The formation of the world’s most popular cryptocurrency, Bitcoin, actually predates well before entering the public domain just after the dawn of 2009. When it finally launched, it was a very novel and mystical idea known by very few. There are momentous milestones along the years that Bitcoin exceeded the more it became mainstream.
While Bitcoin is officially the oldest cryptocurrency in existence, the idea, however, dates back only a few decades before the launch. Though these ideas never came to fruition, only existing as paper on words, its supporters were cypherpunks. These geniuses have close links to cryptic-related fields and privacy-enhancing tech, most notably cryptography.
Their main objectives are using encryption to ensure privacy against governments. We can consider Bitcoin and other cryptocurrencies as one of the world’s greatest inventions simply because people, instead of governments, govern them. Several different people had similar ideas of a cryptocurrency or digital money before Bitcoin.
One prominent name consistently linked to the early days of this phenomenon is a Chinese computer engineer named Wei Dai, who analysts favorably credit as the spark of cryptocurrencies back in 1998. In that year, they proposed the concept of B-money in a publication outlining the basic principles of a cryptocurrency system:
“…a scheme for a group of untraceable digital pseudonyms to pay each other with money and to enforce contracts amongst themselves without outside help.”
Almost as a coincidence, in the very same year of 1998, an American computer scientist by the name of Nick Szabo had proposed plans for his own digital currency called “bit gold.”
Another associated notable name to Bitcoin is the late American computer scientist and software developer, Hal Finney. The Bitcoin community notes him as the first receiver of numerous Bitcoins from the founder of Bitcoin, which segues into one of the great mysteries of the coin.
2008-2009 (formation years)
The world knows the founder of Bitcoin by the pseudonym, Satoshi Nakamoto. Interesting theories exist on who Satoshi could be. However, no one has definitively been confirmed as Satoshi, let alone whether Satoshi is one person or perhaps a group. Through various iterations over the years, 18 August 2008 marked arguably the first day just the mention of the word, Bitcoin, made its way onto the web.
The domain, bitcoin.org, was created. Approximately two months later, on 31 October 2008, Satoshi created the whitepaper, Bitcoin A Peer-to-Peer Electronic Cash System, outlining the missions of the currency, which they posted to a cryptography mailing list. They released the open-source software of Bitcoin on 03 January 2009.
This highly noteable date marked the first block of Bitcoin’s blockchain, aptly named the genesis block. Due to the obscurity of Bitcoin, the only way that you could own the coin was through computer mining, which was significantly simpler back then. According to the whitepaper, mining each block came with a reward of 50 Bitcoins.
Key milestones from 2010 until present
- Though not a proper exchange then, bitcoinmarket.com is recognized as the first Bitcoin exchange launched on 17 March 2010. Later on, the site morphed into the now-defunct Mt. Gox, which handled close to three-quarters of worldwide Bitcoin transactions up until 2014. The first reported commercial transaction with Bitcoin was done by a programmer named Laszlo Hanyecz, in 2010 who ordered two Papa John’s pizzas for 10,000 BTC (roughly around $25 then).
Another milestone in 2010 is that Satoshi was said to have vanished, but not without giving the lead on Bitcoin to a software developer named Gavin Anderson. Anderson later became the foremost Bitcoin developer with the formation of the non-profit organization, Bitcoin Foundation, in 2012. In the same year, the mining rewards were cut in half from 50 to 25 BTC.
- The first mainstream usage of Bitcoin occurred from 2011 in black markets. At this juncture, the price of Bitcoin was $0.30, fluctuating between that and just under $5.
- In 2012, the Bitcoin Foundation came to be to spearhead its development and societal acceptance. At this year, the highest price for a Bitcoin was just under $13.
- 2013 marks arguably the year that Bitcoin became noticeably more valuable and popular with different bodies, countries, and organizations. Despite some technical issues with Bitcoin’s software that irregularly fluctuated its value, by 01 January 2014, the price of Bitcoin was $770, an astounding jump from roughly $13.00 a year prior.
The few following years followed similar patterns of upgrades to the software and price surges to the currency. While more organizations came into being and public acceptance grew, there were opposing forces from the likes of the Chinese government. More cryptocurrencies burst onto the scene. Sometime in 2016, Bitcoin went through its second halving, halving mining rewards from 25 to 12.5 BTC.
- 2017 is probably the most significant year for Bitcoin. A spin-off coin based on its blockchain called Bitcoin Cash was created on 1 August 2017 to raise the block size in the Bitcoin network. The event we can most remember was the unprecedented value increase from $998 at the beginning of the year to $19 783 on 17 December 2017.
At this time, Bitcoin became one of the best-performing assets in recent history, increasing market interest ten-fold. Furthermore, the rise sparked the birth of hundreds more cryptocurrencies and its fair share of eager supporters and detractors. Immediately after the end of 2017, bitcoin and many other coins lost significant value for the entirety of 2018, leaving many to consider this a crash. Though there’s no particular reason for this massive drop, from 2019, things seemed to have gone back to normal for Bitcoin and its counterparts.
The future of Bitcoin and cryptocurrencies
Many arguments continue whether cryptocurrencies like Bitcoin can hold their own as real currencies or whether they are a speculative bubble or fad. Looking at recent history, this instrument has undoubtedly proven itself to be the former, with countless coins coming into existence every day.
As with any volatile instrument, prices can erratically shift. Nonetheless, it’s unlikely that prominent cryptocurrencies will experience a sustained crash. Many well-established merchants have been accepting Bitcoin and other coins as payment methods for years, and we can only expect that more will jump on the bandwagon.
The overarching concern about cryptocurrencies would have to be regulation. Currently, these markets are mostly decentralized, though we cannot tell the future where governments may start implementing regulatory control. In a similar vein to Ethereum, we hope that Bitcoin can be more than just a medium of exchange. With the power of blockchain, we shouldn’t be surprised if we’ve only scratched the surface of what this wonderful invention can do for us in the future.