When Was Bitcoin Created or Invented? - A Brief History of Bitcoin

Bitcoin History: How and When Did Bitcoin Start

Today, on the eve of 2023, there is hardly anyone who has never heard of Bitcoin. In a relatively short period of time, this project has managed to go from a phenomenon understood only by geeks to the most popular cryptocurrency. Moreover, many believe that it can replace the traditional banking system. Bitcoin is already widely used to pay for purchases in various stores.

Although some still consider Bitcoin a financial pyramid, its capitalization has already surpassed some national currencies. There are countries, such as El Salvador and the Central African Republic (CAR), where BTC is even recognized as a legal tender.

In this article, we present the history of Bitcoin from 2008 to 2022. We also explore the earlier events that led to the creation of the most popular cryptocurrency.

Key Takeaways

• The idea of digital currency was conceived around the 80s, long before Bitcoin was created
• In 2009 the first Bitcoin block was mined after an individual or group of individuals under the pseudonym Satoshi Nakamoto published Bitcoin Whitepaper
• The price of bitcoin was initially $0.000764, and its all-time high was $68,789.63
• There are about 19 forks of Bitcoins, which created new side chains
• Bitcoin Cash and Litecoin are the major Bitcoin hard forks
• Initially used by a few crypto enthusiasts, bitcoins are becoming more and more adopted worldwide

The History of Bitcoin

The first mention of the Bitcoin payment system dates back to October 31, 2008. Back then, the document called the “Bitcoin White Paper” was published.

Numerous studies in the cryptographic field contributed to the creation of Bitcoin as well as the emergence of other cryptocurrencies. Below, we will try to reconstruct the chronology of the events which stimulated the development of cryptography.

Before Bitcoin Creation

To better understand Bitcoin's origin, we should go back in time further than 2018. Today's cryptocurrency industry, and Bitcoin, in particular, is a large-scale realization of the ideas conceived 40 years ago.

1982-1997

Back in the 1960s, professional cryptographers were discussing the possibility of creating a global information network. But the first practical steps in this direction were made only in the 80s.

At the same time came the idea of digital money. The concept was reduced to the possibility of rapid purchase of shares, financial assets, and their derivatives. Back then, American cryptographers David Chaum and Stefan Brands were working on the implementation of digital cash. They described the principles of an anonymous digital payment system, as well as proposed the first “e-cash” protocols.

David Chaum made a huge contribution to the development of cryptography. His ideas and works immensely influenced young enthusiasts, united in the so-called “cypherpunk community”. It was an informal group of young idealists from the U.S. preoccupied with cryptography and computer science. The members were obsessed with anonymity and digital freedom. They planned to achieve these two principles through the use of cryptography and technologies that increased anonymity on the Internet.

The cypherpunks also invented an encryption tool called PGP, which is still in use today. PGP (Pretty Good Privacy) is used in anonymous remailers, and even partially the kernel of Linux operating systems.

1998

In 1998, Wei Dai, a computer engineer and member of the cypherpunk mailing list, published an essay introducing the concept of “anonymous distributed digital money”. Essentially, he described Bitcoin, the basic principles of its encryption, and its mining mechanism.

Unfortunately, the project, which was called “B-money”, was never brought to life.

Interestingly, the smallest sub-unit of the second most popular cryptocurrency Ethereum is called “wei”, precisely in honor of Wei Dai.

Nicholas Szabo, a computer scientist and cryptography expert who was another member of the cypherpunk group, went a step further. His developments in digital contracts and digital currency served as the basis for all existing blockchain platforms. The term “smart-contract” was also coined by Nick Szabo. In 1998, Szabo proposed a decentralized digital currency, which he called “Bit gold”. However, the project had the same fate as B-money, remaining at the concept stage.

So When Bitcoin Started or Was Invented?

The last step in materializing the idea of digital money was taken by an anonymous developer under the pseudonym Satoshi Nakamoto.

How Was Bitcoin Created and When Exactly

In 2007, Satoshi began working on the principles of building a distributed network — a system without central authorities’ control.

In August 2008, when the banking crisis was in full swing, someone registered bitcoin.org as a domain.

In 2009, a person or group of people using the pseudonym Satoshi Nakamoto published an official document. For the first time, the document described the blockchain system that would serve as the basis for the entire cryptocurrency market.

