Based on a paper that was posted to a cryptography mailing list by Satoshi Nakamoto in November of 2008 entitled Bitcoin: A Peer to Peer Electronic Cash System, Bitcoin became the first decentralized cryptocurrency, and is currently the most popular among traders. The new electronic cash system was embraced by many programmers that were attracted to the obvious advantages presented by a decentralized free-floating currency. Bitcoin gradually became accepted and was aided by the fact that it was one of the first cryptocurrencies to appear on the scene.
Eventually, bitcoin payments began to be accepted by more and more merchants as central banking authorities clarified that they would not encourage law enforcement to crack down on the newly formed digital currency economy. This made the value of bitcoins explode, and fostered the proliferation of many online exchanges and wallet services, which consequently made it easier for people to buy, hold and spend bitcoins. If you are looking to buy bitcoin, try Bestbitcoinexchange for a huge list of exchanges.
While some of these services failed dramatically at the beginning, such as Mt. Gox in 2013, and hacking to obtain bitcoins remains an ongoing issue, bitcoin not only prevailed but even managed to thrive in the aftermath of these disasters. All bitcoin transactions are registered on a public ledger known as a blockchain, with users making transactions directly without intermediaries and that are verified by network nodes before being recorded on the blockchain.
All bitcoin operations are performed by a network of computers owned by bitcoin miners. Miners maintain the blockchain and sort transactions, which use private keys and signatures encoded with advanced cryptography. In addition to managing transactions and blockchain related information, miners must solve increasingly complicated mathematical problems for which they are rewarded with bitcoins.
Because of the vast number of mathematical computations involved, in addition to the cost of electricity required to run the computer systems, bitcoin mining has become difficult and no longer profitable for many miners. Today, advanced Application Specific Integrated Circuits or ASICs are used and are typically equipped in custom built bitcoin mining boxes.
Nevertheless, even with this equipment, bitcoin mining is typically only profitable in places like Iceland and China, where cold weather conditions and low-cost electricity significantly reduce the cost of mining. In addition to mining, bitcoins can also be obtained as acceptance for payment for goods and services and through trading on a bitcoin exchange.
Bitcoin values have fluctuated dramatically, especially over the past year. One bitcoin is currently worth more than $4,000 per unit as of August of 2017. The bitcoin market has been through several boom and bust cycles and it is currently looking like the bitcoin market is heading higher.