The receiver of the first bitcoin transaction was cypherpunk Hal Finney, who had created the first reusable proof-of-work system (RPoW) in 2004.[28] Finney downloaded the bitcoin software on its release date, and on 12 January 2009 received ten bitcoins from Nakamoto.[29][30] Other early cypherpunk supporters were creators of bitcoin predecessors: Wei Dai, creator of b-money, and Nick Szabo, creator of bit gold.[25] In 2010, the first known commercial transaction using bitcoin occurred when programmer Laszlo Hanyecz bought two Papa John's pizzas for ₿10,000.[31]


Two members of the Silk Road Task Force—a multi-agency federal task force that carried out the U.S. investigation of Silk Road—seized bitcoins for their own use in the course of the investigation.[68] DEA agent Carl Mark Force IV, who attempted to extort Silk Road founder Ross Ulbricht ("Dread Pirate Roberts"), pleaded guilty to money laundering, obstruction of justice, and extortion under color of official right, and was sentenced to 6.5 years in federal prison.[68] U.S. Secret Service agent Shaun Bridges pleaded guilty to crimes relating to his diversion of $800,000 worth of bitcoins to his personal account during the investigation, and also separately pleaded guilty to money laundering in connection with another cryptocurrency theft; he was sentenced to nearly eight years in federal prison.[69]
In February 2014 the world's largest bitcoin exchange, Mt. Gox, declared bankruptcy. The company stated that it had lost nearly $473 million of their customers' bitcoins likely due to theft. This was equivalent to approximately 750,000 bitcoins, or about 7% of all the bitcoins in existence. The price of a bitcoin fell from a high of about $1,160 in December to under $400 in February.[67]
Ethereum-based customized software and networks, independent from the public Ethereum chain, are being tested by enterprise software companies.[47] Interested parties include Microsoft, IBM, JPMorgan Chase,[33][48] Deloitte,[49] R3,[50] Innovate UK (cross-border payments prototype).[51] Barclays, UBS and Credit Suisse are experimenting with Ethereum.
An initial coin offering (ICO) is a controversial means of raising funds for a new cryptocurrency venture. An ICO may be used by startups with the intention of avoiding regulation. However, securities regulators in many jurisdictions, including in the U.S., and Canada have indicated that if a coin or token is an "investment contract" (e.g., under the Howey test, i.e., an investment of money with a reasonable expectation of profit based significantly on the entrepreneurial or managerial efforts of others), it is a security and is subject to securities regulation. In an ICO campaign, a percentage of the cryptocurrency (usually in the form of "tokens") is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, often bitcoin or ether.[47][48][49]
Central to the appeal and function of Bitcoin is the blockchain technology it uses to store an online ledger of all the transactions that have ever been conducted using bitcoins, providing a data structure for this ledger that is exposed to a limited threat from hackers and can be copied across all computers running Bitcoin software. Every new block generated must be verified by the ledgers of each user on the market, making it almost impossible to forge transaction histories. Many experts see this blockchain as having important uses in technologies such as online voting and crowdfunding, and major financial institutions such as JPMorgan Chase see potential in cryptocurrencies to lower transaction costs by making payment processing more efficient. However, because cryptocurrencies are virtual and do not have a central repository, a digital cryptocurrency balance can be wiped out by a computer crash if a backup copy of the holdings does not exist, or if somebody simply loses their private keys.
Central to the appeal and function of Bitcoin is the blockchain technology it uses to store an online ledger of all the transactions that have ever been conducted using bitcoins, providing a data structure for this ledger that is exposed to a limited threat from hackers and can be copied across all computers running Bitcoin software. Every new block generated must be verified by the ledgers of each user on the market, making it almost impossible to forge transaction histories. Many experts see this blockchain as having important uses in technologies such as online voting and crowdfunding, and major financial institutions such as JPMorgan Chase see potential in cryptocurrencies to lower transaction costs by making payment processing more efficient. However, because cryptocurrencies are virtual and do not have a central repository, a digital cryptocurrency balance can be wiped out by a computer crash if a backup copy of the holdings does not exist, or if somebody simply loses their private keys.
Ethereum was initially described in a white paper by Vitalik Buterin,[10] a programmer involved with Bitcoin Magazine, in late 2013 with a goal of building decentralized applications.[11][12] Buterin had argued that Bitcoin needed a scripting language for application development. Failing to gain agreement, he proposed development of a new platform with a more general scripting language.[4]:88
As a cryptocurrency attracts more interest, mining becomes harder and the amount of coins received as a reward decreases. For example, when Bitcoin was first created, the reward for successful mining was 50 BTC. Now, the reward stands at 12.5 Bitcoins. This happened because the Bitcoin network is designed so that there can only be a total of 21 mln coins in circulation.
As can be seen from the data on this page, Ethereum’s price has been enormously volatile and therefore highly unpredictable over the short-term. However, longer-term trends are easier to predict, with fundamental metrics such as the total number of developers, community discussion and GitHub pull requests indicating a more accurate future price trend. Other methods to predict the price of Ethereum include metrics such as Network Value to Transaction ratio (NVT ratio) and the relative prices between coins. The method that we find most interesting is in that of the Ethereum-based prediction market, Augur. These predictions source the “wisdom of the crowd” to determine the likelihood of an outcome occurring and provide a significant level of insight into the market sentiment.
Ethereum's smart contracts are based on different computer languages, which developers use to program their own functionalities. Smart contracts are high-level programming abstractions that are compiled down to EVM bytecode and deployed to the Ethereum blockchain for execution. They can be written in Solidity (a language library with similarities to C and JavaScript), Serpent (similar to Python, but deprecated), LLL (a low-level Lisp-like language), and Mutan (Go-based, but deprecated). There is also a research-oriented language under development called Vyper (a strongly-typed Python-derived decidable language).
Monero is the most prominent example of the CryptoNight algorithm. This algorithm was invented to add the privacy features Bitcoin is missing. If you use Bitcoin, every transaction is documented in the blockchain and the trail of transactions can be followed. With the introduction of a concept called ring-signatures, the CryptoNight algorithm was able to cut through that trail.
Because of bitcoin's decentralized nature and its trading on online exchanges located in many countries, regulation of bitcoin has been difficult. However, the use of bitcoin can be criminalized, and shutting down exchanges and the peer-to-peer economy in a given country would constitute a de facto ban.[176] The legal status of bitcoin varies substantially from country to country and is still undefined or changing in many of them. Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems.[177]
“While it’s still fairly new and unstable relative to the gold standard, cryptocurrency is definitely gaining traction and will most certainly have more normalized uses in the next few years. Right now, in particular, it’s increasing in popularity with the post-election market uncertainty. The key will be in making it easy for large-scale adoption (as with anything involving crypto) including developing safeguards and protections for buyers/investors. I expect that within two years, we’ll be in a place where people can shove their money under the virtual mattress through cryptocurrency, and they’ll know that wherever they go, that money will be there.” – Sarah Granger, Author, and Speaker. 
Bitcoin (BTC) is a consensus network that enables a new payment system and a completely digital currency. Powered by its users, it is a peer to peer payment network that requires no central authority to operate. On October 31st, 2008, an individual or group of individuals operating under the pseudonym "Satoshi Nakamoto" published the Bitcoin Whitepaper and described it as: "a purely peer-to-peer version of electronic cash, which would allow online payments to be sent directly from one party to another without going through a financial institution."
Markets are dirty. But this doesn‘t change the fact that cryptocurrencies are here to stay – and here to change the world. This is already happening. People all over the world buy Bitcoin to protect themselves against the devaluation of their national currency. Mostly in Asia, a vivid market for Bitcoin remittance has emerged, and the Bitcoin using darknets of cybercrime are flourishing. More and more companies discover the power of Smart Contracts or token on Ethereum, the first real-world application of blockchain technologies emerge.
“If the trend continues, the average person will not be able to afford to purchase one whole bitcoin in 2 years. As global economies inflate and markets exhibit signs of recession, the world will turn to Bitcoin as a hedge against fiat turmoil and an escape against capital controls. Bitcoin is the way out, and cryptocurrency as a whole is never going away, it’s going to grow in use and acceptance as it matures.”
Miners are the single most important part of any cryptocurrency network, and much like trading, mining is an investment. Essentially, miners are providing a bookkeeping service for their respective communities. They contribute their computing power to solving complicated cryptographic puzzles, which is necessary to confirm a transaction and record it in a distributed public ledger called the Blockchain.
A lot of people have made fortunes by mining Bitcoins. Back in the days, you could make substantial profits from mining using just your computer, or even a powerful enough laptop. These days, Bitcoin mining can only become profitable if you’re willing to invest in an industrial-grade mining hardware. This, of course, incurs huge electricity bills on top of the price of all the necessary equipment.

