Bitcoin’s origins have roots in dark web
The birth of bitcoin is shrouded in mystery. Its history is filled with controversy.
In 2009, a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” was posted on the Internet by an anonymous author or group.
It described a currency that did not rely on banks or government but instead on individuals who would maintain the transactions of the currency on their computers for all to see. That electronic ledger, called a “block chain,” is supposed to maintain the integrity and transparency of the currency’s trading.
The owners of the computers that maintained and verified the block chain would be rewarded with fees by users and by mining bitcoins with high-tech computers that solved ever-more-complex calculations. There would be only 21 million bitcoins, maintaining the scarcity and value of the cryptocurrency.
It was an innovative idea, but controversy soon followed.
Roots in the dark web
In 2011, Silk Road, an anonymous marketplace that sold illegal drugs, weapons, fake passports and even offered murder for hire, appeared on part of the Internet not available to standard search engines. It is known as the dark web.
Special browsers that masked a user’s location led the user to the marketplace. And bitcoin, which at the time was nearly impossible to trace to an individual, was the currency people used to buy the illegal items and services.
The FBI shut down the site and eventually caught and convicted the operator, but the high-profile case cast a shadow over bitcoin as a currency for outlaws. Since then, federal regulations have required legitimate exchanges to verify the identity of traders with driver’s licenses and other personal information, though some overseas operations allow anonymity.
Despite, or maybe because of the controversy, the value of the currency went from about $100 a coin to nearly a $1,000 at the end of 2013.
Worth stealing
As the currency gained value, people found ways to steal it.
In 2014, about $65 million worth of bitcoin was lost or stolen from a Tokyo exchange called Mt. Gox, sending the price of the cryptocurrency plummeting and prompting critics to predict the death of bitcoin. After that incident, the price dropped to around $300 a coin.
But three years later, bitcoin and dozens of other cryptocurrencies created since 2009 skyrocketed on the various exchanges. Bitcoin hit an all-time high of $19,180 a coin on Dec. 17.
The price has been on a roller coaster since the peak, trading between $7,000 and $16,000 in recent months.
Contact Arthur Kane at akane @reviewjournal.com. Follow @ArthurMKane on Twitter.