Early Bitcoin – A string of bad history

By Lumai Mubanga. [email protected]

The history of Bitcoin is shredded in bad historical “books” partly because of its stringent privacy policy, a policy that made it very difficult to tie digital identities to real world users as well as its decentralization policy, a policy that ensured that no central entity could be summoned to fix any mistakes within the blockchain ecosystem.

It is no wonder then that early Bitcoin was often a target of illegal activities, hacks and scandals.

In 2010, a website with a domain name mtgox.com owned and managed by Jed MacCaleb was turned into the first ever bitcoin exchange site. This was previously a platform for players on the online game magic who traded cards like stock. This exchange was a central point of failure and its popularity because of bitcoin drew a lot of negative attention.

Around Mid-year 2011, hackers using a Mt. Gox auditor’s computer to siphon an abundance of bitcoin to themselves. Mt. Gox was eventually shut down for seven days to investigate the situation. Further lawsuits ensued some of which are still in court. Despite these lawsuits and the breach in security, people still continued using Mt. Gox and for some time, it appeared well.

By the year 2014, Mt Gox was handling about 70% of all bitcoin transactions. This was way too much for the infrastructure to handle. In the same year, it was announced that he had lost more than 700, 000 of his customers bitcoins in a theft that had been going on for some years undetected. By the end of February 2014, he filed for bankruptcy.

Meanwhile, in the depth of the dark web, bitcoin were being used for the purchase of drugs. A website that had opened in 2011 called Silk Road had made a reputation of the anonymous “eBay of Drugs” and was led by a man named Ross Ulbright. This website took advantage of an anonymous protocol called Tor and handled transaction using Bitcoin.

Because of the privacy issues in Bitcoin operation principles, it became very difficult to trace real life identities of these malpractices. The FBI had no option but to close down Silk Road in October, 2013. The owner was sentenced to life imprisonment and the FBI seized 26,000 Bitcoins worth $3.6 million at that time.

It was because of these occurrences of drug dealings and black market transactions that became the primary association between Bitcoin and public mistrust in the early stages.

Despite such a bad patch in its early history, Bitcoin emerged as the most valuable online asset in the years that followed hitting the record highest price ever of $19,783 per US Dollar. Since then, despite its fluctuating values against convertible currencies, it still command respect as the world’s most sought out cryptocurrency.

Its stability in terms of trust and availability has brought about the mushrooming of other crypto currencies including the USDT that Finmail use on its platform. With increased use and trust, Cryptocurrencies are for sure here to stay as the dark history slowly fades away.