At first, the event did not cause any excitement because the idea was not new. Nevertheless, the project gained participants from people interested in the concept of cryptocurrencies.

Who Is Satoshi Nakamoto?

Satoshi Nakamoto's identity is still unknown. There are a lot of speculations about his true identity, including bizarre ones:

• An enthusiastic loner;
• A group of scientists;
• An intelligence agency hiding under the name of the fictional person;
• Illuminati, Freemasons, aliens, reptiloids.

However, it is safe to say that Satoshi Nakamoto's activities were closely connected with the cypherpunk community. Whoever is hiding behind the pseudonym, the person(s) was the first to suggest a working model.

The last message from the author of Bitcoin was received on December 12, 2010. After that, Satoshi’s name disappeared from the network and was never mentioned during the further development of Bitcoin.

How Did BTC Start: Bitcoin Whitepaper

On October 31, 2008, Satoshi Nakamoto posted in the Cypherpunk mailing list an article titled “Bitcoin: a peer-to-peer electronic payment system”. It was a Bitcoin Whitepaper article, which was the quintessence of the previous cypherpunk developments.

When Was the First Bitcoin Mined (Genesis Block)

In January 2009, the full Bitcoin code was shared publicly. The network itself was launched on January 03, 2009, when the first block, known as the genesis block, was mined. This day is considered the Bitcoin start day. The first transaction took place on January 12, 2009. Satoshi Nakamoto sent 10 bitcoins to Hal Finney (another member of the cypherpunk community).

How Much Was Bitcoin When It First Came Out?

Between January 2009 and October 2009 there were no crypto exchanges. Bitcoin users were mostly crypto fans who sent bitcoins for a hobby. The coins had little or no value. In March 2010, user “SmokeTooMuch” auctioned off 10,000 BTC for $50 (aggregate), but no buyer was found.

On October 5, 2009, public sales began on the New Liberty Standard exchange. The first Bitcoin to dollar exchange rate was $1 = 1,309.03 BTC. This means that the price of one coin was approximately $0.000764.

The Mt.Gox Disaster

One of the first Bitcoin exchanges in the world was called Mt.Gox. It began operating in 2010 and by 2014 it accounted for 70% of the total BTC trading volume.

The first recorded attack on Mt.Gox took place in June 2011. Hackers managed to steal at least 25,000 BTC, which equaled approximately $400,000 at the time. As a result, the price of bitcoin on Mt.Gox plummeted from $17 to nearly zero.

During 2011-2013, attackers managed to withdraw 650,000 BTC from the exchange. This was the largest hack in the history of cryptocurrencies. On February 28, 2014, Mt.Gox declared bankruptcy and shut down.

Bitcoin Timeline

Below we take a closer look at the evolution of Bitcoin year by year from 2010 till the present day.

2010 - Pizza Day & Satoshi Exit

May 22 is a World Bitcoin Pizza Day celebrated annually by cryptocurrency enthusiasts. On this day om 2010 Laszlo Hynek made his first purchase of a physical commodity for 10,000 BTC. He purchased two Papa John's pizzas in Jacksonville, Florida. Thus, this transaction became one of the most expensive in the history of Bitcoin. At the current rate of December 2022, 10,000 BTC is equal to $165 million.

Also, in 2010, the first public miners appeared. On December 16, Slush user launched the first Slush Pool mining pool, which, under the name Braiins Pool, is still in operation today. The network's hash rate begins to exceed 100 GH/s.

At the end of 2010, the final version of the Bitcoin client (0.3.9) was released. At the same time, the person (or team of people) hiding behind the pseudonym Satoshi Nakamoto left the project without any note.

2011 - Wikileaks

On April 16, 2011, the world's press first started talking about Bitcoin when TIME magazine published an article about it.

The same year, new exchanges appeared, the first mobile wallet BitPay was created, as well as a contactless NFC transaction.

In the summer of 2011, WikiLeaks began accepting anonymous cryptocurrency donations. Thus, in 2017, founder Julian Assange tweeted that WikiLeaks' investments had grown by more than 50,000% since they started accepting this digital asset.

2012

The year 2012 sees the first major protocol update, Pay-to-Script Hash (P2SH). However, for the first time, difficulties related to the size of the BTC blockchain appeared. Specialists from related fields started looking for a solution. As a result of the efforts, an application layer protocol CryptoNote was designed. Later it served as a basis for the whole family of anonymous cryptocurrencies, with Monero and Bytecoin among them.

