Bitcoin is 10 years old — here’s a look back at its crazy history
This week marks the 10th anniversary of bitcoin, the world’s first cryptocurrency.
A decade ago today, bitcoin’s mysterious founder Satoshi Nakamoto published a nine-page long academic style paper called “Bitcoin: A Peer-to-Peer Electronic Cash System.”
The paper would go on to act as the founding text for the cryptocurrency, and lead to the first bitcoin transactions being carried out in early 2009.
It’s impossible to say how much bitcoin has increased in price single its earliest incarnation, because its value back then was in the fractions of cents.
A conservative estimate, based on bitcoin’s current price being around $US6,300 per coin, and its early price being less than 1c, would see bitcoin’s value increasing more than 1 million fold in the last decade.
The first bitcoin transactions were carried out in private, so no one really knows when or how numerous they were, but the first trade is believed to have been between Nakamoto and developer Hal Finney.
Many have speculated that Finney, who died in 2014, may actually have been Satoshi.
Bitcoin adoption grew slowly at first, with the cryptocurrency first fetching mainstream attention in May 2010 on a day that has since become known as “Bitcoin Pizza Day”.
It was May 22, when the purchase of the two Papa John’s pizzas by Laszlo Hanyecz from another bitcoin enthusiast marked what is believed to be the first “real-world” bitcoin transaction.
Hanyecz traded 10,000 bitcoins for two large Papa John’s pizzas, a sale now worth around $US63 million.
Bitcoin’s journey continued slowly at first, but it hit the mainstream in 2013 after the first of several hyperinflation incidents occurred in the currency.
In late 2013, the cryptocurrency spike in value from around $US100 per coin to $US1,000 in just over a month, before halving in value over the next three or four months.
Bitcoin would not hit $US1,000 again until 2017.
The spike, however, drew mainstream media attention, with Business Insider’s Joe Weisenthal penning a now well-known op-ed titled “I’m Changing My Mind About Bitcoin” – having just weeks earlier called bitcoin a “joke”.
For the next three years, bitcoin stayed in a range of around $US400 – never trading above $US650 or much below $US250.
The most notable event during that time was the collapse of Mt Gox, the first ever exchange, which filed for bankruptcy protection after hackers stole nearly $US500 million of bitcoin, and a further $US30 million of cash deposits.
The hack, still the largest ever in the crypto space, exposed massive security flaws, and exacerbated bitcoin’s reputation as a Wild West asset with little to no financial protection for its users.
After three years of relative calm, bitcoin truly hit the mainstream in 2017, a year which saw the cryptocurrency increase in value from around $US1,000 per coin to almost $US20,000 per coin in a matter of months.
Part of the spearhead for that huge jump in value was the bitcoin “fork” which saw bitcoin split into bitcoin and bitcoin cash, after a group of Chinese developers decided to split bitcoin’s original code in protest at what Reuters calls “improvements to the currency’s technology meant to increase its capacity to process transactions”.
2017 also saw the first major public efforts from financial institutions to get involved in cryptocurrencies, with two US exchanges, the CME and Cboe, creating platforms for customers to trade bitcoin futures.
Numerous major banks also announced projects involving crypto, which helped fuel the rapidly expanding bubble in bitcoin’s price.
That bubble began to burst just before Christmas – only a couple of weeks after futures were launched – and by the end of January 2018, bitcoin had fallen from around $US20,000 per coin to just $US10,000.
The falls were driven in part by rising fears that regulators planned to crack down on the cryptocurrency, which had largely operated outside the auspices of normal regulators until that point.
Bitcoin continued to decline during early 2018, before eventually stabilizing at around $US7,000 per coin.
It has remained in the $US6,000 to $US7,000 range since June, and the volatility that characterised the market in 2017 and early 2018 has all but evaporated.
On its 10-year anniversary, bitcoin is trading around $US6,350 per coin.
While it has now well and truly entered the mainstream consciousness, there are still concerns that it has longevity, and could ultimately fail.
Even Wences Casares, widely known as bitcoin’s “Patient Zero” for his role in spurring interest in crypto in Silicon Valley, expressed worries about its future.
“It may work, it might not work,” he told Bloomberg on Monday. “We are in the equivalent of 1992 for the internet.”