On 31st October 2018 Bitcoin turns 10! We look back at Bitcoin’s Journey from 2008 until the present day.
Bitcoin: How did it all begin?
On 31 October 2008 a person or group who went by the name of Satoshi Nakamoto published the whitepaper, titled ‘Bitcoin: A Peer-to Peer Electronic Cash System’.
Just over a few months later on 3 January 2009, the genesis block was released. This was the starting point for the bitcoin blockchain on its path to becoming a revolutionary network for peer-to-peer transfers of value.
The first physical purchase of goods using Bitcoin
Laszlo Hanyecz is infamous amongst developers for the first physical purchase of goods using bitcoin in 2010. He paid 10,000 Bitcoin for pizza on May 22nd, 2010 just over a year after the first block of bitcoin was mined.
Given that 10,000 bitcoin would be worth more than £55m today, these would be the most expensive pizzas in history!
For some time, many people were spending thousands of bitcoin on insignificant items, even giving them as kudos on some forums.
Lightning Network: possible solution to Bitcoin’s problem of speed & scalability
On February 25th, 2018 Laszlo Hanyecz repeated the transaction – this time paying just a fraction of a Bitcoin due to the gargantuan rise in the price of the first digital currency.
However, this time he used the Bitcoin Lightning Network, a “second layer” payment protocol operating on top of the Bitcoin blockchain to enable instant transactions. The Lightning Network is becoming a popular possible solution to Bitcoin’s problem of speed and scalability.
Bitcoin: a criminal’s best friend?
The majority of Bitcoin users are motivated by privacy concerns or plain curiosity. However, Bitcoin’s anonymity is also a powerful tool for financing crime.
The rapid growth in cryptocurrencies and the anonymity that they provide users has created considerable regulatory challenges, including the use of cryptocurrencies in illegal trade (drugs, hacks and thefts, illegal pornography, even murder-for-hire), potential to fund terrorism, launder money, and avoid capital controls.
Bitcoin mining uses a lot of energy!
It is well-established established that Bitcoin mining uses a lot of energy.
The bitcoin network is run by miners, computers that maintain the shared transaction ledger called the blockchain. A new study estimates that this process consumes at least 2.6GW of power—almost as much electric power as Ireland consumes. This figure could rise to 7.7GW before the end of 2018—accounting for almost half a percent of the world’s electricity consumption.
However, Bitcoin’s high energy use is a problem that, to some extent, will resolve itself over time. The bitcoin network is programmed to reduce the block reward by 50 percent every four years, with the next halving scheduled to happen in mid-2020. When that happens (assuming a constant bitcoin price) the mining industry’s revenue will fall in half. In equilibrium that should mean that energy use falls by half as well. Energy use should halve again in 2024, 2028, and so forth—though that could be offset by further gains in bitcoin’s price.
Bitcoin turns 10: milestones over the last decade
As Bitcoin turns 10, we look at some of the main milestones reached over the last decade.
October 31, 2008 – The white paper is published
publishes a design paper through a metzdowd.com cryptography mailing
list that describes the Bitcoin currency and solves the problem of
double spending so as to prevent the currency from being copied. January 3, 2009
January 3, 2009 – Genesis Block is mined
Block 0, the genesis block, is established at 18:15:05 GMT. January 12, 2009
January 12, 2009 – First Bitcoin transaction
The first transaction of Bitcoin currency, in block 170, takes place between Satoshi and Hal Finney, a developer and cryptographic activist. October 5, 2009
October 5, 2009 – An exchange rate is established.
Liberty Standard publishes a Bitcoin exchange rate that establishes the
value of a Bitcoin at US$1 = 1,309.03 BTC, using an equation that
includes the cost of electricity to run a computer that generated
Bitcoins. May 22, 2010
May 22, 2010 – 10,000 BTC is spent on pizza!
first, real-world transaction using Bitcoins takes place when a
Jacksonville, Florida programmer, Laszlo Hanyecz, offers to pay 10,000
Bitcoins for a pizza on the Bitcoin Forum. At the time, the exchange
rate put the purchase price for the pizza July 12, 2010
July 12, 2010 – Bitcoin value increases tenfold
Over a five day period beginning on July 12, the exchange value of Bitcoin increases ten times from US$0.008/BTC to US$0.080/BTC.
