Bitcoin: A Brief History

The beginning

In October of 2008, members of a cryptography mailing list on Metzdowd received a document known as the Bitcoin Whitepaper. This document was created by the still-anonymous person or persons known as Satoshi Nakamoto, and was the beginning of a revolution. The concepts outlined in the whitepaper were fairly simple, when you really think about it. It outlined a digital cash system that operates on a peer-to-peer network with no need for an intermediary like a bank.

The protocol represented a cryptographically-secured tamper proof system that operates on a distributed ledger system. Anyone can look at the ledger and verify the transactions at any time. A transparent system that empowers its users to transaction in a truly immutable way, without the need to ask for the bank to send money for you. As you can imagine, this sort of thing resonated with so many people across the world. We should have the ability to transact in whatever way we choose.

These concepts would start to become a reality not too long after the publication of the Bitcoin Whitepaper. Just a few months after the publication, the first ever Bitcoin block was mined by Satoshi Nakamoto, and thus... The Bitcoin blockchain was born. This genesis Bitcoin block included a special message referencing the flaws of the current banking system. The first ever Bitcoins were mined, and the first block verified. For the nerds that were paying attention, that meant that we were off to the races with cryptocurrency. I was a youngster at this point, and had no idea about any of this shit so I don't have a ton of context. I can imagine how exciting it was, though.

Early versions of the Bitcoin Core software started being released, and the community that surrounded Bitcoin was extremely small. Consisting of cypherpunks, cryptography enthusiasts, and developers, the community contributed to the testing and development of the software. At this point, the only way to acquire BTC was to mine it yourself. There was no way to go and purchase BTC on an exchange, so there was no "real world value" that had been established. That would change in 2010 when the first ever BTC exchange, BitcoinMarket.com was launched, and people were able to acquire BTC with fiat currencies.

This was a major turning point that took BTC from being nothing more than "magic internet money" to an asset that could actually be used to pay for goods and services because it would have a market value. This was the milestone BTC needed to pass to get any kind of real-world attention or users. People could now acquire BTC, and use that to send cross-bored payments in seconds without the need for services like MoneyGram.

Real world use

2010 was a huge year for the magic internet money BTC, for a few reasons. The first BTC exchange launched, and the first real-world BTC transaction was completed. Cryptocurrency legend Laszlo Hanyecz traded 10,000 BTC for 2 large Papa John's pizzas in May of 2010, marking the first ever real-world used of BTC. He made a post on the Bitcoin Talk forums offering 10,000 BTC to anyone that would buy him 2 pizzas. The offer was live for almost an entire month before someone finally accepted his deal. At the time, this transaction had a value of roughly $30, or the price of 2 large Papa John's pizzas.

If you do the math, this is roughly $227 million today. Some expensive fucking pizza! At the time, it wasn't about the money. It wasn't about the value. It was about making BTC real for people. A demonstration that would change the course of BTC's history forever. There was now a market value established for BTC, although an extremely low one. Laszlo has stated that he does not regret it, and I actually believe him. He jump-started the speculation of BTC's value by making a real-world transaction.

Over the next couple years, BTC started to attract investors, speculators, and hardcore traders. In 2011, Silk Road, the most well-known online black market launched with BTC as its preferred payment method. This platform allowed users to conduct anonymous transactions using BTC, often for illegal goods or services. I won't highlight the fact that most of the transactions were for illicit things, because realistically... cash is used for illicit shit every day and no one bats an eye. Anyway - BTC was starting to be used to transact globally in a decentralized way. It was working.

Silk Road operated for years, lead by the infamous Dread Pirate Roberts (Ross Ulbricht?), and facilitated millions and millions of dollars in BTC transactions. Eventually being shut down in 2013 by the FBI, Silk road played a major role in the wide-spread use of BTC and catapulted it forward. People argued that the only thing BTC was used for was illegal transactions, but that simply was not the case. It did, however, demonstrate the power of a truly decentralized distributed ledger system. You could trust that the transaction was real, and could not be modified. You didn't have to know who the sender was, just that the transaction was valid.

Growth

In 2011, a new exchange emerged after Mt. Gox (Magic The Gathering Online eXchange) was sold to Mark Karpeles, who turned it into a Bitcoin exchange. Mt. Gox quickly became the dominant BTC exchange, handling over 70% of all BTC transactions at one point. BTC's price became insanely volatile, hitting highs of $260 and lows of $50 in 2013. People getting involved around this time were insanely lucky, especially if they held on to any of the BTC they acquired at these prices. It was apparent that Bitcoin was not going anywhere. It was here to stay.

Things we're perfect at Mt. Gox, however, because they faced numerous issues that lead to their eventual downfall. They struggled with banking partners and were hacked for thousands of BTC. At this point, I'm pretty sure they were already insolvent, just trying to stay afloat. In 2014, Mt. Gox halted BTC trading and withdrawals, blaming it on "technical issues". People were very skeptical, and it was revealed that they had lost over 500,000 BTC. These were customer funds, of course, and they literally could not fulfill withdrawal requests. It was the end of the largest BTC exchange at the time. They filed for bankruptcy shortly after, and eventually people that lost funds got some of their funds back.

Despite this being sort of a black swan event that shook the Bitcoin community... It was a good thing. It taught us a lot of things like the fact that you shouldn't hold cryptocurrency on centralized exchanges. It showed regulators that they needed to do something in regard to the way exchanges operated. As unfortunate of a hit to crypto as it was, it was absolutely necessary. Businesses were operating exchanges without the security of users in mind because they could. There were no clear regulations on operating a cryptocurrency exchange.

Bitcoin was getting some serious attention from media outlets at this point. Major companies started accepting BTC as a form of payment for their products and services. Dell, Expedia, Microsoft, and even Starbucks accepted BTC as a payment method, each for various amounts of time. This was around 2015, when I personally started experimenting with Bitcoin. Thinking back, I really can't remember the first time I heard about Bitcoin. It's weird because clearly that was a turning point in my life, but I really don't remember. I think it was on Reddit. Anyway - I was immediately hooked. I had to figure out how to get some BTC.

2016 was when the sort of blockchain revolution started. Every business wanted to have something in their name related to blockchain, because they knew their stocks would soar. Hell, even Long Island Iced Tea changed their name to Long Blockchain Corporation. They literally had nothing to do with blockchain, but number go up, right? Blockchain projects were starting to launch left and right, hoping to get some of that sweet, sweet venture capital money.

To infinity

In 2017, we saw the face-melting mega bull run that took BTC from $1000 to over $20000. There was just so much happening centered around blockchain and BTC that everyone had to get a taste. I remember friends coming to me asking me for advice and how to trade and shit... I've never been a good trader. Just the facts that people in the real world were coming to me for advice and to just talk about it was pretty damn cool. I can count on 1 hand how many people in my real life now actually know anything about cryptocurrency. Weird how that works.

The price was flying high, until it wasn't. We saw it tank due to regulations and the general war on crypto. Banks and the tax man wanted their cut. From here, we saw the emergence of various decentralized finance platforms and BTC ETFs on stock exchanges. BTC was starting to be used as collateral for loans, and people were trading BTC on exchanges without ever touching it. After years of down, we finally saw some up. It took BTC all the way to $69000 at the peak of this bull market.

Today, BTC remains the most widely known cryptocurrency. The OG. It's considered one of the most safe, if not the safest, cryptocurrencies to hold your value in. Will that change? I doubt it. I think we will one day see $100000 BTC. Maybe even $1000000.

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