Satoshi Nakamoto, a Japanese individual created Bitcoin in 2007. He wanted to create a currency free from any government control. After four years, the debt crisis in the US and UK accelerated the adoption of Bitcoin. People saw it as a real solution to a fluctuating currency system, and ideally, it really is.
Bitcoin is an experimental new digital currency that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority: managing transactions and issuing money are carried out collectively by the network.
Bitcoin has no central issuing authority, and there is a limit to the number of Bitcoins generated per day. The entire Bitcoin system has its own terminologies like “block-chain” and “digital wallet”. This makes it orgasmic for geeks, and scary for others. Nonetheless, it was a fool-proof system.
The Bitcoin economy has many features. It appeals to geeks and there is a certain excitement to see one’s Bitcoins increase gradually, as the CPU burns. Bitcoin exchange is based on public key cryptography, where a user’s wallet has a public key and a private key. The public key is transformed into a Bitcoin address and the private key is used to authorize transactions. Therefore, if A sends Bitcoins to B, B’s public key is added to the bitcoins and it is signed by A to release the Bitcoin. A timestamp server keeps track of payments and makes them consistent and durable.
Exciting eh? Well, it is; in theory. This is what happened in practice. Bitcoin mining went on to become a lucrative business, with people using just about anything to mine bitcoins. Parallel processing capabilities of GPUs started being used for mining and several botnets sprung up based on this business. Currently, Bitcoin is used in the Silk Road, which is a notorious drug marketplace. LulzSec accepts donations in Bitcoin and seeing this, everyone is frowning upon Bitcoin. This negativity gave Bitcoin a certain stigma, from which it will never recover.