12 years have passed since the Bitcoin whitepaper was published by Satoshi Nakamoto on October 31, 2008. In this time,
Today, Bitcoin is regularly being discussed in mainstream media, the adoption of it is increasing, and even some of the more conservative institutional investors are starting to open up to the new technology. In terms of valuation, Bitcoin grew from being worth next to nothing to a price of almost $14,500 per coin at the time of writing. Its market is open 24/7, has a $260 billion capitalization, and features high daily trading volumes. While 12 years might seem like a lot of time, Bitcoin is still considered one of the fastest growing assets ever.
This article is a summary of some of the key events that shaped Bitcoin and the cryptocurrency industry during Bitcoin’s 12-year history. Being familiar with the history will allow you to better understand the bigger picture of where Bitcoin stands today and where it might be headed in the future.
October 31, 2008 - Satoshi Nakamoto publishes the Bitcoin whitepaper
On October 31, 2008, an anonymous author using the pseudonym Satoshi Nakamoto published a whitepaper in which they described a peer-to-peer non-custodial online payments system called Bitcoin. The system also included a digital asset carrying the same name, was often referred to as "internet money”, and became the first asset to be called a “cryptocurrency”.
Although several others have tried to create a similar trustless digital monetary environment before Satoshi, they failed to sufficiently solve the issue of double spending without relying on a trusted intermediary. Nakamoto, however, solved this issue by introducing a chain of hash-based proof-of-work ledger entries, which guarantee ownership of the coins and prevent transaction reversals.
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This distributed ledger system became known as blockchain and the concept is used today also in applications that don’t involve cryptocurrency. Theoretically, the only way to perform double spends or alter the history of transactions would be if the malicious actor gained control over more than 50% of the network’s total computing power. Such attacks became known as 51% attacks, but luckily never took place on the Bitcoin blockchain.
January 3, 2009 – the Bitcoin Genesis Block is mined
Satoshi Nakamoto released the version 0.1 of the Bitcoin software in early 2009. The first Bitcoin block, also called the Genesis Block, was mined on January 3, 2009. The Bitcointalk.org forum played a very important role in Bitcoin’s development as it served as an important source of information and feedback in the first few years.
The pseudonymous creator Satoshi Nakamoto was also active on the forum, making a total of 575 posts before disappearing into the unknown. Cryptography enthusiasts and computer scientists Hal Finney, Gavin Andresen, Nick Szabo, Wei Dai, Mike Hearn were also among the super-early Bitcoin adopters and contributors.
May 22, 2010 – Bitcoin Pizza Day or 10,000 BTC for two pizzas
In the first year, Bitcoin was sporadically used as a means of payment, but there was no accepted exchange rate, so the actual buying power of BTC could vary a lot. A famous Bitcointalk post created by Laszlo Hanyecz provides us with insight into just how low the value of Bitcoin was back then. On May 22, 2010, which is now celebrated as the Bitcoin Pizza Day, Laszlo paid 10,000 BTC to a forum user that arranged the delivery of two pizzas to his home. While the pizzas look tasty on the pictures, they would make one very expensive meal at today’s prices, as they would together cost more than $140 million or $70 million per pizza. This transaction made its path into the history as it is the first documented purchase of a good with Bitcoin.
April 23, 2011 – Satoshi Nakamoto steps away from the Bitcoin project
To this day, the identity of Satoshi Nakamoto remains unknown. What is more, we are not even sure if Satoshi Nakamoto was one person or represented a group of developers. Satoshi last known activity dates to April 23, 2011, when he replied to an e-mail from a Bitcoin developer Mike Hearn:
[Mike Hearn] I had a few other things on my mind (as always). One is, are you planning on re-joining the community at some point (e.g. for code reviews), or is your plan to permanently step back from the limelight?
[Satoshi Nakamoto] I've moved on to other things. It's in good hands with Gavin and everyone.
Even though Satoshi is no longer involved in Bitcoin development, the BTC markets still shake every time coins mined in the "Satoshi Era" are on the move. The anonymous creator is estimated to have mined more than 1 million BTC.
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October 2, 2013 – Silk Road shutdown
Bitcoin was a digital currency that facilitated secure cross-border transactions on a 24/7 basis. In addition to that, it was also anonymous, allowing anyone to make a transaction without having to submit their personal information, let alone pass a know your customer (KYC) procedure. As such, Bitcoin turned out to be a suitable value transfer medium for criminals that were operating online.
Silk Road, a specialized marketplace for illegal goods and services was set up on the dark web in February 2011. Silk Road implemented Bitcoin as the payment method between sellers and buyers. So, the first widespread use case of Bitcoin was not very reputable, to say the least. Silk Road came to an end in October of 2013 when the FBI shut down the platform and seized 26,000 BTC, worth approximately $3.6 million at the time, from the accounts of its users.
