If you look at the history of bitcoin and the entire crypto sphere, it becomes evident that this market has gone through different times. Nowhere will you see such frantic ups and downs, stories of incredible enrichment, and loss of capital. However, one thing is clear: the value of cryptocurrency remains high in the eyes of the public, and the number of blockchain-based projects is growing every day.
In today’s environment, when cryptocurrencies are going through hard times, let’s remember the main milestones of their development and be inspired by the hope that all difficulties will soon remain behind..
💭 Were there any cryptocurrencies before bitcoin?
The history of cryptocurrencies dates back to the 80s of the last century. In 1982, mathematical scientist David Chaum proposed the concept of electronic currency, which described the protection of information on the Internet using cryptography.
The next was Adam Back, who in 1997 invented an electronic money system called Hashcash, where he first applied proof of work concept. In 1998, two ideas appeared at once, which were based on technology very close to the blockchain in its properties — B-money, where all network participants could see information about all transactions, and Bit Gold created by Nick Szabo. Szabo’s idea was to make the monetary system independent of the need for a third party, that is, a central authority like a bank.
Despite none of the first projects became successful, all of these developments served as the foundation for cryptocurrency’s creation.
💭 How did Bitcoin first appear?
The creator of Bitcoin is an anonymous person or a group of authors under the name Satoshi Nakamoto. In recent years, several people have claimed the title of the inventor of Bitcoin, but who is it remains unknown.
In August 2008, the domain bitcoin.org was registered, and on October 31, a white paper called “Bitcoin: A Peer-to-Peer Electronic Cash System” was published on the web. The essence of the creation of Nakamoto echoed the ideas of his predecessors. The system functioned on the PoW algorithm; encrypted keys were used to sign transactions that formed a continuous chain available for viewing by any network’s member.
On January 3, 2009, the genesis block of Bitcoin, the first block with 50 network coins, was generated. The hash record of the genesis block contains a fragment of a line from an article by The Times, which was not chosen by chance: the article dealt with the fact that the UK Minister of Finance was forced to consider new measures to save banks in an economic crisis.
Indeed, the crisis at this time was raging throughout the world. In the US, banks that issued mortgages to everyone in a row inflated an enormous economic bubble, which eventually burst. Many banks went bankrupt, and their customers lost their savings. What was needed was a completely new approach to solving problems, because the money printer only worsened the situation. It is this approach that Satoshi proposed in the concept of Bitcoin .
💭 How did the Bitcoin network develop after its inception?
A few months after the publication of Bitcoin’s white paper, scattered around the world team formed around Nakamoto, which helped him develop the network software. This continued until 2011 when Satoshi suddenly disappeared without saying a word to anyone.
A week after the first block was mined, Nakamoto sent the first transaction with ten bitcoins to a well-known programmer Hal Finney. While network complexity was low, its first users mined hundreds of coins per day. Nakamoto himself owns about a million BTC, of which he has so far spent just 500.
In October 2009, the New Liberty Standard website first published the Bitcoin exchange rate: for $1 it was possible to buy 1309.03 BTC.
On August 6, 2010, a severe vulnerability was discovered in the Bitcoin protocol: it became possible to create an unlimited number of coins. On August 15, this vulnerability was exploited, and as a result, 184 billion BTC was created and sent to 2 addresses. Within a few hours, an error was detected, false transactions were deleted from the ledger, and the network was transferred to an updated version of the protocol. It was the first fork of the Bitcoin network and the only serious security flaw that has been discovered so far.
In 2010, another historical event occurred: for the first time, something real was acquired for bitcoins. A programmer Lazlo Hanesh sent a certain Englishman 10k bitcoins in exchange for two pizzas for $25.
💭 When did the first crypto-exchanges and altcoins appear?
In the same year, the first bitcoin exchanges were launched: in February, the Bitcoin Market, and in July Mt. Gox. Also then the first mining pool called Slush was founded.
By November 2010, the market capitalization of bitcoin had already exceeded one million dollars, and in February 2011, the coin crossed the next historical milestone: bitcoin equaled the dollar.
On the wave of interest in bitcoin, cryptocurrency products of various developers called altcoins began to appear. Their creators either tried to introduce an improved analog of bitcoin to the world or suggested totally different tasks for their coins. Litecoin, which is currently the 7th cryptocurrency in terms of capitalization, quickly gained popularity in 2011. Its creator Charlie Lee practically copied bitcoin; however, the problem of slow transaction flow was solved in his coin.
In 2012, the Bitcoin exchange rate exceeded $100, and the next year its price reached $1000 for the first time. So then it became already clear that Bitcoin has turned into a successful and recognizable project.