November 6, 2010 – Market cap exceeds $1 million USD.
by multiplying the number of Bitcoins in circulation by the last trade
on MtGox, the Bitcoin economy exceeds US$1 million. The price on MtGox
reached US$0.50/BTC. January 28, 2011
2011 – The year other cryptocurrencies start to emerge
This is the year the first alternative cryptocurrencies appear. Sometimes known as altcoins, these generally try to improve on the original Bitcoin design by offering greater speed, anonymity or some other advantage. Among the first to emerge were Namecoin and Litecoin. Today, there are over 1,000 cryptocurrencies in circulation with new ones frequently appearing.
January 28, 2011 – 25% of total Bitcoins generated
the generation of Block 105000, 5.25 million Bitcoins have been
generated, totalling more than 25 percent of the projected total of
almost 21 million. February 9, 2011
February 9, 2011 – Bitcoin reaches parity with US dollar
Bitcoin touches US$1.00/BTC at MtGox, reaches parity with the US dollar for the first time. August 20, 2011
March 28, 2013 – Market cap reaches $1 billion.
The total Bitcoin market cap passes US$1 billion. May 2, 2013
May 2, 2013 – First Bitcoin ATM unveiled.
The first Bitcoin ATM in the world is debuted in San Diego, California. November 19, 2013
November 19, 2013 – Bitcoin goes above $1000.
Bitcoin price surges to a record of US$1242 after Senate hearings.
September, 2015 – Bitcoin now a commodity
Bitcoin is a commodity according to The Commodity Futures Trading Commission.
December, 2016 – Bitcoin enjoys end of year price surge
Bitcoin enjoys end of year price surge and hits a three-year high with each one now worth about $900.
January 2, 2017 – Bitcoin Tops $1,000 for first time in 3 years
Bitcoin tops $1,000 for first time in three years as 2017 trading begins.
March 1, 2017 – Value of 1 bitcoin surpassed the spot price of an ounce of gold for the first time.
April 1, 2017 – Bitcoin legal payment in Japan
Japan passed a law to accept bitcoin as a legal payment method.
June 12, 2017 – Bitcoin reaches all time high
Bitcoin reaches an all-time high of $3,000.
August 1, 2017- Bitcoin Cash is born
Bitcoin Cash is born and bitcoin crosses $4000.
August 23, 2017 Segwit activates on Bitcoin.
A huge milestone in the development of Bitcoin.
“The activation of segregated witness is a huge milestone in the development of Bitcoin. A step which enables a literal explosion of cool new features enhancing scalability, fungibility, privacy and usability of our favourite money,” said the hosts of the SegWit activation party.
November 28, 2017 – Bitcoin Hits $10,000
Bitcoin hits $10,000 for the very first time, 10x since starting the year at $1000.
April 2018 – Only 4 million Bitcoin left to mine
There are now 17 million bitcoins in existence only 4 million left to mine.
September 2018 – Bitcoin trading consistently
Since early September 2018 Bitcoin has traded consistently at around $6,500, only ever fluctuating by a few hundred dollars.
This trend has been helped by a lack of destabilising news in the cryptocurrency space, together with broader consensus on how to address some of the technological challenges facing bitcoin.
Bitcoin Turns 10: conclusions
As Bitcoin turns 10, it has had its ups and downs. And since bitcoin’s inception nearly a decade ago, more than 3,000 other cryptocurrencies have emerged. However, of these, only a handful have actually managed to have any significant impact, and none have managed to reach the same heights as bitcoin.
Throughout regulatory pressures, technical difficulties, the cryptocurrency has remained at the forefront of the Blockchain revolution. Will Bitcoin replace fiat currency in another decade? Unlikely. But anything is possible!