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February 28, 2014 – Mt.Gox exchange crumbles under the weight of hacker attacks
Quite early on, the need for a place where people could trade Bitcoin versus USD and other fiat currencies became obvious. Jed McCaleb saw the opportunity and launched Mt.Gox in 2010, which soon became the first Bitcoin exchange to achieve widespread popularity. He later decided to sell the site to Mark Karpelès in March of 2011.
While Mt.Gox offered a relatively easy way to acquire some cryptocurrency, the space was also filled with speculators who tried to profit from the changes in the price and/or hoped for future appreciation of the coin. At one point, the Mt.Gox exchange was processing 70% of all Bitcoin trades worldwide. With Bitcoin’s appreciation and high publicity, Mt.Gox became a lucrative target for hackers.
In a series of security breaches, the attackers drained over 850,000 BTC from the exchange’s hot and cold wallets, which led to Mt.Gox’s collapse. The exchange was first forced to halt withdrawals in the beginning of February 2014, but it all came down to filing for bankruptcy in a matter of several days.
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The collapse of Mt. Gox caused the Bitcoin market to turn bearish. The price, which had previously climbed above $1,000 in early December 2013 fell to a low of around $200 in January 2015. By this time, several other reputable Bitcoin exchanges, such as Coinbase, Bitstamp, Bitfinex, and Poloniex already emerged and took up Mt.Gox’s market share. Despite having many other alternatives, investors were likely extremely cautious having heard of the Mt.Gox disaster. Also due to this, it took Bitcoin over three years to reach a price of over $1,000 again (January 2017).
August 1, 2017 – dispute over block size culminates in the first major Bitcoin fork
2017 was the year of Bitcoin’s fastest growth in terms of price. Nevertheless, the year was also marked by a major dispute regarding the block size among Bitcoin developers. A certain group of developers argued that to ensure scalability of the system, Bitcoin’s block size should be increased to over 1 MB. While this would really allow for a higher transaction output, it would also make the blockchain size a lot larger over time.
Developers arguing for keeping the blocks smaller eventually "won", but the side which wanted larger blocks pushed for a hard fork of the Bitcoin blockchain. The hard fork eventually took place on August 1, 2017. This is how
December 17, 2017 – 2017 bull run peaks with BTC price hitting nearly $20,000
The second half of 2017 produced unprecedented growth in the Bitcoin market. To be fair, the whole cryptocurrency sector experienced fast growth in 2017, with the revolutionary smart-contract enabled
The unbelievable bull market of 2017 gained additional traction during the festive December, which caused the price of Bitcoin to rally up to its all-time high of $19,783, with the price temporarily surging even past the $20,000 mark on some exchanges. However, such a high price was only maintained for a short while, as the bubble popped at the beginning of 2018. The bearish trend caused the Bitcoin markets to find a bottom at around $3,200 in November 2018, once again illustrating just how volatile cryptocurrency markets can be.
Bitcoin price milestones
While Bitcoin market surely is very unpredictable and volatile, the big picture is relatively clear. The overview of Bitcoin’s key price milestones below clearly illustrates where the long-term trendline points to.
Bitcoin price at the time of writing: $14,500
- Bitcoin surpasses $1 for the first time: April 2011
- Bitcoin surpasses $10 for the first time: August 2012
- Bitcoin surpasses $100 for the first time: April 2013
- Bitcoin surpasses $1,000 for the first time: December 2013
- Bitcoin surpasses $10,000 for the first time: November 2017
- Bitcoin surpasses $100,000: ??? (See Top Bitcoin Price Predictions)
2020 – the year of institutional interest in Bitcoin
As of today, Bitcoin price has been above $10,000 for over 100 days, and Bitcoin is up by almost 100% year-to-date. The current bull run seems to be largely fueled by institutional interest.
Publicly-traded companies such as MicroStrategy and Square have invested millions of dollars into Bitcoin, and institutional-grade crypto asset management company Grayscale has been reporting record inflows for three quarters in a row now. In addition, the cryptocurrency space is also becoming much more mature, with Bitcoin futures contracts and other advanced products gaining significant traction this year.
The COVID-19 pandemic acted as an additional booster of BTC appreciation, since governments around the world issued massive stimulus checks to help their citizens and salvage their economies. While this response might have saved some from going bankrupt, it also caused investors to become very scared of impending inflation. As a result, a larger share of money has been pouring into so-called safe-haven assets, including Bitcoin.
The recent announcement by PayPal that it would be rolling out a cryptocurrency buying and selling feature within its platform was just the cherry on the cake. The online payment processor’s move could spark even greater adoption, since the platform’s 340 million active users now have a very easy way to acquire crypto.
The future looks bright: is Bitcoin set for the next big bull run?
In addition to all the facts laid out in the previous paragraph, Bitcoin’s supply is programmatically capped at 21 million, the majority of which had already been mined, making the world’s favorite digital asset scarcer and scarcer as time passes. The question arises; can these circumstances, e.g. the increased demand and limited supply, drive the price of Bitcoin up to its new all-time high already in 2020?