Ethereum enables developers to build and deploy decentralized applications. A decentralized application or Dapp serve some particular purpose to its users. Bitcoin, for example, is a Dapp that provides its users with a peer to peer electronic cash system that enables online Bitcoin payments. Because decentralized applications are made up of code that runs on a blockchain network, they are not controlled by any individual or central entity.
Within a cryptocurrency network, only miners can confirm transactions by solving a cryptographic puzzle. They take transactions, mark them as legitimate and spread them across the network. Afterwards, every node of the network adds it to its database. Once the transaction is confirmed it becomes unforgeable and irreversible and a miner receives a reward, plus the transaction fees.
Ethereum is the pioneer for blockchain based smart contracts. When running on the blockchain a smart contract becomes like a self-operating computer program that automatically executes when specific conditions are met. On the blockchain, smart contracts allow for code to be run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference. It can facilitate the exchange of money, content, property, shares, or anything of value. The Ethereum network went live on July 30th, 2015 with 72 million Ethereum premined.
The use of bitcoin by criminals has attracted the attention of financial regulators, legislative bodies, law enforcement, and the media.[226] In the United States, the FBI prepared an intelligence assessment,[227] the SEC issued a pointed warning about investment schemes using virtual currencies,[226] and the U.S. Senate held a hearing on virtual currencies in November 2013.[228] The U.S. government claimed that bitcoin was used to facilitate payments related to Russian interference in the 2016 United States elections.[229]

