Satoshi’s Dream Realized: The History of Bitcoin
How Bitcoin originated didn’t start with a radioactive coin bite, a laboratory technician being exposed to trading radiation, or a meteor with extraterrestrial currency crashing on Earth. Instead, it begins with a dream—one about a genuinely electronic peer-to-peer cash system.
It’s safe to assume that Bitcoin has dominated the cryptocurrency market since the very beginning, acting as a catalyst that has sprung thousands of successors. But where did the history of Bitcoin begin? How did this seemingly magical digital asset make its way into our daily lives? Who was behind it?
Every prominent superhero has an equally compelling origin story. Today, we’ll go back in time to explore the birth of our favorite “supercurrency,” Bitcoin.
Once upon a time…
Anyone well-versed in the crypto world knows that Bitcoin, the “first” cryptocurrency, was created in January 2009. However, not many people know that to truly understand how Bitcoin started, we have to go back even further.
The pre-Bitcoin world
Let’s set the scene: it’s 1982 and privacy in making payments via the Internet isn’t at its peak—to say the least—and it concerns you. How are you supposed to make safe and secure payments now?
David Chaum, a computer scientist, felt the same way. He published a paper titled Blind Signatures for Untraceable Payments—a clear indicator that he wasn’t too hot on payment privacy on the Internet either. So what did he do? He proposed the concept for eCash, specifically, DigiCash.
Just like Bitcoin, DigiCash was designed to be a safe and secure online currency. Unfortunately, things didn’t go too well with him—DigiCash ended up going bankrupt in the late 90s. However, this opened the floodgates for people like Adam Back, the inventor of Hashcash—a proof-of-work model that would eventually be the basis for Bitcoin’s system.
Let’s move on to the 90s, which saw the emergence of two attempts at creating a cryptocurrency: B-Money by Wei Dai and Bit Gold by Nick Szabo. Both were formulated, but unfortunately, they were never fully developed—so we can’t definitively give either of them the title of “the first cryptocurrency.”
Then comes August 2008. Quietly, bitcoin.org was registered online. Two months later, the paper was released. Bitcoin: A Peer-to-Peer Electronic Cash System was passed around on a cryptography mailing list, authorized by a name that we will eventually know as Satoshi Nakamoto.
The Bitcoin era
If bitcoin.org was registered in 2008, when was Bitcoin created? On January 3, 2009, a code began to spell out the birth of Bitcoin. A few days later, the first-ever Block—the Genesis Block—was mined.
By January 9, the Bitcoin software’s first iteration became available to the public and Bitcoin mining began. On the 12th, 10 BTC was sent from Satoshi Nakamoto to Hal Finney, a noted computer programmer and developer—the exchange that became known to be the first-ever Bitcoin transaction.
In October that year, Bitcoin received its first dollar value from the NewLibertyStandard, an influential forum user. Back then, 1 USD was worth 1,309.03 BTC—a number based on how much electricity the average computer would use to mine a single Bitcoin.
In 2010, Bitcoin got its first exchanges: Bitcoinmarket in February and Mt. Gox in July. Bitcoinmarket was the first platform that would treat BTC as a commodity, effectively creating the market we now know today.
Shortly after, the first-ever BTC purchase was made, and we’re pretty sure you know this story. Someone decided to sell two pizzas for 10,000 BTC. At the time, the approximate value of the two pizzas was at 25 USD. May 22, 2010, from that day onwards, came to be known as Bitcoin Pizza Day. 10,000 BTC, at the time of writing, is worth 113,740,000 USD… yikes.
Soon after the saddest trade in BTC history was processed, Bitcoin’s value crossed the penny (0.01 USD) threshold and the market cap surpassed 1 million USD in November.
In February 2011, Bitcoin hit its next milestone: 1 BTC = 1 USD. Our favorite digital asset started getting more press, both good and bad. Let’s start with the bad. Unfortunately, Silk Road, the digital black market primarily used for buying and selling drugs, was discovered.
Mt. Gox also suffered a severe security breach that compromised thousands of their accounts and the BTC attached. The good news is that Bitcoin got its very first magazine feature from TIME Magazine… err… maybe we should have started with the good news first.
Anyway, another big event that happened in 2011 was Satoshi Nakamoto stepping down from the Bitcoin project. One of the Bitcoin Core’s developers, Mike Hearn, received an email one fateful day with Satoshi Nakamoto saying that the creator of Bitcoin has “moved on to other things” and felt that Bitcoin’s future was left “in good hands.”
When Satoshi “retired,” there were a few notable things left behind: the premise of the workings of Bitcoin, a collection of notes and writings, and possibly the most influential cryptocurrency ever.
2012 – 2013
In 2012, Bitcoin reached the 100 USD mark for the first time. It was also the year that the first Bitcoin Halving occurred—the event in which block rewards for miners are cut in half to prevent inflation within the cryptocurrency’s system.
