Fun

Bitcoin Interest-Bearing Accounts Were Conceived Over 10 Years Ago, but the Idea Took 8 Years to Catch On

News Feed - 2022-09-09 06:09:43

Bitcoin Interest-Bearing Accounts Were Conceived Over 10 Years Ago, but the Idea Took 8 Years to Catch On


While decentralized finance (defi) has created a plethora of protocols that make it so crypto assets can gather a yield, ten and a half years ago a bitcoin exchange called Bitcoinica introduced the first interest accruing system for bitcoin deposits. Despite being the first to test the waters, Bitcoinica eventually went bust after a series of hacks that saw roughly 62,101 bitcoin stolen from the exchange, and interest-bearing crypto accounts did not return until 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 people don’t know that the idea was introduced more than a decade ago. In mid-February 2012, the now-defunct bitcoin exchange, Bitcoinica, developed an idea that allowed bitcoin deposits on the exchange to gather interest. The idea was announced by the 18-year-old Zhou Tong, a bitcoin enthusiast who founded the exchange the year before. Bitcoinica saw 3,724.12 BTC, worth $71.56 million today, traded during the trading platform’s first 24 hours of operation. A screenshot of Bitcoinica, one of the earliest bitcoin exchanges that was hacked and later liquidated in August 2012.


By September 2011, Bitcoinica was the second-largest bitcoin trading 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).” The 18-year-old Zhou Tong announcing the bitcoin interest-bearing accounts on February 13, 2012, via the forum bitcointalk.org.


A great deal of today’s interest-bearing protocols stems from the world of decentralized finance (defi), which is a whole lot different than Bitcoinica’s interest-bearing account offering. Bitcoinica’s concept is similar to what centralized crypto exchanges like Coinbase, Crypto.com, and many others offer today, as Bitcoinica was a centralized bitcoin trading platform.


Bitcoinica was similar to Celsius, in a sense, as it offered interest-bearing payments but eventually went under from financial difficulties. Bitcoinica’s interest accounts were calculated every hour, and payouts were distributed after each 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 were introduced, the very next month Bitcoinica was hacked and lost 43,554 bitcoins worth $837.17 million using today’s exchange rates. Then more than a month later, on May 11, 2012, Bitcoinica was hacked again losing 18,547 bitcoins, worth roughly $356.50 million today. Crypto Yields took 8 years to Mature After Bitcoinica’s Collapse


The interest-bearing accounts via Bitcoinica never really saw traction after the controversy that surrounded the Bitcoinica founder Zhou Tong and the mysterious hacks. Bitcoinica was eventually taken offline and by August 2012, the company entered into liquidation. Interestingly enough, the very day Zhou Tong announced the BTC interest-bearing account concept, one of the first comments asked the founder to assure the community that their funds were safe.


“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 individual asked the Bitcoinica founder. While Zhou Tong pledged to keep the exchange safe, the trading platform’s two breaches were considered some of the most controversial hacks in crypto history, besides the scandals surrounding Mt Gox.


It took more than eight years to see crypto interest-bearing accounts finally take hold in the digital currency industry. Moreover, with defi protocols, yields can be earned in a private and noncustodial fashion without holding crypto assets on a centralized exchange.


However, much like Bitcoinica, interest-bearing crypto platforms can fail, and Celsius is one such lender that went bankrupt in recent times. While Celsius and Bitcoinica were centralized, defi platforms can go under too, like when the Terra blockchain ecosystem imploded.


When UST de-pegged from the $1 parity, defi users leveraging the lending application Anchor Protocol they had to deal with the bank run that followed. Other defi applications have been hacked or have seen rug pulls, and defi users looking to gain interest have lost all their money. Tags in this story 2011, 2012, 8 years, announcement, Bitcoin (BTC), Bitcoinica, Bitcoinica interest 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 think about the first bitcoin interest-bearing accounts offered by Bitcoinica more than a decade ago? Let us know what you think about this subject in the comments section below. Jamie Redman


Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,700 articles for Bitcoin.com News about the disruptive protocols emerging today. US Seizes Cryptocurrency Worth $30 Million From North Korean Hackers FEATURED | 2 mins ago Apple Shielded From Crypto Wallet App Lawsuit, Judge Rules FEATURED | 20 hours ago


Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleBitcoin Mining Threatens America’s Climate Change Efforts, White House Science and Tech Department Says Next articleCrypto E-Commerce – Shopping․io Introduces $SHOP Back Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItCentral Bank of Brazil Confirms It Will Run a Pilot Test for Its CBDC This Year


The Central Bank of Brazil has confirmed that the institution will run a pilot test regarding the implementation of its proposed central bank digital currency (CBDC), the digital real. Roberto Campos Neto, president of the bank, also stated that this ... read more.Privacy-Centric Monero Plans for July Hard Fork, Plans Include Ring Signature, Bulletproof Upgrade Survey: Adoption in Argentina Grows, With 12 out of 100 Adults Having Invested in Crypto Microbt Reveals Latest Bitcoin Mining Rigs — Machines Produce up to 126 TH/s With Custom 5nm Chip Design Ethereum Foundation"s Financial Report Discloses It Holds $1.6 Billion in Assets, 80.5% Held in Ether

News Feed

Million-Dollar Digital Collectibles: An In-Depth Look at the Top 10 Most Expensive NFTs Sold This Year
Million-Dollar Digital Collectibles: An In-Depth Look at the Top 10 Most Expensive NFTs Sold This Year 2021 is coming to an end and one prominent theme this year in the world of cr
Australian Monochrome spot Bitcoin ETF expected to launch within 2 months, says CEO
Prashant Jha13 hours agoAustralian Monochrome spot Bitcoin ETF expected to launch within 2 months, says CEOAlthough Australia already has a couple of ETPs exposed to Bitcoin, Monochrome’s spot BTC ETF will be the first
Ana Paula Pereira8 hours agoCrypto Biz: Value of X halves, CME rises among top Bitcoin futures exchanges, and other newsThe CME booms as the crypto industry anticipates the approval approval of a spot Bitcoin ETF in the
Marcel Pechman7 hours agoGermany is dragging Europe’s economy down — and that’s great for cryptoCointelegraph analyst and writer Marcel Pechman explains how a weakening German economy — Europe’s largest — is
Crypto Exchange Hotbit Suspends Service After Law Enforcement Freezes Its Funds, Subpoenas Senior Managers
Crypto Exchange Hotbit Suspends Service After Law Enforcement Freezes Its Funds, Subpoenas Senior Managers Crypto exchange Hotbit has announced the suspension of trading, deposits,
Stacks Activating Nakamoto Upgrade In 8 Days, Will STX Break $2?
Este artículo también está disponible en español. Stacks Network, the Bitcoin layer-2, is one of the largest DeFi protocols on the world’s most secure platform. DeF
William Suberg8 hours agoBitcoin analysts doubt BTC price rally as $23K target gains popularityBitcoin is not catching a genuine bid despite the buzz around Grayscale, analysis warns, with BTC’s price still able to div
Bitcoin 4% dip may ‘panic’ short-term holders as price falls below average cost
Ciaran Lyons5 hours agoBitcoin 4% dip may ‘panic’ short-term holders as price falls below average costBitcoin short-term holders are currently holding a 3% unrealized loss, but it “isn’t the end of the world,”
Yield App Doubles Assets In Q3 As It Scores Big With Premier League Partnership
Yield App Doubles Assets In Q3 As It Scores Big With Premier League Partnership sponsored YIELD App, a FinTech company and digital asset wealth management platform, has published it
Marcel Pechman2 hours agoNo, Bitcoin withdrawals from exchanges are not inherently bullish for cryptoTraders say the record-low number of BTC held on exchanges is a bull signal, but data suggests otherwise.1943 Total vie
The Asia-Pacific market is heating up for Bitcoin and Ethereum ETFs
Abel Seow3 hours agoThe Asia-Pacific market is heating up for Bitcoin and Ethereum ETFsTwo Bitcoin ETFs launched in Australia in June — after six Bitcoin and Ethereum ETFs launched in Hong Kong in April. We"ll see soon
Casper Network halts operations following security breach
Amaka Nwaokocha13 hours agoCasper Network halts operations following security breachThis incident serves as a reminder of the ever-present need for vigilance and proactive measures in the rapidly evolving world of blockc