Cameron and Tyler Winklevoss, the founders of the Gemini Trust Co. exchange, reported that they had cut their paper wallets into pieces and stored them in envelopes distributed to safe deposit boxes across the United States.[106] Through this system, the theft of one envelope would neither allow the thief to steal any bitcoins nor deprive the rightful owners of their access to them.[105]
This dramatic volatility attracted global attention with the mainstream media running near-daily reports on the price of Ether. The publicity generated has been a major boon for the ecosystem, attracting thousands of new developers and business ventures alike. In 2018 the amount raised through Ethereum-enabled ICOs reached almost $8bn, increasing from just $90m in 2016. While the price of Ethereum has faced extreme volatility over the years, it is this volatility which has driven interest. After every boom and bust cycle, Ethereum comes out the other side with a fundamentally stronger platform and a broader developer community backing it. These fundamental improvements would suggest a positive long-term outlook on the price of Ethereum.
Since prices are based on supply and demand, the rate at which a cryptocurrency can be exchanged for another currency can fluctuate widely. However, plenty of research has been undertaken to identify the fundamental price drivers of cryptocurrencies. Bitcoin has indeed experienced some rapid surges and collapses in value, reaching as high as $19,000 per bitcoin in December of 2017 before returning to around $7,000 in the following months. Cryptocurrencies are thus considered by some economists to be a short-lived fad or speculative bubble. There is concern especially that the currency units, such as bitcoins, are not rooted in any material goods. Some research has identified that the cost of producing a bitcoin, which takes an increasingly large amount of energy, is directly related to its market price.
In Ethereum all smart contracts are stored publicly on every node of the blockchain, which has costs.[56] Being a blockchain means it is secure by design and is an example of a distributed computing system with high Byzantine fault tolerance. The downside is that performance issues arise in that every node is calculating all the smart contracts in real time, resulting in lower speeds.[56] As of January 2016, the Ethereum protocol could process about 25 transactions per second.[56] In comparison, the Visa payment platform processes 45,000 payments per second leading some to question the scalability of Ethereum.[57] On 19 December 2016, Ethereum exceeded one million transactions in a single day for the first time.[58]

As with other cryptocurrencies, the validity of each ether is provided by a blockchain, which is a continuously growing list of records, called blocks, which are linked and secured using cryptography.[30][31] By design, the blockchain is inherently resistant to modification of the data. It is an open, distributed ledger that records transactions between two parties efficiently and in a verifiable and permanent way.[32] Unlike Bitcoin, Ethereum operates using accounts and balances in a manner called state transitions. This does not rely upon unspent transaction outputs (UTXOs). State denotes the current balances of all accounts and extra data. State is not stored on the blockchain, it is stored in a separate Merkle Patricia tree. A cryptocurrency wallet stores the public and private "keys" or "addresses" which can be used to receive or spend ether. These can be generated through BIP 39 style mnemonics for a BIP 32 "HD Wallet". In Ethereum, this is unnecessary as it does not operate in a UTXO scheme. With the private key, it is possible to write in the blockchain, effectively making an ether transaction.


