“In just three years, Bitcoin has grown quickly in popularity”
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Like many Internet phenomenons, Bitcoin has surged in popularity despite having only existed for three years. Those who founded Bitcoin registered the domain name about 10 weeks before introducing the idea to the world.
Satoshi Nakamoto announced his Bitcoin P2P e-cash paper to the Gmane newsgroup, which is a cryptography e-mail list. Nakamoto outlined the idea behind Bitcoin in the paper by publishing it to the newsgroup, as well as posting a PDF file to the Bitcoin.org Web site. From the very first sentence of the paper, it was obvious that Nakamoto was proposing an entirely new system.
The idea of crypto-currency, on which Satoshi Nakamoto based Bitcoin, seems to have its roots in a proposal that Wei Dai introduced in 1998. In Dai’s proposal, he posted the idea of crypto-currency to the Cypherpunks mailing list. Crypto-currency is a form of currency that only exists electronically. Crypto-currency differs from electronic financial exchanges, such as with PayPal and electronic bank transfers, because those types of transactions are simply substitutes for government-based, physical money. No government monitors and/or supports crypto-currency.
Nakamoto’s paper outlined the key elements in the peer-to-peer electronic cash system. The primary aspects of the system haven’t changed much since 2008. For example, all participants in the network can choose to be anonymous. No third parties must be involved in overseeing the transactions. Double-spending could be prevented through the security makeup of the network.
The first alpha version of Bitcoin appeared in early January 2009. Version 0.1 gave users a chance to try the service. With Satoshi Nakamoto’s announcement at the Cryptography BBS, Bitcoin was able to recruit technically savvy users from the beginning, thus giving it credibility within a key demographic.
With the first alpha version, the documentation and the execution files were available for Windows only. In addition, Nakamoto included the C++ code with the release, allowing for open source improvements to be made. Users simply had to download the Bitcoin files into a directory and then run the executable file.
With the alpha version, early users had two options for sending coins. With an online recipient who was not a member of the Bitcoin system, the sender could simply enter the IP address of the recipient. Bitcoin then would generate a public encryption key to finish the transaction. For those who were participating in the system, the sender could ship money to anyone with a Bitcoin address.