Prior to the release of bitcoin there were a number of digital cash technologies starting with the issuer based ecash protocols of David Chaum and Stefan Brands. Adam Back developed hashcash, a proof-of-work scheme for spam control. The first proposals for distributed digital scarcity based cryptocurrencies were Wei Dai's b-money and Nick Szabo's bit gold. Hal Finney developed reusable proof of work (RPOW) using hashcash as its proof of work algorithm.
Our first assumption is that bitcoin will derive its value both from its use as a medium of exchange and as a store of value. As a footnote to this assumption, it should be stated that bitcoin's utility as a store of value is dependent on its utility as a medium of exchange. We base this in turn on the assumption that for something to be used as a store of value it needs to have some intrinsic value, and if bitcoin does not achieve success as a medium of exchange, it will have no practical utility and thus no intrinsic value and won't be appealing as a store of value.
Bitcoin has become more widely traded as of 2017, and both short term traders and long-term investors are looking to participate in this exciting market. The price of bitcoin fluctuates on a daily basis, and can see some significant price volatility. Prices can be affected by numerous influences. Some of the possible drivers of price include: further acceptance, more exchanges opening, regulations, weakening paper currency values, inflation and more.
In early February 2014, one of the largest bitcoin exchanges, Mt. Gox, suspended withdrawals citing technical issues. By the end of the month, Mt. Gox had filed for bankruptcy protection in Japan amid reports that 744,000 bitcoins had been stolen. Months before the filing, the popularity of Mt. Gox had waned as users experienced difficulties withdrawing funds.
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