Bitcoin, As Of Today In India Stands At 42,487.90 USD
No matter if you are a tech geek like me, or a quick-witted investment freak, you might have heard about bitcoin. Being a sporadic finance person, I will tell you about bitcoin without just revolving around some crude financial terminologies.
To understand bitcoin, you must first understand the system of digital transactions. Any online transaction involves the transfer of money from an issuer bank to an acquiring bank. That transaction begins when the customer consents to pay the merchant. Merchant sends a payment request to the associated payment gateway.
In this case, the payment gateway must handle customer card information, obtain authorization via a One Time Password or a PIN code from the customer, accept the payment from the issuer bank, and settle the payment with the acquiring bank. The gateways also check the balance in the customer's account with the issuer bank and depending on that, they can proceed with authentication or reject the request if the balance is insufficient or credentials are wrong.
In the case of UPI transactions, banks and apps such as PhonePe, Paytm, Google Pay, etc process the payments with their apps or QR codes, and National Payments Corporation of India (NPCI) provides online transaction routing, processing, and settlement services for these apps and customers.
On 31st October 2009, an anonymous person or a group of individuals, named Satoshi Nakamoto, published a whitepaper on the website registered as bitcoin.org. Nakamoto in this paper argued about traditional system that,
“The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party.”
In this paper, Nakamoto envisaged a system of peer-to-peer online transactions without the involvement of any central agency. It offered to provide a medium of exchange and allow individuals to make payments to each other. Moreover, the transactions are secured as the technology uses cryptography and are validated using a consensus mechanism such as Proof-of-stake. The consensus mechanisms are used to verify transactions on a block chain network by various computers connected to the network.
As each transaction is successfully verified, it is grouped and chained together as a block in the block chain. Creating new blocks is known as mining, and the people who do it are called miners. In exchange for their effort and resources, miners receive crypto paybacks. In this way, the technology provides an incentive for people to maintain the blockchain and establish its authenticity.
During the overnight hours of 3 January 2009, Satoshi Nakamoto mined the starting block of the bitcoin chain, known as the genesis block, creating the bitcoin network. Hal Finney was the first person to receive the first ever bitcoin on 12 January 2009, after creating the first reusable proof-of-work system (RPoW). Notably, the value of bitcoin at that time was USD 0.09. Finney downloaded the Bitcoin software on its release date and received ten bitcoins from Nakamoto.
Programmer Laszlo Hanyecz performed the first known commercial transaction of bitcoin in 2010, when he bought two Papa John's pizzas for 10,000 bitcoin from Jeremy Sturdivant.
After this, the first major users of bitcoin were illegal markets, such as the Silk Road. Silk Road exclusively accepted bitcoins during its 30 months of operation, beginning in February 2011, transacting 9.9 million bitcoins, valued at about $214 million.
In 2011, the price started at $0.30 per bitcoin, growing to $5.27 for the year. The price rose to $31.50 on 8 June. Within a month, the price fell to $11.00. The next month it fell to $7.80, and in another month to $4.77.
The price of bitcoin in 2012 reached $13.30, up from $5.27 at the beginning of the year. After reaching $7.38 by 9 January, the price fell 49% over the next 16 days to $3.80. A price increase to $16.41 occurred on 17 August, but the price dropped by 57% to $7.10 over the next three days. On 1 January 2014, prices climbed to $770 from $13.30 as of 1 January 2013. In 2014, we saw prices start at $770 and fall to $314 for the year. Prices started at $314 in 2015 and rose to $434 at the end of the year. By 1 January 2017, the price climbed up to $998.
Compared to 14 July 2017, bitcoin was trading at $1,835, up 52% from $2,748, a rise of 52%. After reaching an all-time high of $19,783.06 on 17 December 2017, prices started at $998 in 2017 and rose to $13,412.44 on 1 January 2018. On 30 November 2020, the bitcoin value reached a new all-time high of $19,860, topping the previous high of December 2017. From that time the price of bitcoin has fluctuated and as of today, 7th Jan 2022, it is at 42,487.90 USD.