Ethereum-based customized software and networks, independent from the public Ethereum chain, are being tested by enterprise software companies.[47] Interested parties include Microsoft, IBM, JPMorgan Chase,[33][48] Deloitte,[49] R3,[50] Innovate UK (cross-border payments prototype).[51] Barclays, UBS and Credit Suisse are experimenting with Ethereum.
^ The word bitcoin first occurred and was defined in the white paper[4] that was published on 31 October 2008.[10] It is a compound of the words bit and coin.[11] There is no uniform convention for bitcoin capitalization. Some sources use Bitcoin, capitalized, to refer to the technology and network and bitcoin, lowercase, to refer to the unit of account.[12] The Wall Street Journal,[13] The Chronicle of Higher Education,[14] and the Oxford English Dictionary[11] advocate use of lowercase bitcoin in all cases, a convention followed throughout this article.
Homero Josh Garza, who founded the cryptocurrency startups GAW Miners and ZenMiner in 2014, acknowledged in a plea agreement that the companies were part of a pyramid scheme, and pleaded guilty to wire fraud in 2015. The U.S. Securities and Exchange Commission separately brought a civil enforcement action against Garza, who was eventually ordered to pay a judgment of $9.1 million plus $700,000 in interest. The SEC's complaint stated that Garza, through his companies, had fraudulently sold "investment contracts representing shares in the profits they claimed would be generated" from mining.[70]
Venture capitalists, such as Peter Thiel's Founders Fund, which invested US$3 million in BitPay, do not purchase bitcoins themselves, but instead fund bitcoin infrastructure that provides payment systems to merchants, exchanges, wallet services, etc.[162] In 2012, an incubator for bitcoin-focused start-ups was founded by Adam Draper, with financing help from his father, venture capitalist Tim Draper, one of the largest bitcoin holders after winning an auction of 30,000 bitcoins,[163] at the time called "mystery buyer".[164] The company's goal is to fund 100 bitcoin businesses within 2–3 years with $10,000 to $20,000 for a 6% stake.[163] Investors also invest in bitcoin mining.[165] According to a 2015 study by Paolo Tasca, bitcoin startups raised almost $1 billion in three years (Q1 2012 – Q1 2015).[166]
Since prices are based on supply and demand, the rate at which a cryptocurrency can be exchanged for another currency can fluctuate widely. However, plenty of research has been undertaken to identify the fundamental price drivers of cryptocurrencies. Bitcoin has indeed experienced some rapid surges and collapses in value, reaching as high as $19,000 per bitcoin in December of 2017 before returning to around $7,000 in the following months. Cryptocurrencies are thus considered by some economists to be a short-lived fad or speculative bubble. There is concern especially that the currency units, such as bitcoins, are not rooted in any material goods. Some research has identified that the cost of producing a bitcoin, which takes an increasingly large amount of energy, is directly related to its market price.
Ethereum enables developers to build and deploy decentralized applications. A decentralized application or Dapp serve some particular purpose to its users. Bitcoin, for example, is a Dapp that provides its users with a peer to peer electronic cash system that enables online Bitcoin payments. Because decentralized applications are made up of code that runs on a blockchain network, they are not controlled by any individual or central entity.
Take the money on your bank account: What is it more than entries in a database that can only be changed under specific conditions? You can even take physical coins and notes: What are they else than limited entries in a public physical database that can only be changed if you match the condition than you physically own the coins and notes? Money is all about a verified entry in some kind of database of accounts, balances, and transactions.
In 1983, the American cryptographer David Chaum conceived an anonymous cryptographic electronic money called ecash.[7][8] Later, in 1995, he implemented it through Digicash,[9] an early form of cryptographic electronic payments which required user software in order to withdraw notes from a bank and designate specific encrypted keys before it can be sent to a recipient. This allowed the digital currency to be untraceable by the issuing bank, the government, or any third party.

According to the Library of Congress, an "absolute ban" on trading or using cryptocurrencies applies in eight countries: Algeria, Bolivia, Egypt, Iraq, Morocco, Nepal, Pakistan, and the United Arab Emirates. An "implicit ban" applies in another 15 countries, which include Bahrain, Bangladesh, China, Colombia, the Dominican Republic, Indonesia, Iran, Kuwait, Lesotho, Lithuania, Macau, Oman, Qatar, Saudi Arabia and Taiwan.[178]
Bloomberg reported that the largest 17 crypto merchant-processing services handled $69 million in June 2018, down from $411 million in September 2017. Bitcoin is "not actually usable" for retail transactions because of high costs and the inability to process chargebacks, according to Nicholas Weaver, a researcher quoted by Bloomberg. High price volatility and transaction fees make paying for small retail purchases with bitcoin impractical, according to economist Kim Grauer. However, bitcoin continues to be used for large-item purchases on sites such as Overstock.com, and for cross-border payments to freelancers and other vendors.[149]
Then, in early 2009, an anonymous programmer or a group of programmers under an alias Satoshi Nakamoto introduced Bitcoin. Satoshi described it as a ‘peer-to-peer electronic cash system.’ It is completely decentralized, meaning there are no servers involved and no central controlling authority. The concept closely resembles peer-to-peer networks for file sharing.
1) Controlled supply: Most cryptocurrencies limit the supply of the tokens. In Bitcoin, the supply decreases in time and will reach its final number sometime around the year 2140. All cryptocurrencies control the supply of the token by a schedule written in the code. This means the monetary supply of a cryptocurrency in every given moment in the future can roughly be calculated today. There is no surprise.

According to the European Central Bank, the decentralization of money offered by bitcoin has its theoretical roots in the Austrian school of economics, especially with Friedrich von Hayek in his book Denationalisation of Money: The Argument Refined,[132] in which Hayek advocates a complete free market in the production, distribution and management of money to end the monopoly of central banks.[133]:22
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