According to Google Trends, interest in Bitcoin has been spreading across the world since 2009. In this post, we will be looking at Bitcoin’s history and giving you the lowdown on everything you need to know.
What is Bitcoin
Bitcoin is regarded as the first established cryptocurrency in the world. However, it should be noted that many attempts at electronic cash had already been made, going right back to computer scientist David Chaum’s “Digicash” developed in the 1980s.
Who created Bitcoin?
The creator of Bitcoin is an anonymous person or possibly a group of people, known as Satoshi Nakamoto.
Why was Bitcoin created?
To truly understand what Bitcoin is and the value it can bring to our world, it is very important to know why it was created in the first place.
Some say Bitcoin was created in response to the global financial crisis in 2008 to put power back in the hands of individuals who suffered from the greed of large banks and central authorities which held all control.
In Bitcoin’s whitepaper – an academic document with details about Bitcoin – Satoshi Nakamoto states that the goal of Bitcoin is to create a new “peer-to-peer electronic cash system” that is completely decentralized with no central authority.
Bitcoin was created so that people could transfer and store money in a secure way. It is essentially a payment and banking system with enhanced privacy.
With bitcoin, nobody can:
- manipulate the money supply through inflation
- track the use of money
- have monopolies on financial services
- confiscate money from people at will
Bitcoin uses a shared common ledger which can’t be manipulated by dishonest people. Transactions in the ledger can’t ever be falsified or changed.
But, although Bitcoin was first conceived as a peer-to-peer electronic cash system, it’s become much more than that — it’s now also a popular investment and store of value, like gold. This is especially true in areas with high economic volatility
The important milestones in Bitcoin’s history
August 18, 2008, the domain name “bitcoin.com” was registered.
A few weeks later, on October 31, 2008, the world as we know it would be changed forever.
On that day, a link to a paper with the title Bitcoin: A Peer-to-Peer Electronic Cash System, was uploaded to a cryptography mailing list.
The bitcoin network was created on January 3, 2009, when the first block of the chain was mined. This was called the genesis block. Embedded in the coinbase of that block was a text alluding to a British news headline from that day referring to bank bailouts.
On January 12, the first Bitcoin transaction was made when Satoshi sent 10 BTC to crypto-activist Hal Finney.
And in October, the first exchange rate was established: 1 USD is worth 1,392.33 BTC, according to the New Liberty Standard.
In May 2010 the first Bitcoin purchase was made. Florida-based programmer Laszlo Hanyecz sent 10,000 BTC to a London man in exchange for two pizzas, valued at a total of $25. This still valued a single Bitcoin as a fraction of a penny, but with a purchase made, intrigued parties saw potential in the product. A couple of months later, Bitcoin's value finally broke the penny threshold.
The first Bitcoin exchanges popped up in 2010. Bitcoin Market in February and Mt. Gox in July. Slush, the first mining pool, also mined Bitcoin successfully for the first time that year. Mining pools are where several miners combine resources to get Bitcoin. By November, the market cap for Bitcoin surpassed $1 million for the first time.
Not that it was all ups for Bitcoin. Someone spotted a vulnerability in Bitcoin's protocol in October that allowed for transactions without proper verification and exploited it, generating 184 billion BTC. The transaction was soon erased, and the vulnerability fixed.
In February 2011 a major milestone occurred: 1 Bitcoin was worth $1 for the first time.
TIME Magazine published an article on Bitcoin for the first time, but the same year there was also an article on Gawker detailing Silk Road, the dark web drug market where Bitcoin was frequently used as payment. The publicity got people talking, and by June, Bitcoin was worth over $30. Soon after, it crashed back down to about $10.
Also, in June, Mt. Gox dealt with a serious security breach that compromised tens of thousands of accounts and their Bitcoins. It would not be the first security issue Mt. Gox would deal with.
Still, Bitcoin was becoming an entity that more and more of the public knew about and interest in the cryptocurrency grew. This led to a rise in altcoins, other forms of cryptocurrency whose developers were either trying to improve upon Bitcoin or had created the digital coin for a different purpose. 2011 was the year Litecoin debuted.
Bitcoin was on its way to becoming the world's top digital coin, crossing the $100 threshold in April.
In September, The Bitcoin Foundation was formed to standardize the technology.
Bitcoin's price saw its share of ups and downs in 2013, but it passed a value of $1,000 for the first time and was becoming the most recognizable and successful wallet and exchange available. Cypriots sought financial refuge in Bitcoin and the Darknet’s use of Bitcoin was also exposed and confronted.
In January 2014 Bitcoin fell below $1,000 and struggled below the key level for a few years. During this period, Crypto exchange Mt. Gox went bankrupt and shut down. Bitcoin rose and fell somewhat, while failing to reach its high. Bitcoin also gets front page coverage from the Economist, featured as “the Trust Machine”
This was Bitcoin’s biggest and busiest year when Japan became the first nation to formally recognise Bitcoin as legal tender.
After spending 2016 desperately trying to claw its way back up, 2017 was when it finally reached and passed the $1,000 mark. It kept ascending. By June 2017, Bitcoin was worth over $3,000.
Even so, some Bitcoin users were frustrated with the network. The rising number of Bitcoin miners meant higher fees and more time spent processing transactions, leading some to want an increase in block size. In August 2017, this led to Bitcoin Cash (BCH) being created via a fork in the network.
Still, for the remainder of 2017 Bitcoin was on an upswing. By October, it was topping $6,000. It ended November at nearly $10,000, and by the end of December Bitcoin hit a peak of $19,783. More and more people and companies began chasing the trend as the price just kept rising. Unsurprisingly, it wouldn't continue that heady growth.
2018 was a tough year for Bitcoin users, especially ones who held on assuming the price would keep ascending. Many sold their Bitcoins while they could, and the price steadily dropped all year.
As of September 2019, there were 5,457 Bitcoin ATMs worldwide. In August of that year, the countries with highest number of Bitcoin ATMs were the United States, Canada, the United Kingdom, Austria, and Spain.
On October 31, bitcoin’s 11th anniversary, the world’s first cryptocurrency reached a major milestone – $1 billion in cumulative transaction fees.
The Bitcoin network has surpassed 500 million transactions since going live over 11 years ago.
It has also been predicted by a German bank that the Bitcoin price will increase exponentially before landing on the $90,000 mark in 2020.
The future of Bitcoin
Few transformative technologies have captured the public’s interest — and imagination — as quickly as Bitcoin.
Hal Finney, the computer developer who was the recipient of the world’s first Bitcoin transaction, said: “the computer can be used as a tool to liberate and protect people, rather than to control them.” Bitcoin is the world’s first global currency that harnesses the power of computers — and humankind’s innate need to innovate — to enable worldwide economic freedom.
We’re looking forward to seeing what the future has in store!