Bitcoin’s a little bit like your aneurotypical, hyperactive kid. Nobody’s very sure of its potential or trajectory, whether it’s going to be the greatest financial tour de force of all time, a multi-billion dollar scam, or that big elephant in the room that’s going to divide more than unite.
Regardless, bitcoin deserves our attention at least in its history, as much as it’s a revolution in principle. Whether you are a skeptic or a fan, you need to treat it like a psychologist. And knowing its past may be the first step to confirming your doubts or emboldening your faith in it.
Here is a brief history of bitcoin.
2007
A pseudonymous identity by the name of Satoshi Nakamoto began formalising the idea of bitcoin.
18 Aug 2008
The website bitcoin.org was registered via anonymousspeech.com, a broker that registers domain on behalf of their clients who wish to remain anonymous.
31 Oct 2008
The bitcoin whitepaper was published on the metzdowd.com, a cryptography mailing list archive that is regularly read by cypherpunks. Cypherpunks are activists who believe social and political change can be brought via technology buttressed on cryptography ensuring privacy.
3 Jan 2009
The first block(block zero) was mined and added to the blockchain. The coinbase transaction(mining reward) entailed a text that said:
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
It’s referring to the headline of the UK newspaper, Times. It was dual purpose in the sense it let everyone know the block couldn’t had been mined before that date, and that it was reminder that such problems are obsolete in bitcoin as it doesn’t need banks.
However, the 50 bitcoins in that first block was unspendable, as the creator, arguably Satoshi, had problems in the code which prevented transfers to any addresses.
9 Jan 2009
The first version of Bitcoin Core was released. Its open source code was for the public to review and download. It was the first time anyone with Internet connection could become a bookkeeper or a mining node.
12 Jan 2009
The first ever transaction was made from Satoshi’s address to Hal Finney’s. Finney was a cypherpunk, cryptographer, and programmer. He was apparently presumed the identity of Satoshi.
6 Feb 2010
The first bitcoin exchange, the Bitcoin Market, came into the public eye. It became the first point in history people could formerly trade bitcoins as we do for stocks, instead of doing it ad hoc over Reddit.
22 May 2010
It marked the day bitcoins was first used to purchase a real life, tangible good—pizza. A programmer named Laszlo Hanyecz, made on offer for a pizza on bitcointalk forum for 10,000BTC. Another programmer Jeremy Sturdivant took up the offer, ordered two Domino’s pizzas for Laszlo, receiving 10,000BTC in return.
15 Aug 2010
It was the first time bitcoin’s blockchain was hacked due to a vulnerability in the code. An unknown hacker exploited the bug(integer overflow) and stole for themselves 184 billion bitcoins. A debate ensued over the chain’s continuity in its immutability, and as a consequence a chain fork resulted. The Bitcoin Classic, whose token symbol we now know as BXC, is the chain still preserving the hack in its record, following the mantra of immutability of blockchain kept religiously by a segment of the bitcoin community.
7 Jan 2011
The day the highest exchange rate between bitcoin and fiat dollars happened, at 1 BTC = $25,000,000,000,000. Alas, it was Zimbabwean dollars.
9 Feb 2011
Bitcoin first reached parity with the USD dollar at Mt.Gox exchange, previously a card trading exchange founded by Jed McCaleb, who revamped it into a bitcoin trading platform, which eventually imploded with millions of dollars of consumer debt.
1 Jun 2011
Bitcoin gained global attention from a WIRED magazine publication about Silk Road, the marketplace operating in the darknet which only accepted bitcoin as the medium of trade. The Silk Road, accessible only through a special browser named Tor, was dubbed as the ‘eBay for drugs’, allowing trades of all kinds of illicit paraphernalia. It made sense, considering you are pseudonymous, and loosely speaking, all trades are not traceable to a meaningful identification.
20 Jun 2011
The first time where a merchant accepted bitcoin as payment option. An owner of restaurant in Berlin, Room 77, traded bitcons for his fast food.
28 Nov 2012
The first bitcoin halving day. The coinbase reward of 50BTC was reduced down to 25BTC. This halving cycle of 4 years is bound to continue until bitcoin reaches its maximum supply of 21 million in 2140. With the current reward at 6.25BTC, the next target of 3.125BTC will be in 2024.
Jul 2013
Filing for bitcoin as a viable ETF(Exchange Traded Funds) by SEC(US Securities and Exchange Commission). Such efforts vastly elevate bitcoin as a legitimate means of funds to be traded, pulling public sentiment in finance towards a widespread adoption. Unsurprisingly, cryptocurrency ETFs is now leading the curve in the market of index funds trading.
6 Aug 2013
Bitcoin became classified as a currency in Texas, US. However, there is yet to be a global convergence on its definition: should we define it as security? commodity? cash? With greater adoption very soon to arrive, it’s my humble guess it’s going to be a transcendent asset ripe for trading just like any other common financial products we know of.
20 Aug 2013
Bitcoin began to be treated as private money in Germany, with the onset of contention on taxation rules. In the US, profits through bitcoin trading is considered a capital gain, and so tax exemption is no longer in the legal grey zone.
Bitcoin’s Price History
Bitcoin’s price history is truly remarkable—a kind of volatility never experienced like before in its predecessors. It went through a series of bubbles, mostly buckling on the legs of public sentiment, supply and demand via narratives. There are many and conflicting theories on what exactly caused the bubbles, but most are driven by stories and exacerbations from global or regional economic activities.
Jul 2010
The first bubble burst when bitcoin experienced a 40% drop in price, from $0.09 to barely 5 cents.
June 2011
A bigger 80% crash, an eye-watering drop from its high of $31 to a mere $5. Talks about generating income via interest in bitcoin from the WIRED magazine inflated its bubble, only to burst in just under a half-year period.
April 2013
A yet another 80% crash from supposed pump and dump drama by large financial institutions, madly hiking it to an unbelievable $266, before plummeting it from $266 to $50.
2013/14 Bitcoin winter
Bitcoin traded at its then peak of $1200 at the Mt.Gox exchange, before diving to $200, which stayed steadily for painfully long period(well, at least to the traders and holders). Surrounding theories include bugs from bitcoin trading bots, the fact that Mt.Gox froze its accounts preventing users from withdrawing fiat from bitcoin balances, and the Chinese government declaring a nationwide ban on cryptocurrencies.
2023(current)
Today, 1 BTC = approximately 27,000USD, following a recent bullish trend, expectant of its next halving event set for 2024. Other possible reasons for the current surge include increasing institutional and national adoption by companies like JPMorgan Chase and Hong Kong, with its recent crypto licensing and general easing of its previous restrictions.
It’s fair to say bitcoin’s volatility in short-terms is(or should) be less of a worry and be more of a source of optimism for the future of finance. With its current trajectory, I personally foresee bitcoin an antifragile asset class less swayed by investor sentiment and be more of a robust financial utility that simultaneously decentralise and harmonise us all for good.
