The Great History of Bitcoin (BTC)
Bitcoin today is the most popular and valuable cryptocurrency. Hedge funds buy it, millionaires buy it, and it's already regarded as a new asset class. Some governments even hoard Bitcoin as their reserve funds. Analysts predict it the price of $50,000 because of its scarcity, AS there’s only a limited amount of Bitcoin (21 million) whereas the demand keeps growing.
But all this popularity came only recently, and before it, Bitcoin went a long way from being the experimental currency of geeks to this universally recognized store of value. Here we're going to explore the history of Bitcoin, and how it became the phenomenon it is now.
How it all began
The history of Bitcoin starts with one person or a group of people who decided that they want to create a truly decentralized virtual currency, independent of any government. We still don’t know who this mysterious developer was, but their common alias he always used to communicate with everyone else busy with Bitcoin development, was Satoshi Nakamoto.
The idea of Bitcoin lays on the foundation of many previous researchers and movements. Such as the movement of cypherpunks. Cypherpunks believe that all data related to every person should be protected by cryptography. Bitcoin is the literal implementation of this idea. Another source of possible inspiration for Nakamoto was probably Ecash, the anonymous digital payment system, shut down by the US government in 1998. And of course, there were numerous authors, whose works Nakamoto also used for his Bitcoin whitepaper. Such as the work published by Haber and Stornetta in 1990 on time-stamping digital documents into a hash-chain, which was essentially the original idea of blockchain, implemented later by Satoshi. Overall, it required a lot of knowledge of mathematics, cryptography, economics and game theory.
Satoshi wasn’t alone - many people helped him to develop Bitcoin right from the start. Soon after the release of version 0.3.9. Nakamoto disappeared. All developers who work on Bitcoin code, claim that they simply supporters, not the authors. That’s the thing that allows Bitcoin to stay decentralized.
During the early days, Bitcoin wasn’t anything bigger than an exotic experimental payment option between geeks, who wanted to play antigovernmental games. Some people actively used it on the black market to sell and buy illegal things, and the famous darknet site, the Silk Road, used Bitcoin and some other cryptocurrencies later for payment purposes. Of course, legal activities also developed. A lot of people mined Bitcoin on their laptops and personal computers, even though it was very cheap, and anyone could get thousands of Bitcoins for a month of mining. All of it looked like some kind of amusement and curiosity. Also, people were trying to buy and sell various goods for BTC. May 22 is celebrated as Bitcoin Pizza Day because the first-ever purchase made with Bitcoin was the pizza order at Papa John’s. Laszlo Hanyez, an early Bitcoin developer from Florida, created a topic on Bitcoin forum, indicating that he wanted to spend 10,000 BTC for two large pizzas. This exchange was successfully made, thus making it the first-ever Bitcoin purchase. At the time of the purchase, the cost of these two pizzas was $41. Now they cost $90 million. A special Bitcoin Pizza Index reflects that value.
In March 2010 the first Bitcoin exchange was launched, and in July 2010, Bitcoin had its first major rally - its price increased from $0.0008 to $0.08 for a single coin. Bitcoin trading became a thing. Since then it had many rallies and still stays on top of the crypto market, valued at $9,000 currently.
2014 was a really rough year for Bitcoin, because Mt.Gox, the exchange handling over 70% of all BTC transactions worldwide at that moment, went bankrupt. Those users who had anything there lost of their funds. This event was followed by a market crash when the price of BTC fell from $1,200 to $200 and stayed there for three years.
Bitcoin going mainstream
2017 was a special year for crypto. ICOs (Initial Coin Offerings) on Ethereum platform started to boom and Bitcoin began its rise to $20,000 from $1,000. Many people became millionaires by participating in ICOs, and the whole crypto industry, in general, attracted a lot of media attention and coverage. Governments around the world started talking about the industry because it reached the point where it couldn’t be ignored anymore. Some countries such as China banned crypto and BTC, while countries like Japan accepted it.
Also in 2017 was created the most successful Bitcoin fork - Bitcoin Cash. It got a lot of support from the Chinese miners’ community because it was based on slightly different principles and even started a war with the original BTC for the right of being the main cryptocurrency. There was a lot of other forks that year, Bitcoin Gold, Bitcoin Diamond, Bitcoin Candy, Bitcoin God, but all of them are pretty much dead by now. The reason behind is that it’s incredibly easy to create a fork, but it’s a lot harder to build a community around it. Thus the only remaining major chains were Bitcoin Core (BTC) and Bitcoin Cash, which also got forked to two chains, BCH and Bitcoin SV (BSV).
Since then, Bitcoin has experienced several market crashes, a long bear market, but its development never stopped. Now it’s time to look at where we’re now.
The current state of Bitcoin
Bitcoin nowadays is still considered a risky asset. But still, it is recognized by mainstream finance. Some bankers might not love it, for example, Goldman Sachs still doesn’t recommend its clients to buy it, but by taking such an approach, they simply miss their possible fees and profit, while funds that offer Bitcoin trading see an influx of money. The Grayscale Investments, the large crypto fund, holds $3.8 billion worth of crypto assets. The Japanese giant SBI Holdings launches the first Japanese crypto fund with 30% of BTC in the crypto basket. The ecosystem of Bitcoin is growing - the Lightning Network, the 2nd layer solution with instant transactions, has a 1000 BTC capacity. Many famous people, including Steve Wozniak, the co-founder of Apple, and Jack Dorsey, the Twitter founder, believe in BTC. That means that the network will continue to grow further. Many Bitcoin-based fintech services are developed, and now it’s even possible to deposit cryptocurrency and receive interest on it. That’s what the CoinLoan platform is for. Now Bitcoin holders can make some money on their funds not by trading and selling their portfolio at the right time, but actually holding the crypto. That’s a giant leap for the industry, and it’s clear that the future holds even more.