In September 2012 developers Gavin Andresen, John Matonis, Patrick Murk, Charlie Shremy and Peter Vessenes founded the Bitcoin Foundation, aimed at facilitating the mass adoption of the main cryptocurrency.

Further on, on November 28 the block reward for miners was cut in two for the first time. The process known as Bitcoin halving decreased rewards from 50 BTC to 25 BTC.

In the same year, the major crypto thefts occurred. Hackers stole 24,000 BTC from the Bitfloor exchange and 50,000 BTC from a web host Linode by exploiting its security vulnerability.

2013

In 2013, a serious system failure occurred, which led to a halt in transactions and a 23% plunge in the Bitcoin exchange rate. The failure was caused by a minor bug in an older version of the Bitcoin 0.7 client software. Due to the bug, there was a parallel transaction chain generated by Bitcoin 0.8 users. One user exchanged his bitcoins for dollars twice, using two transaction chains from clients from the Bitcoin 0.7 and Bitcoin 0.8 branches.

In the same year, regulators started taking action against the crypto market. For example, the U.S. Financial Crimes Enforcement Agency (FinCEN) established regulatory rules requiring miners to register their activities and comply with legal regulations.

In December, the Chinese government banned fintech companies from using Bitcoin for the first time. The regulation caused Baidu to stop accepting crypto-assets to pay for a number of services.

2014

The first secure Bitcoin vault, Elliptic Vault, opened in London in 2014. The U.S. Commodity Futures Trading Commission (CFTC) approved the listing of an OTC swap product for TeraExchange, LLC. This was the first time a U.S. regulator has approved a Bitcoin-based financial product.

In December 2014, Microsoft added support for BTC payments. Users could purchase Xbox game consoles and Windows software with BTC. Later in 2018, however, Microsoft stopped accepting Bitcoin.

2015

In 2014, Barclays became the first UK bank to offer cryptocurrency services to customers. The number of retailers accepting Bitcoins worldwide exceeded 100,000.

Unicode Consortium adopted and added the symbol BTC (₿) to the ASCII table. The symbol appeared r in the Unicode 10.0 specification in June 2017.

2016

In early 2016, the network's hash rate exceeded 1 EH/s for the first time.

On July 9, the second Bitcoin halving took place on the 420,000 blocks: the reward was reduced from 25 to 12.5 BTC.

In August, one of the largest hacks of the Bitfinex crypto exchange occurred. About 120,000 BTC (~$6.7 billion at current exchange rates) were stolen.

2017

The year 2017 was marked by two important events. On August 1, 2017, there was a major hard-fork split from the main Bitcoin blockchain. The new chain Bitcoin Cash (BCH) increased Bitcoin’s block size from 1 MB to 8 MB, allowing for more transactions.

In December, the price of BTC reached a new all-time high of $20,000 and capitalization exceeded $100 billion for the first time, followed by an extended period of correction in late December, which lasted until the spring of 2019.

The same year, the Segregated Witness (SegWit) protocol, proposed by Bitcoin Core developers back in 2015, was activated. SegWit introduced a new address format, bech32, which almost halved fees and increased the speed of transactions on the Bitcoin network. The address in Bech32 always starts with bc1.

2018

The year 2018 is remembered by crypto enthusiasts for a prolonged correction in the crypto market. The cryptocurrency plunged by more than 90%. The period was called “Crypto Winter”, which extended for almost 18 months. By the end of the year, BTC fell below $4,000 and lost more than 65% against its last ATH.

Despite the extended period of low prices in the cryptocurrency market, institutional investors showed significant interest in crypto. In July, the CBOE filed for a Bitcoin ETF to be linked to the Vaneck and Solidx bitcoin trust fund. That same month, the SEC deferred its review of the other five Bitcoin-ETF applications filed by NYSE Arca.

2019

At the beginning of 2019, the positive dynamics of the crypto market, caused by the inflow of investors' funds, returns amid tense economic relations between the U.S. and China. The price breaks through the $10,000 mark again in the summer.

2020

After the WHO officially announced the beginning of the pandemic, the price of Bitcoin fell to a one-year low below $4,000.

