Peer-to-Peer Cryptocurrency Exchange Systems outline the framework and concepts that underpin bitcoin and seeks to, to some degree, justify the necessity for a deregulated or decentralized cryptocurrency of this type. Trade or exchange USD for crypto such as:
eth to USD
neo to USD
dash to USD
ltc to USD
xrp to USD
Do this at Rubix Exchange.
Nakamoto put the concept into practice, creating the first ever bitcoin client in 2009. The client issued the first-ever bitcoins and Nakamoto mined the first block, generating 50 bitcoins as a reward. He sent 10 of these to a wallet owned by the above-mentioned Hal Finney – a transaction that has served to fuel the suggestion that Finney is Nakamoto (Finney died in 2014 from ALS).
For reference, Finney has always denied the rumors. Anyway, from there on out it was all about adoption.
The more people that downloaded the bitcoin client, the more of this digital currency was used as a currency in transactions and the more popular it became. Back then there was no set value as none of the exchanges that exist today were around to bring buyers and sellers together and – in doing so – set a universal exchange rate. Instead, the value was bartered between buyers and sellers and varied widely from transaction to transaction.
Famously (or perhaps more accurately, infamously), it was the transaction token of choice used on Silk Road– a TOR network hosted marketplace where buyers and sellers connected to exchange drugs, weapons, and illegal services, amongst other things. Silk Road’s creator, Ross Ulbricht, is currently in prison serving a life sentence for his involvement in this platform.
Between 2011 and 2015, bitcoin continued to grow, rising in value by many multiples and gradually forging its way into mainstream consciousness. It was during this period that some of the more well-known wallet providers and exchanges were founded, some of which still exist today, and some of the now incredibly popular bitcoin news and media outlets started up.
Fast forward to 2017 and an entire industry is built on bitcoin and cryptocurrency. There remain certain hurdles to mainstream adoption, but any doubt that the industry can overcome these hurdles is now largely removed, and bitcoin and blockchain technology looks like it’s here to stay.
How does bitcoin work?
We will go into bitcoin transactions in quite a lot of detail but to round off this first chapter and to complete our introduction, let’s touch on the question – how does Bitcoin work?
Conceptually, bitcoin works just as does any other token of exchange, whether it be Ethereum, EOS or any other.
Party A sends a particular amount of bitcoin to Party B, with the assumption being that Party B will give Party A something in return – be that goods or services or whatever. At the instruction of Party, A, the bitcoin that is in his or her wallet gets transferred to the wallet of Party B where, initially, it shows up as an unverified transaction. Once the block associated with the transaction is mined, the transaction becomes verified and valid for use. From here the bitcoin remains in Party B’s wallet until he or she chooses to send it somewhere of their choosing.
It’s important to recognize that because there isn’t a third party involved in this process (that is, not including the network of bitcoin nodes that verify the transaction), Party A needs some way of instructing the bitcoin client to transfer the balance (or part of it) from his or her wallet to that of Party B.
This is where private keys come in. This way both the sender and receiver can be sure there will be no intervention of any sort.
Instead of logging on to your online bank with a password and instructing Citi or whoever to set up and process the transaction, Party A accesses their wallet with a private key and initiates the transaction themselves.
As readers can probably imagine, in the early days, these transactions were quite complicated for anybody that wasn’t mainly technological knowledgeable. These days, however, numerous wallet providers and exchanges have simplified the process by building user-friendly platforms through which bitcoin users can store and send cryptocurrency without having to ever really interact with the backend technology.
From a mainstream adoption perspective, the creation and adoption of these just mentioned platforms and the simplicity that they bring to the process of transacting using cryptocurrencies was a game changer.