Revisiting the history of bitcoin

What is the History of Bitcoin?

The birth of Bitcoin is steeped in money, politics, and centralized governance over cash. After the economic crash in 2008, an anonymous entity known as Satoshi Nakamoto decided to disrupt the centralization of money.

Satoshi Nakamoto believed that the financial system must be transparent and within the public’s reach. Humans have relied on a payment system to buy goods and services throughout history. People initially used the bartering system to exchange goods like livestock for grains. Nonetheless, we needed to have a consistent system of establishing worth.

Consequently, Gold was used as an intermediary and a medium of trade to reduce the inconvenience of bartering. Sadly, precious metals have a limited supply due to their difficulty in production. As a result, government-issued fiat currencies like the US dollar and the Euro eventually took the role of gold and silver.

Fiat, however, has problems like debasement and inflation since it is simple to produce large amounts of paper money. Throughout the evolution of payments, there has been one recurring theme: People choose payments that are quick and simple to complete.

As a result, some economists and historians believe that the birth of cryptocurrency is more significant than the invention of gold. As Bill Gates said, “Bitcoin is a technological tour de force.” When it debuted in 2008, Bitcoin sparked a revolution in cryptocurrencies. But it was made possible by many earlier predecessors and innovations.

The beginning of the internet is actually connected to the origin of cryptocurrencies. After all, cryptocurrencies could not operate without a worldwide network of interconnected computer systems.

You might find it interesting that several people believe that David Chaum was the first cryptocurrency pioneer. He first proposed the concept of an untraceable digital currency in a research paper he published in 1983 while a graduate student at Berkeley.

Because he developed many cryptographic protocols that formed the foundation for cryptocurrencies, Chaum is frequently referred to as “the Godfather of Anonymous Communication.”

In the internet age, he claimed that privacy was essential for an open society, but that it could not be relied upon to be provided by government corporations or other faceless organizations. Hence, developing and promoting efficient cryptography and privacy tools was vital.

Years later, David’s ideology would play a role in the development of Bitcoin. Unfortunately, his concepts were much ahead of their time and needed help catching on. When David’s company, DigiCash, which he started in 1989 to fulfill his dream, declared bankruptcy, he gave up on the attempt.

At first in the late 1980s, people were hesitant to conduct business online, and technical problems and legal uncertainties discouraged banks and merchants. As online stores started to display products on the World Wide Web and accept credit cards in the early 1990s, the first e-commerce transaction occurred.

The dot-com boom started in the middle of the 1990s, bringing the first functional digital currencies. E-gold, a company created in 1996 and backed by gold, was one of the first. When PayPal was launched in 1998 by Elon Musk, Peter Thiel, and others, it represented a significant breakthrough.

This global online payment system enables online money transfers. It is a digital replacement for traditional paper payment methods like checks and money orders.

Despite increased competition from Google Wallets, Apple Pay, and other services, Paypal is still a well-liked and effective method of sending money online to this day. Even after these innovations, it would still be another decade before the concept of cryptocurrencies was established.

Although Bitcoin was not the first cryptocurrency to be proposed, it is noteworthy since it was the first to function. Equally important is the ground-breaking record-keeping technology it popularized: blockchain.

Thus, Bitcoin’s history begins on Halloween in the year 2008. Satoshi Nakamoto released his whitepaper on October 31, 2008, outlining his ideas for his new kind of cryptocurrency. This document, which was only eight pages long and is freely available online, launched the entire cryptocurrency and blockchain fever.

Bitcoin was launched during the 2008 global financial crisis, which is probably not a coincidence. As a result of the public’s growing mistrust of the government and large banks in managing their finances, new approaches to solving problems were made possible.

Due to that, Nakamoto provided a cutting-edge approach to changing lengthy financial processes. Money might be transferred instantly, anonymously, without middlemen costs, and without governmental control using Bitcoin. You might find it interesting to know that the identity of Satoshi Nakamoto remains a mystery until today.