On May 11, a third halving occurred on block 630,000, after which the reward for a mined block decreased from 12.5 to 6.25 BTC.

2021 - The Last Bullrun

Bitcoin renewed its all-time high this year, reaching $69,000 in November. There was also the largest update since SegWit, called Taproot.

2021 also saw investment in Bitcoin by tech giant Tesla, as well as Microstrategy, which invested more than $1 billion in Bitcoin.

That same year, Tesla announced that it would support Bitcoin as a means of payment. However, almost immediately, the company suspended BTC payments due to the climate change concerns connected to Bitcoin mining.

Also, it is worth noting that in September 2021 that El Salvador became the first country in the world to recognize Bitcoin as an official national currency.

In October 2021, the first SEC-approved Bitcoin-based futures from ProShares were launched, and the number of Bitcoin ATMs worldwide exceeded 10,000.

2022 - Crypto Winter

Although crypto-enthusiasts greeted November 2021 with euphoria and Bitcoin came close to the $69146 mark, on December 31 BTC was already trading at $45500. So the new year 2022 started with a downward trend and all further important events of 2022 only strengthened the bearish trend.

Political and economic challenges shook the world’s economy in 2022, forcing the U.S. Federal Reserve to raise the key rate by 4% to fight inflation. This provoked a powerful outflow of funds from the cryptocurrency market. Thus, 2022 marked the beginning of a real crypto-winter.

This led to Bitcoin trading at $16,000 in December 2022, having fallen more than 70% since the beginning of the year.

Bitcoin Forks

In the process of Bitcoin's operation, certain disadvantages were discovered that the developers failed to foresee. They include slow network speed, low scalability, high transaction fees, and others. Bitcoin forks aimed to solve these problems.

A fork is essentially a split of the existing blockchain into several branches. As a result, a new coin is created based on the original blockchain with improved characteristics of the previous chain. In addition, the fork of the coin may run on a different algorithm. Bitcoin runs on the Proof-Of-Work algorithm. A Bitcoin fork can run on the Proof-Of-Stake algorithm, which has its advantages.

Over the course of Bitcoin's existence, there have been 19 forks conducted. The major forks are Bitcoin Cash (BCH) and Litecoin (LTC).

Bitcoin Cash (BCH) appeared in 2017 when Bitcoin was preparing to implement the SegWit2x protocol. The block size was increased up to 2 MB, after the implementation. However, some developers rejected the new protocol and proposed to increase the block size to 8 MB. Block 478559 was the first for the new coin after the split. A network protocol update on May 15, 2018, further increased the size to 32 MB.

Litecoin (LTC) in 2011, when Bitcoin was only two years old. The project was created by former Google engineer Charlie Lee, who became interested in cryptocurrencies while working for the corporation.

As a result, Litecoin was created with a number of differences from Bitcoin, including a larger total coin supply. Litecoin adds new blocks to the blockchain and processes transactions faster. Halving in the Litecoin network occurs four times less frequently.

Conclusion

The idea of digital money is not new, and it was first discussed more than forty years ago. But only by 2008, against the backdrop of the global economic crisis, the creators of Bitcoin were able to launch a real working decentralized financial system. Thus, Bitcoin became the first cryptocurrency created, but to this day, it remains the industry's flagship.

In 15 years, Bitcoin has come a long way from being a geek fad to being accepted by entire countries as an official national currency. At the same time, its technical characteristics (speed of operation, size of commissions, bandwidth) have long lagged behind modern cryptocurrencies, which gave rise to dozens of forks, and made it in essence a digital analog of gold.

FAQ

What is Proof of Work?

Proof of Work is an algorithm that adds a new block to the blockchain, validates transactions, and verifies a single version of the registry in all of its copies that store nodes.

Proof of Work is the cryptocurrency and consensus algorithm. It was introduced by Satoshi Nakamoto in the Bitcoin Whitepaper published in 2008. However, the technology itself was proposed long before that.

Are There Any Altcoins on BTC Network

No. Unlike smart contract platforms such as Ethereum or Polkadot, Bitcoin does not support token functionality, remaining primarily a digital currency.

What Are Bitcoin Price Predictions

BTC Price Prediction is an attempt to predict the future price of BTC based on historical data, as well as technical and fundamental analysis of Bitcoin. Thus, traders can improve their trading strategy, build a long-term perspective while trading BTC and minimize risks.

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