In 2013, Bitcoin crossed the 1,000 USD mark for the first time.
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In 2014, we said our goodbyes to one of the first Bitcoin exchanges to pop up on the scene: Mt. Gox. They filed for bankruptcy and shut down in April of that year due to another hack that compromised their platform.
To this day, there are still ongoing lawsuits and even proposals to revive the once-popular Bitcoin exchange.
2015 saw a flurry of price spikes and drops, reaching neither its peak nor its lowest point.
In 2016, the second Bitcoin Halving happened, halving the miner’s reward to 12.5 BTC. At this time, Bitcoin also tried to claw its way up to the top as its price reflected a shadow of what it once was.
2017 turned out to be one of Bitcoin’s busiest years. While 2016 saw Bitcoin trying to recover, 2017 became a prosperous year for our favorite digital asset. First, it reached the 1,000 USD mark again—something it hasn’t done since 2013. This time, it didn’t stop there. By October, the value topped 6,000 USD and ended November with a bang by reaching the 10,000 USD mark for the first time.
Due to the Bitcoin bull run, investors started to feel the FOMO eating their insides. By the end of December, Bitcoin would be just a couple hundred dollars away from 20,000 USD—effectively sealing BTC’s all-time high. Unfortunately, that’s where it stopped.
2018 was a heartbreaking year for a lot of holders. Many of them expected BTC’s price to keep rising and found themselves on the short end of the deal. Many sold while they still could, but most suffered a loss from buying BTC at its highest price.
It was a rocky start for Bitcoin’s 2019 run, starting the year at around 3,700 USD. However, eyes began to turn as it rose to 12,000 USD in July—the year’s peak. But with the fears of past failures in mind, people were cautious, and rightfully so—the price dropped back to around 8,000 USD later on that year.
We are now more than halfway through the rollercoaster that is 2020 and Bitcoin is still as unpredictable as ever. The year started strong, with the price rising from around 7,000 to 10,000 USD in February. However, in March, we would see the price drop back to the 5,000 USD range.
This past May, we saw another Bitcoin halving. The following month, we saw its value rise once again to around 10,000 USD.
At the time of writing, the price is sitting steadily in the 11,000-12,000 USD range.
Who is behind Bitcoin?
To this day, no one knows who Satoshi Nakamoto really is. It’s a pseudonym that remains a mystery. Some believe Nakamoto is male, some believe female, and others even as robots or groups of people. However, this unsolved mystery only raises more questions than answers. People have pointed to several suspects that could be “the one.”
Let’s quickly go over some of the prime suspects:
- Nick Szabo – Szabo is the founder of Bit Gold who had ideas that were very similar to those of Satoshi Nakamoto.
- Hal Finney – Finney is one of Bitcoin’s earliest supporters. He was also a noted developer and another player that was part of Bitcoin’s first transaction.
- Gavin Anderson – Anderson is the software developer that took over once Nakamoto stepped down from the project. Some even say that his handwriting closely matches Nakamoto’s.
- Dorian Nakamoto – How can we not include Dorian Nakamoto, right? Some sources even say that he was even named “Satoshi Nakamoto” at birth. His work in engineering and his very private life made him one of the top suspects. Despite him denying the claims and Satoshi Nakamoto even resurfacing to say “I am not Dorian Nakamoto,” who knows? It could all be a cover-up.
At this point, we may never know the true identity of Satoshi Nakamoto. For now, we’ll just have to cherish the wonderful gift Nakamoto left for us and try not to go crazy thinking about the identity behind the inventor.
Throughout Bitcoin’s history, the regulations imposed on it have been hazy, to say the least. This is because the laws and regulations on Bitcoin will differ vastly depending on the country and its jurisdictions.
In most cases, KYC (know your customer) and AML (anti-money laundering) rules will apply to exchanges and traders moving large amounts. As we move along Bitcoin’s evolution, we might see governments start to ease up on seeing BTC’s use as a criminal activity—but then again, we’ll have to wait and see.
The future of Bitcoin
The power and likeability of each superhero heavily rely on their origin stories—Bitcoin is no different. Now you know what’ll go on issue #1 of the Bitcoin comics, but what’s the storyline moving forward?
As the years have passed, we have noticed that more and more people are adopting the use of Bitcoin in their daily lives. This time, it’s not only for investing purposes. They’re starting to see it as a new and unique form of way to pay. It solves a problem for the unbanked and underbanked people by providing a financial passport—something that will allow them to transact in a way they never have before.
As for what will happen in the future of Bitcoin—if it becomes widely adopted or if it disappears into the void once its supply of 21 million runs out—we’ll just have to wait and see. Right now, it feels like we’re in a good place, so let’s take it as it is, enjoy it while it lasts, and make the most of it.
Thank you, Satoshi Nakamoto—whoever and wherever you may be.