Last week, Bitcoin celebrated its tenth birthday. The original cryptocurrency has now been around for a decade, and in that time, it has been a revolutionary presence across a wide spectrum of operations. For CFD traders who favour forex markets, digital coins can play a large part in their day-to-day activities The fact that Bitcoin has now been on the scene for so long has several major implications.
3rd January 2009 saw the arrival of the so-called “genesis block,” the first block in the blockchain technology that Bitcoin is based on. This block is unique because it has no predecessor and is the only one of its kind in the entire digital infrastructure that does not relate in any way to a previous block. The genesis block was the “big bang” moment of cryptocurrency.
Some news stories considered last October the ten-year anniversary of Bitcoin, but that month actually marked the decade since Satoshi Nakamoto published the original whitepaper. The arrival of the entire concept of a digital currency based on blockchain technology came at a time of major upheaval for the world economy, as it was still in the first round of shock reverberating from the global banking crisis.
The theoretical basis for Bitcoin became public upon the publication of Nakamoto’s whitepaper, which set out how the world’s first cryptocurrency would work. Based on a cryptographic system using a peer-to-peer approach that was both secure and transparent, Bitcoin’s appeal quickly became apparent to far-sighted individuals who could understand the need for transactions in this new type of digital cash.
The genesis block that made its debut in January 2009 is always hard-coded into the network’s software and acts as the basis for the variables required to create the continuation of the blockchain. Block 0 counted as block 1 in very early versions of the blockchain and the first mining occurred on 3rd January 2009 at 1:15:05pm EST. Data from the Bitcoin Block Explorer tool shows that it had a reward of 50 BTC at the time, and today, that figure would translate to about $191,350 (£150,202). However, as the first of its kind, the original figure was really inestimable.
The actual creation of Bitcoin is still somewhat mysterious. as the nominal inventor, Satoshi Nakamoto, could be an individual or a collective. However, the timing of the first crypto coin is not in doubt, as the hexadecimal code of the genesis block had an embedded message. This was an encrypted version of a headline from the 3rd January 2009 edition of UK daily newspaper the Times, which referenced the bank bailout given to the United Kingdom’s banks.
The message is particularly fitting because when decoded, it reads: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” This put the revolutionary nature of Bitcoin into stark relief from the very beginning. The concurrent global recession and subsequent central bank interventions in many different countries provided the perfect backdrop for the unveiling of a new concept that aimed to create a completely unique global economic trading platform.
The actual creator of Bitcoin remains unknown, as Nakamoto went silent soon after the first cryptocurrency hit the public domain. Even today, after several figures have claimed to be Nakamoto and numerous conspiracy theories have bounced around the Internet, no one really knows the truth.
Those familiar with the way that Bitcoin works will know that “mining” is an essential element of the process and a key factor in the original cryptocurrency’s success. Anyone with a powerful enough computer can theoretically mine Bitcoin, but this was much easier in the early days. The rewards were far higher, and the difficulty of mining was much less than it is today.
As exchanges were set up and Bitcoin trading became more commonplace, mining difficulties rose greatly, and today, application-specific integrated circuits (ASIC) mining hardware is the basic requirement. By the end of 2013, a Gigahash of mining occurred for the first time. At present, this has increased even more, and Bitcoin mining hardware across the world uses as much energy as a small country or an international manufacturing sector.
Bitcoin’s first recorded trading price showed up on trading platform bitcoinmarket.com. The platform no longer exists, but on 17th March 2010, it valued Bitcoin at $0.003 (£0.0024). Recent figures hitting the sub-$4,000 (£3,142) mark means an increase of nearly 128,000,000% in value over ten years. Satoshi Nakamoto’s genesis block earned the creator 50 Bitcoin, which today would be worth around $200,000 (£157,100). At high points last year, this could have been worth almost five times more.
The price swings over the last year have shown how much room there for Bitcoin and similar digital currencies for CFD traders to make their mark. Even though Bitcoin mining will continue, it will slow even more over the coming years, and eventually, the maximum figure of 21 million Bitcoin will release. Already, 80% of the total is in existence, and although some think that it will take as long as 100 years to mine the last Bitcoin, one can never underestimate updated technology.
For CFD traders, this all adds up to one of the most interesting and exciting areas to take a position on, and the ups and downs of the last year proved the point for anyone still in doubt. After only ten years, Bitcoin has achieved its aim of revolutionising international money markets and economic trading systems, so it really is anyone’s guess as to what will happen over the next decade.
One thing is for sure, however: CFD traders can take advantage of the ever-changing nature of cryptocurrency transactions and the almost unlimited scope of applications for the blockchain technology that lies before them.