Adding to that mystery, Nakamoto has still not accessed his Bitcoin wallet containing over one million Bitcoins. Before vanishing, Satoshi chose Gavin Andersen, a programmer who worked on the first version of Bitcoin, as his successor. In an email, Nakamoto‘s final words were as follows: “I’ve moved on to other things. [Bitcoin is] in good hands with Gavin and everyone.”

Today, in honor of Nakamoto, the smallest amount of Bitcoin that can be transferred is referred to as a Satoshi. Bitcoin came to life on January 3, 2009, the date of the so-called Genesis Block. At that moment, cryptocurrency became more than just an idea.

Now that Nakamoto’s vision had come true, it would take some time for the technology to be developed into a reliable, anonymous, decentralized payment system. Bitcoin didn’t have any monetary value at first. Meanwhile, programmers could download the computer software for free from the internet and earn bitcoins through a process called mining or Proof-of-Work.

On May 22, 2010, a significant event in Bitcoin’s history occurred. It was the first time a person used Bitcoin to buy something, and that “something” was a pizza. May 22 is frequently referred to as “Bitcoin Pizza Day” and is an important day in the history of cryptocurrencies, showing that Bitcoin could actually be used as a means of payment.

Soon after that, Bitcoin miners began realizing they could make money off their bitcoins and started selling their bitcoins on exchanges such as Mt. Gox, CEX.IO (commenced operations in 2013) and Tradehill. Over five days beginning on July 12th of 2009, the market value of Bitcoin increased 10 times from less than a penny to 8 cents.

By November 2010, Bitcoin’s market cap reached $1 million, and Bitcoin’s price reached 50 cents per coin. The first mobile transaction occurred in December 2010. The data has been available in the form of a chart on Bitstamp Exchange TradingView since August 2011.

After a while, when the Silk Road website was launched in January 2011, Bitcoin’s usage for online purchases took off. Due to its anonymity, Bitcoin was accepted on the internet black market, Silk Road, to buy drugs and other illicit materials. As a result, Bitcoin was able to take off because it now had a practical application.

According to the digital rights organization, Electronic Frontier Foundation, a censorship-resistant digital currency is a cryptocurrency that may be exchanged anonymously from one person to another.

Additionally, WikiLeaks started taking Bitcoin because the US government forced traditional payment processors like Visa and MasterCard to ban donations. Bitcoin was soon being used to finance a variety of secret transactions. Bitcoin sold for one dollar per unit in February 2011, achieving parity with the US dollar.

In the beginning of February 2014, one of the biggest Bitcoin exchanges, Japan-based Mt. Gox, suspended withdrawals, claiming technical difficulties. After reporting that 744,000 Bitcoins had been stolen, Mt. Gox filed for bankruptcy by the end of the month.

Needless to say, the popularity of Mt. Gox had already decreased months before the filing due to users having trouble withdrawing money. After that, Bitcoin had a bumpy road with its ups and downs.

In 2017, Bitcoin almost touched the $20,000 price, crumbling to around $6,800. The fall in price was catastrophic for many Bitcoin holders, and they sold everything and left the cryptocurrency market.

On the other hand, some other people hearing about that peak in price were fascinated by it and jumped into the cryptocurrency market. In December 2020, when I started my cryptocurrency journey, Bitcoin crossed its previous highest price of $19,800.

The hype around it continued for almost a year until it reached an all-time high price of $69,000 in 2021. During this time, I invested $30,000 and made $120,000. Later, the market went bearish, and the price fell. As of this date, the price is around $24,400.

Bitcoin is currently consolidated, moving in a stable price range. Some analysts believe 2023 will be the beginning of the bullish cycle, while others disagree and think the bearish cycle will continue for another year.

If you are interested in knowing more about the king of cryptocurrency, I recommend that you read my Bitcoin Roadmap article. Trade bitcoin via CFD with a broker like BDSwiss, or via a crypto exchange like Binance.