Bitcoin BTC

Bitcoin is a cryptocurrency, a digital asset designed to work as a medium of exchange that uses cryptography to control its creation and management, rather than relying on central authorities. 

The history of Bitcoin started with the invention and was implemented by the presumed pseudonymous Satoshi Nakamoto, who integrated many existing ideas from the cypherpunk community. Over the course of bitcoin's history, it has undergone rapid growth to become a significant currency both on- and offline. From the mid-2010s, some businesses began accepting bitcoin in addition to traditional currencies

One of the biggest financial stories of the past year has been the incredible rise of bitcoin. The virtual currency was designed to revolutionize peer-to-peer transactions; it doesn't require a go-between (like a bank or credit card network), the exchange of personal information, or transaction fees.

Yet while many are still confused about what exactly a "bitcoin" is and how the nascent cryptocurrency works, just as much confusion exists about where bitcoin came from and how it got to where it is today -- a technological innovation that has shaken the financial world to its core.

A bitcoin primer

The backbone of bitcoin is the blockchain technology it uses to record the transactions on its network. A blockchain is essentially a publicly distributed ledger; it records each and every bitcoin transaction ever made on a block. When that block's memory is full, it is added (in sequential order) to the chain of blocks. This ledger -- freely available on any computer in the bitcoin network -- validates bitcoin transactions, stores the blockchain, and relays transactions to other network computers. These computers are called nodes.

Because the database is stored on a network of computers, rather than on a single server, hacking or stealing bitcoin data is virtually impossible for would-be cybercriminals. A hacker would have to break into the majority of nodes simultaneously, a virtually impossible task.

There is also only a predetermined number of bitcoins that can ever be created, meaning that the currency cannot be devalued in the future by a central bank issuing more.

Thanks to the claimed advantages of the cryptocurrency, the only thing that has risen faster than the number of bitcoin enthusiasts is the price of a bitcoin token. Twelve months ago the price of one bitcoin was approximately $1,040. As I write, the price is just under $8,200 -- a 680% increase in just one year.