A Brief History of Bitcoin
Cryptocurrencies have been parading down the red carpet for some time now, lapping up the limelight. The well-known volatility of the crypto market has added to the excitement and hype. But where did it all start? This Medium series from Contentworks takes a look at this history of some of crypto’s top players and how each digital asset shot to stardom. Let’s kick things off with Bitcoin.
The Origins of Bitcoin
Believe it or not, Bitcoin’s knocking on. The concept has been around for well over a decade with the Bitcoin code written down in 2007. The domain name bitcoin.org first registered on 18th August 2008 and a few months later on 31st October, the nine-page Bitcoin whitepaper was released into the big wide world of the web, posted to a cryptography mailing list. It was entitled Bitcoin: A Peer-to-Peer Electronic Cash System and authored by the notoriously mysterious Satoshi Nakamoto.
Who is Satoshi?
Satoshi Nakamoto is accredited as the creator of Bitcoin, setting in motion a crypto and blockchain trend that has not only spread across the world but made its mark on a multitude of industries. Satoshi is the word’s most elusive billionaire with the mystery surrounding Nakamoto fuelling Bitcoin interest.
On his P2P Foundation profile of 2012, Nakamoto claimed to be of Japanese descent. However, this has been questioned multiple times — mainly due to his use of perfect English. And the fact that his Bitcoin software is not documented or labelled in Japanese. It is not known for sure whether Nakamoto is a man, woman or indeed a group of people collaborating together.
Genesis Block
On 3rd January 2009, Bitcoin took its next big leap. Nakamoto successfully created the Genesis Block, which was the very first block of the Bitcoin chain.
The average time between creation of new blocks is 10 minutes, but it wasn’t until six days later that a new block was added. Maybe Nakamoto was testing the network? This is likely. However, it has been suggested that he was mirroring the Genesis creation story in which God creates the world in six days.
The First Transaction
The first ever Bitcoin transaction took place on 12th January 2009 to test the network. 10 BTC were sent between Nakamoto and the late Hal Finney (is he actually Nakamoto?) who contributed considerably to the invention of Blockchain during its early days. Bitcoin quickly started to garner attention with the New Liberty Standard setting the first ever BTC exchange rate against the USD on the 5th October, 2009. At the time $1 equaled 2300.03 BTC. The important aspect here is Bitcoin’s comparison with well-established currencies.
A Pizza Purchase
Bitcoin’s initial test transaction soon led to a real-life foodie transaction. On 22nd May 2010, programmer Laszlo Hanyecz used the Bitcointalk.org forum to order two pizzas in exchange for 10,000 BTC. Student Jeremy Sturdivant accepted the offer and send Hanyecz the food order from Papa John’s. Awesome stuff! This was a real milestone for the currency proving that you could indeed use Bitcoin to buy real-world items.
Bitcoin volatility
By February 9th, 2001, Bitcoin was neck and neck with the USD at a ratio of 1:1. The world was awakening to the power of crypto and Bitcoin was lapping up the fame. It soon soared from $1 to $31.91.
Sadly, this success was short-lived due to several security breaches including a hack of Mt. Gox exchange in 2011. Four days after peaking at $31.91, Bitcoin dropped to just $10.25 in the first big correction from the crypto community. That said; Bitcoin again started to gain momentum and on 9th April 2013 it passed the $200 mark for the first time.
The Silk Road Shutdown
Bitcoin’s history has long been a turbulent one. And the closure of Silk Road, an infamous dark website saw 260,000 BTC seized. The price of Bitcoin plummeted from $139 to $109 in just a few hours but again, it managed to get out of the furnace and continued to climb to a whopping $1000 by November 2013 — with a single Bitcoin being of the same worth as an ounce of gold.
Over the next few months, Bitcoin continued to rise and fall with prices ranging from $600 to $1000.
The Notorious Mt. Gox hack
In the early days, Mt. Gox was the most notorious crypto exchange handling 70% of all Bitcoin transactions. The massive hack of 2014 was therefore terrible news for the currency. Over 850,000 Bitcoins were stolen, making the hack the biggest crypto exchange hack of its time. This triggered an abundance of lawsuits and claims by customers wanting their Bitcoins returned — to no avail. In March 2014, Mt Gox’s legal team declared $60 million worth of debts and CEO Mark Karpeles had resigned from his position. Bitcoin was in a dark place — but not for long.
Mainstream adoption
Despite the controversy, Bitcoin began to be adopted into the mainstream with big brands taking an interest. Microsoft started to accept Bitcoin payments on 11th December, 2015 and on the 31st October 2015, 6 years after the Bitcoin whitepaper was released, Bitcoin was seen on the front page of the Economist.
Bitcoin’s 2017 stardom
A massive shift in Bitcoin’s popularity and success came in 2017. The currency enjoyed its longest bull run in history reaching $10,000 on the 29th November and topping $11,000 just a few hours later. As investors jumped on the bandwagon to grab a piece of the Bitcoin pie, the price jumped further to a whopping $20,000.
Bitcoin Cash came about in August 2017 as a result of a hard fork over discrepancies regarding Bitcoin’s protocol. This was the first real divide of the crypto community with characters such as Roger Ver pushing for an increase in the blocksize. The SegWit soft fork came into play a few weeks later. Neither decisions prevented Bitcoin’s success, but in true crypto style Bitcoin was back down to $13,000 by the end of the year.
Regulations and bans
While 2017 was Bitcoin’s year, 2018 was much tougher with rumours of a crypto ban in South Korea and talks of China ramping up crypto sanctions causing serious price drops. This, combined with Facebook’s crypto and ICO ad bans, saw Bitcoin crash to $7,000. While the Commodities and Future Trading Commission and the SEC promised to provide a safer environment for Bitcoin investors, volatility was still rife and the currency plummeted further to $5,868 on the 24th June.
The SEC’s rejection of all nine Bitcoin ETFs did little to revive Bitcoin either. October 17th saw a 17-month record low, yet industry experts tried to remain upbeat stating how the currency still remained the most valuable in terms of market cap.
Bitcoin in 2019
Starting the year at a price of $4,000, Bitcoin surged past $12,000 in mid-June. Facebook’s Libra announcement stood only to drive BTC higher and surge the loyalty of true cryptocurrency fans around the world. Experts predict BTC could be worth $100,000 by 2025, do you agree? Comment below and let us know your thoughts.
