The history of Bitcoin has been a turbulent one to say the least, and right now we’re in one of the most turbulent periods in its history, as it has spent the entirety of 2018 falling further and further from its peak value of nearly $20,000 in December 2017.
But something as uncertain as Bitcoin (and cryptocurrency in general) was never going to be smooth sailing. Many tried a cryptographed digital currency before it, and they weren’t able to fully crack it. Since Bitcoin became a reality nearly a decade ago, there have been some high highs and some low lows. For some Bitcoin owners, that’s part of the appeal.
But how did we get to where we are today with Bitcoin? How did it begin, what were its forebearers, and what have been the unexpected turns of the Bitcoin journey? Let’s take a walk through the timeline and find out.
Bitcoin itself did not exist until the late 2000s. Its origins, however, trace back to a few decades ago.
Specifically, we can trace it back as far as 1982. That is when computer scientist David Chaum first proposed the concept of e-Cash. Already concerned with privacy in the digital realm back in the early 80s, Chaum published a paper entitled “Blind signatures for untraceable payments” that detailed a new form of cryptography which he claimed could allow for an automated payment system where third parties could not see information on the payment.
Chaum tried to put this idea, which would create a blind signature system, to practical use in 1990 by creating DigiCash. DigiCash was a company founded in Amsterdam designed, as Bitcoin would be, to create a safe, secure online currency. Chaum’s reputation as a brilliant mind attracted both employees and venture capital alike, but the product itself never caught on and by the late 90s DigiCash was bankrupt.
Still, Chaum opened the floodgates for other cypherpunks with similar ambitions. In 1997, Adam Back invented hashcash, a proof-of-work system that would prove very similar to what Bitcoin uses.
Click here to learn more about proof-of-work.
This year saw the sudden emergence of two cryptocurrency ideas. In late 1998, Wei Dai released an essay detailing his idea for “b-money,” a cryptocurrency whose exchange reads similarly to what the blockchain in Bitcoin would eventually become. The proof-of-work system creates the currency by solving a mathematical computation, and the transfer of money is broadcast to the network.
That same year, Nick Szabo put out a similar proposal for “Bit Gold.” Szabo’s reasoning for alternative currency was to create something that did not require a third party, like a central bank, to create or manage it. Solving the proof-of-work gets you bits and the last bit of the string is used to create the string of the next transaction, similar to Bitcoin’s blockchain.
Neither of these proposals, however, came to fruition.
Those predecessors had tried and failed for two decades prior. Then, in 2008, came Bitcoin. In August of that year, Bitcoin.org was registered. Two months later, a whitepaper was published: “Bitcoin: A Peer-to-Peer Electronic Cash System.” The whitepaper’s idea had similar ambitions to the previously mentioned papers: secure digital signatures, not requiring the use of a third party, proof-of-work, and hashing the transactions together to form a chain.
Satoshi Nakamoto, an unknown person or group of people, wrote the Bitcoin paper.
Click here to learn more about the elusive Bitcoin founder.
Just a few days into 2009, the first-ever block of Bitcoins, known as the Genesis Block, was mined. By Jan. 9, the first iteration of Bitcoin software was released, and on Jan. 12, the first-ever Bitcoin transaction occurred as Nakamoto sent 10 Bitcoins ( (BTC) ) to noted computer programmer and developer Hal Finney.
Toward the end of the year, in October, the New Liberty Standard publishes the first Bitcoin exchange rate in the young cryptocurrency’s history, deeming $1 to be worth 1,309.03 BTC. Nakamoto released the second version of the software in December.
With an exchange rate established, it was only a matter of time until someone attempted to make an actual purchase with Bitcoins. In May of 2010, it happened. Florida-based programmer Laszlo Hanyecz sent 10,000 BTC to a London man in exchange for two pizzas, valued at a total of $25. This still valued a single Bitcoin as a fraction of a penny, but with a purchase made, intrigued parties saw potential in the product. A couple of months later, Bitcoin’s value finally broke the penny threshold
A pivotal year for the exchange of Bitcoin, fittingly the first Bitcoin exchanges popped up in 2010 as well – Bitcoin Market in February, and Mt. Gox in July. Slush, the first mining pool, also mined Bitcoin successfully for the first time that year. Mining pools are where several miners combine resources to get Bitcoin. By November, the market cap for Bitcoin surpassed $1 million for the first time.
Not that it was…