However, in 2014, the first cryptocurrency disaster occurred: the bankruptcy of the Mt Gox exchange. What exactly happened on Mt Gox then has not been fully clarified, but the fact is that as a result of fraudulent actions, 650k bitcoins were stolen from the exchange, 200 of which were found several years later. Hacking Mt Gox was a hard blow for the young crypto-economics, and for several years it fell into a state of decline.
In 2015, one of the most important events in the world of cryptocurrencies took place: on July 30, the Ethereum network was launched, which is the 2nd crypto by capitalization. The project was developed by Canadian programmer Vitalik Buterin and was a platform for creating decentralized applications on the blockchain which work based on smart contracts.
💭 When did Big Crypto Hype and the ICO era begin?
In 2016, the significant advantage of a cryptocurrency over fiat money came to the fore: the ability to issue assets based on blockchain technology. So the phenomenon of initial coin offering (ICO) came to the cryptocurrency market — an investment mechanism for raising funds based on the principles of crowdfunding. The project described its idea on the web and attracted funds for the launch of any interested person. In exchange for invested money, investors received tokens, a kind of analog of shares, since their share in future profit was distributed in proportion to the number of tokens purchased.
ICOs, most of which were based on the Ethereum platform, quickly gained enormous popularity. Many projects raised millions of dollars in minutes. The most successful ICOs for the period of 2016–17 were Filecoin ($257 million), Tezos ($232 million), EOS ($185 million), Bancor ($140 million), and Status ($108 million).
2017 turned out to be the most important and eventful year for the cryptocurrency world: after the wild volatility of 2016, bitcoin surpassed the $1,000 mark again and exceeded $3,000 by June.
A significant date for the cryptocurrency market was December 11, 2017, when the Chicago-based options exchange (CBOE) began trading in bitcoin futures.
With a slight lag, the Chicago Mercantile Exchange (CME) followed.
It was against the backdrop of news about the possible addition of bitcoin to classical exchanges that bitcoin began to rise rapidly. By October, the price exceeded $6,000, in November reached $10,000, and by the end of December, it showed a record $19,783. Such a frenzied growth caused general hysteria in the crypto market, and although many understood that the pump could not continue indefinitely, everyone tried to jump onto this outgoing train.
2018 turned out to be a challenging year for the cryptocurrency industry, especially for those who were waiting for further growth. Mass sales of cryptocurrencies began, and prices drove steadily throughout the year. The reason was primarily due to the notoriety that ICOs had earned by that time. Fabulous easy profits attracted crowds of scammers into this area who discredited the very idea of cryptocurrencies. This year was called “crypto winter” for all processes were a kind of frozen during this time.
💭 What are the latest cryptocurrency market trends?
Starting in 2019, interest in cryptos and positive forecasts gradually began to return. Since that time, the primary trend in the development of the crypto market has been digital money, increasingly becoming an integral part of the global financial system. Institutional investors began to get very interested in cryptocurrencies.
ICOs gave way to IEOs (initial exchange offerings): the token offerings started to be conducted on exchanges, and this immediately swept away a lot of scammers, since exchanges made a thorough audit of the projects before the placement.
In 2019, bitcoin over again updated the highs: by the end of May, the price of the coin exceeded $9,000. The correction that started after this ended quickly enough, and by June 26, the coin had set an annual maximum of $13,700. In 2018, BTC grew by more than 100%, ETH by 35%, Litecoin by 78%, and many altcoins showed an increase of hundreds and even thousands of percent.
A new wave of interest in cryptocurrencies was fueled by two blockchain projects that announced their imminent opening: the Libra stable coin from Facebook social media and the decentralized TON network from the creators of the Telegram messenger. Both caused a lot of discussions, including in government circles. It is precisely because of regulatory objections that both projects have not yet been launched.
💭 How is the cryptocurrency market doing right now?
The beginning of 2020 turned out to be the most successful for the cryptocurrency market in history. Usually, unprofitable January gave bitcoin an increase of 20% — the highest figure in 8 years. The forecasts were the most favorable, but life often brings surprises and, alas, not always pleasant. Such a surprise factor for all markets, including cryptocurrency, was the coronavirus epidemic. Due to this situation, many businesses were forced to quarantine, and panic was observed in the stock markets. Over the past month, Bitcoin lost about 35% of the value, after which the rate of all other cryptocurrencies collapsed.
No matter how difficult times the crypto market may be experiencing now, it will recover and become even stronger than before — this is what its history teaches us.
There is one more critical factor: amid the widespread crisis, the central banks announced that they are going to re-print the currency: the Fed will print $6 trillion, and the European Central Bank €1.1 trillion. Amid inflation, which inevitably awaits fiat currencies, bitcoin looks like a real hero.
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