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Bitcoin Interest-Bearing Accounts Were Conceived Over Ten Years Ago, but the Idea Took 8 Years to Catch On – Featured Bitcoin News

While decentralized finance (defi) has created a plethora of protocols that make it so crypto belongings can collect a yield, ten and a half years in the past a bitcoin alternate referred to as Bitcoinica launched the first curiosity accruing system for bitcoin deposits. Despite being the first to check the waters, Bitcoinica finally went bust after a sequence of hacks that noticed roughly 62,101 bitcoin stolen from the alternate, and interest-bearing crypto accounts didn’t return till eight years later.

Bitcoin Interest-Bearing Accounts Were Introduced by Bitcoinica in 2012

These days, interest-bearing accounts and yield-gathering defi protocols are all the rage in the world of cryptocurrency, but most individuals don’t know that the thought was launched greater than a decade in the past. In mid-February 2012, the now-defunct bitcoin alternate, Bitcoinica, developed an concept that allowed bitcoin deposits on the alternate to collect curiosity. The thought was introduced by the 18-year-old Zhou Tong, a bitcoin fanatic who based the alternate the 12 months earlier than. Bitcoinica noticed 3,724.12 BTC, price $71.56 million right this moment, traded throughout the buying and selling platform’s first 24 hours of operation.

Bitcoin Interest-Bearing Accounts Were Conceived Over Ten Years Ago, but the Idea Took 8 Years to Catch On
A screenshot of Bitcoinica, one in every of the earliest bitcoin exchanges that was hacked and later liquidated in August 2012.

By September 2011, Bitcoinica was the second-largest bitcoin buying and selling platform by volume behind Mt Gox. “We are glad to announce that we have started the public test run of our interest system,” the Bitcoinica founder wrote on February 13, 2012. “We are the first website to offer interest for Bitcoin deposits. This post is intended to explain how the system works — Assuming you deposit $10,000 with us and the interest rate is always 4.17, you will get $4.17 every day or $1,644 every year (with compound interest).”

Bitcoin Interest-Bearing Accounts Were Conceived Over Ten Years Ago, but the Idea Took 8 Years to Catch On
The 18-year-old Zhou Tong saying the bitcoin interest-bearing accounts on February 13, 2012, by way of the discussion board bitcointalk.org.

A substantial amount of right this moment’s interest-bearing protocols stems from the world of decentralized finance (defi), which is an entire lot totally different than Bitcoinica’s interest-bearing account providing. Bitcoinica’s idea is comparable to what centralized crypto exchanges like Coinbase, Crypto.com, and lots of others provide right this moment, as Bitcoinica was a centralized bitcoin buying and selling platform.

Bitcoinica was comparable to Celsius, in a way, because it supplied interest-bearing funds but finally went beneath from monetary difficulties. Bitcoinica’s curiosity accounts had been calculated each hour, and payouts had been distributed after every day ended. “Bitcoinica has been running great for the last [five] months, and we’re the fastest growing bitcoin business ever,” Zhou Tong wrote at the time.

After the Bitcoinica interest-bearing accounts had been launched, the very subsequent month Bitcoinica was hacked and misplaced 43,554 bitcoins price $837.17 million utilizing right this moment’s alternate charges. Then greater than a month later, on May 11, 2012, Bitcoinica was hacked once more dropping 18,547 bitcoins, price roughly $356.50 million right this moment.

Crypto Yields took 8 years to Mature After Bitcoinica’s Collapse

The interest-bearing accounts by way of Bitcoinica by no means actually noticed traction after the controversy that surrounded the Bitcoinica founder Zhou Tong and the mysterious hacks. Bitcoinica was finally taken offline and by August 2012, the firm entered into liquidation. Interestingly sufficient, the very day Zhou Tong introduced the BTC interest-bearing account idea, one in every of the first feedback requested the founder to guarantee the neighborhood that their funds had been protected.

“Soothe our fears and tell us why Bitcoinica will not be hacked, and tell us about how our money will not be stolen out of thin air?” the particular person requested the Bitcoinica founder. While Zhou Tong pledged to preserve the alternate protected, the buying and selling platform’s two breaches had been thought of a few of the most controversial hacks in crypto historical past, apart from the scandals surrounding Mt Gox.

It took greater than eight years to see crypto interest-bearing accounts lastly take maintain in the digital forex business. Moreover, with defi protocols, yields might be earned in a non-public and noncustodial trend with out holding crypto belongings on a centralized alternate.

However, very similar to Bitcoinica, interest-bearing crypto platforms can fail, and Celsius is one such lender that went bankrupt in current occasions. While Celsius and Bitcoinica had been centralized, defi platforms can go beneath too, like when the Terra blockchain ecosystem imploded.

When UST de-pegged from the $1 parity, defi customers leveraging the lending utility Anchor Protocol they’d to take care of the financial institution run that adopted. Other defi functions have been hacked or have seen rug pulls, and defi customers wanting to acquire curiosity have misplaced all their cash.

Tags on this story
2011, 2012, 8 years, announcement, Bitcoin (BTC), Bitcoinica, Bitcoinica curiosity accounts, Bitcointalk.org, BTC, BTC interest-bearing account, Celsius, Centralized, Centralized Exchange, Crypto Lenders, decentralized finance, DeFi, Early Days, hacked, Interest Bearing Accounts, Interest-Bearing, leverage, liquidated, maturing, Maturity, mid-February 2012, Zhou Tong

What do you concentrate on the first bitcoin interest-bearing accounts supplied by Bitcoinica greater than a decade in the past? Let us know what you concentrate on this topic in the feedback part beneath.

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Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a monetary tech journalist dwelling in Florida. Redman has been an lively member of the cryptocurrency neighborhood since 2011. He has a ardour for Bitcoin, open-source code, and decentralized functions. Since September 2015, Redman has written greater than 5,700 articles for Bitcoin.com News about the disruptive protocols rising right this moment.




Image Credits: Shutterstock, Pixabay, Wiki Commons

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