mBTC) is 1/1,000th of a Bitcoin. The smallest unit is a satoshi (sat), which is 1/100,000,000th of a Bitcoin.
Transaction: A computer directive styled as "payer X sends Y Bitcoin to receiver Z."
Blockchain: Each transaction forms an unbroken link on the chain. This transparent, public chain is what allows Bitcoin to exist and be usable. All blocks of transactions are linked to previous blocks of transactions, forming the etymology for the word "blockchain."
Mining: Independent individuals or groups complete intensive and costly computer calculations to create a block.
Block hash: Mining activities incorporate a record-keeping service that keeps the blockchain consistent, complete and unalterable. The hashes validate available Bitcoin and serve as a means of uniformly rewarding the miners.
Blockchain address: A of 25 to 34 alphanumeric characters. This is the information that is given to other parties so they know where to send the coins. They are considered pseudonymous because, while the blockchain itself is public, the address shields personally identifiable information. Cryptocurrency exchanges may be required by law to collect personally identifiable information, but each transaction can be associated with a different Bitcoin address to maintain privacy.
Wallet: Any individual or entity wishing to exchange Bitcoin (and not store them on an exchange, in someone else's custody) must create a digital collection of the credentials, known as a wallet, necessary to transact coins.

• Full clients: This is a wallet that includes a full copy of the entire blockchain. This is the safest form of storage other than offline, or "cold storage," but it requires substantial digital space.
• Lightweight clients: This is a wallet that includes a more limited version of the blockchain to enable it to be portable on devices, such as a smartphone. Since the entire blockchain is not available, a party using a lightweight wallet must trust intermediaries who have full wallets.
• keys: These are the credentials stored in the wallet. Like a safe-deposit box, there are two keys necessary for each transaction.
• Public: This is the technology necessary to encrypt and decrypt transactions. It is "one way," meaning that it easily unlocks transactions, but it can't be used to reverse the transaction. This key enables the blockchain to be uninterrupted.

If the party loses its key, the Bitcoin in the wallet becomes essentially worthless, as it is unrecognizable and inaccessible to anyone. According to Chainalysis, a blockchain analytics company, roughly 20% of Bitcoins have been lost by parties who misplaced the private key. Additionally, if the private key is revealed in a security breach, the value of Bitcoins can be stolen. In 2022, cryptocurrency investors lost a record $3.8 billion to hackers.
Cold Storage: Private keys are stored offline to help avoid losing them or exposing them to a security breach.