Bitcoin has been on a volatile roller coaster this past week. The cryptocurrency hit an all-time high of $11,395 on Nov. 29 before losing over one-fifth of its value, dropping as low as $9,000 at one point on Nov. 30.
Despite the drop, bitcoin is still up over 900 percent year-to-date, meaning the value of one bitcoin is now more than 900 times its purchase amount. So what exactly is bitcoin and how is it being used?
Here are five things to know about bitcoin:
1. Bitcoin is a form of currency. Bitcoin is a type of cryptocurrency, which is a digital currency that uses encryption techniques to control its creation and secure transactions, independent from a central bank. These encryption techniques make it very difficult to create any kind of counterfeit form. According to bitcoin.org, “Bitcoin is pretty much like cash for the Internet.” People can purchase bitcoins or fractions of a bitcoin through online exchanges or from an individual and store them in a virtual wallet. There are hundreds of thousands of retailers that accept bitcoin and millions of dollars worth of bitcoins are exchanged daily throughout the world.
2. The creator is somewhat of a mystery. In 2009, a proof of concept was published in a cryptography mailing list under the pseudonym Satoshi Nakamoto. In this paper bitcoin was called “a peer-to-peer electronic cash system.” The first 50 bitcoins were mined, the process by which bitcoins are created, on Jan. 3, 2009 — considered to be Bitcoin’s birthday — by Nakamoto, who is said to have left the project in 2010. The community grew and other developers took over. But ever since the inception of bitcoin, there has been an ongoing debate over the identity of Nakamoto. No one has been able to identify who or what Nakamoto is, but some have tried.
In 2014, Newsweek claimed that a California man named Dorian Satoshi Nakamoto was the creator, but he firmly denied it, claiming he hadn’t even heard of bitcoin. There was then speculation around Nakamoto’s neighbor Hal Finney, a computer scientist who was the first recipient of a bitcoin transaction. Finney described his initial involvement via a forum post on bitcointalk.org, saying, “Satoshi’s true…