Bitcoin - what it is and its evolution

Bitcoin is the name of the 1st digital currency based on a decentralized payment network sustained by "Peer to Peer" (user to user), i.e, is supported by its users without the existence of a central authority , which allows the money transfer between anyone in the world without the need for a centralized service, such as a bank or the "PayPal".

There are several aspects that distinguish bitcoin from other types of currency, such as:
• Autonomy - unlike currencies like the euro or the dollar, which are dependent on the ECB and Federal Reserve respectively, there is no entity able to impose rules on the use of the same, as well as any kind of monetary policies.
• Transfer facility - unlike other entities is possible to transfer any amount, at any time of day, anywhere in the world and without paying exorbitant fees.
• Predictable and limited supply - unlike currencies whose central bodies may issue more currency, bitcoin has a maximum supply of 21 million units, a figure which today is situated a little over 16 million.
• Security - it is impossible to transfer portfolios than their own, make "chargebacks" or freeze the funds.
 

The evolution of bitcoin

In May 2010, Florida Laszlo Hanyecz bought two pizzas valued at about $ 25, per 10,000 bitcoins (BTC). This transaction made history as the first time bitcoin was used to buy something, giving it the first concrete value: about $ 0.0025 by BTC.

Since then, the value of bitcoin has gone through periods of high volatility. The first occurred in July 2010 when it increased from $ 0.008 to $ 0.08 in just five days. February 2011 saw when bitcoin achieved for the first time parity with the dollar ($ 1 = 1 BTC) and in July of that year, was the peak of the first significant rise in Bitcoin, up from $ 30.

The movement was supported by the growing popularity of the Silk Road, an online black market. Falls more than 90% was followed until close to $ 2 in November 2011.

From then until the beginning of 2013, there was a period of greater calm in prices, with a gradual appreciation up to $ 13. However, this year proved to be one of the busiest to date for bitcoin, being from here that your trading gained more notoriety.

The currency rose to $ 266, recorded in April 2013, at a time when the banking crisis in Cyprus resulted in two weeks with the closed banks and limited withdrawals. The distrust in the banking system made it more attractive to hold a currency that was not under the control of any government, not only in Cyprus but also internationally. This is an issue that, even today, is crucial for the development of bitcoin.

The climb was not lasting, and within a few days, prices fell back to $ 70. However, in the last quarter of 2013, bitcoin rose as never before and in November for the first time surpassed $ 1,000. This increase was due to the rise in popularity of bitcoin in China with the market entry of several grants and new users - today, China said most of the action occurred in the currency prices.

The volatility was significant during the following months, with bitcoin to oscillate between $ 500 and $ 1,000. Prices were being influenced by rumors of mismanagement and uncertainty in the Japanese stock exchange Mt. Gox, which at the time was the most used worldwide. The insolvency and closure confirmed in February 2014, triggering a drop in prices to the area of $ 400, which continued gradually until the beginning of 2015 - there have negotiated down from $ 200. By November of that year, prices stabilized between $ 200 and $ 300, but then began an upward trend that prevailed until 2017.

In 2016, the performance of bitcoin (+ 124%) exceeded that of all conventional currencies, with several factors that can highlight to justify their valuation: the depreciation of the currency of China (yuan) and capital control measures in the country, " Brexit " demonetization in India (to a recall of the most valuable notes to reduce the blood money), hyperinflation in Venezuela, as well as the victory of Donald Trump in the US presidential elections. In common, these events are that they are enhancers of instability and uncertainty, which attracts the interest of both people, both investment funds and other institutional investors, alternative asset to or "refuge".

Valuation in 2016: bitcoin and gold

The performance of Bitcoin in 2016 was also far superior to gold (+ 8%), an active considered "safe" and to which the currency is often compared.

However, the past two years the correlation between the two instruments was negative, which does not imply that Bitcoin is not being used as active "refuge". In fact, it may suggest that some market participants have been replaced by gold Bitcoin as a tool to hold in times of greater instability.

"Refuge" or not, the bitcoin has thwarted all sentences 'death' made by it in recent years, particularly after each suffered loss. Its resilience has been remarkable, and the first day of 2017 again exceeded the $ 1,000, three years after the last time.

Today, the two pizzas that Laszlo Hanvecz acquired in 2010 would be worth $ 10 million.

References:
Translation of an article written by my friend
https://steemit.com/bitcoin/@hugoncosta/bitcoin-o-que-e-e-a-sua-evolucao