Two months ago we celebrated Bitcoin’s 10th birthday. Today, we are celebrating the same occasion again. Why?
On the January 03rd of 2009, the first block of bitcoins (Genesis Block) was mined. Approximately two months earlier, on the October 31st, Satoshi Nakamoto published a piece titled “Bitcoin: A Peer-to-Peer Electronic Cash System”.
For this reason, the community is somewhat divided on when is the exact birthday of world’s biggest digital coin. For instance, some media outlets have published the anniversary articles on both dates.
While there is a debate about which day has more meaning for the Bitcoin community, we suggest to take the conciliatory approach and mark both occasions.
Below, you can read our original October 31st article marking the anniversary of the publication of Nakamoto’s article. The Bitcoin price has obviously changed a bit since October 🙂
Happy 10th Birthday, Bitcoin!
Exactly 10 years ago, Satoshi Nakamoto published a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”, which actually had started the decentralized revolution. Today, 10 years later, we take a look at how it all began, the timeline, and where we stand today.
The White Paper
Nakamoto initially circulated the white paper to a mailing list titled “Cypherpunks”. The white paper, written in a classic academic manner starting with the “Abstract” section, outlines containing a way to create a decentralized electronic cash system which would solve the biggest flaw in the digital payment system – the “double-spending”, where a single unit can be spent more than once.
In a nutshell, the solution included using a “peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions”. To this end, the white paper proposed using proof-of-work (PoW) to record a public history of transactions.
Just two months after publishing the white paper, Nakamoto announced the Bitcoin version 0.1, followed by the first transaction involving Bitcoin where Nakamoto sent 100 bitcoins to Hal Finney, one of the early Bitcoin enthusiast.
By the end of 2009, the system had to increase the difficulty of producing bitcoins in order to prevent a situation that would end up with too many being produced. The following year was marked by a famous event in which Laszlo Hanyecz offered a reward of 10,000 bitcoins to anyone who ordered him a pizza. As someone accepted the offer, this event marks the first real payment in bitcoins. The payment valued 1 BTC equaled 0.0025$, whereas compared to today’s market price 10,000 bitcoins are valued at more than $62 million dollars.
Going in the same direction, Gavin Anderssen created a website through which he gave out bitcoins for free – 5 per each visitor. Today, such a visit would earn you a whopping $30,000. In the dying months of 2010, Nakamoto posted some of his last messages online.
Looking back from this point of view, the year of 2011 was one of the more important years in the decade-old history of Bitcoin. The price reached 1$ for the first time ever at the start of the year, followed by the mid-year time when mainstream media started publishing articles on Bitcoin and its role in the future of digital payments.
It was also the time when the first major hack occurred as one of the users claimed that they were a victim of a hacker attack. This resulted in the loss of 25,000 bitcoins. The incident prompted a debate about security and risks associated with bitcoin.
While 2012 was a pretty quiet year with nothing major to report, the following year was arguably the most important in the history of Bitcoin. One of the first Bitcoin startups, Bitpay, had raised millions in order to support merchants to accept Bitcoins. Moreover, Coinbase had reported the sale of $22 million worth of bitcoins in a single month, before it raised $25 million to build a Bitcoin wallet.
More importantly, the price went above the $1,000 handle for the first time ever, only to ultimately reach $1,242 in November, which is even more impressive if I tell you that the price on January 1st of the same year was a mere $13.30.
Fast forward to 2017: Bitcoin was split in two by creating Bitcoin Cash (BCH), following a long debate over how to scale the currency. The new software that allows for eight times the number of transactions per block ultimately ended up processing transactions on the blockchain faster. In December of the same year, the currency hit an all-time high of $19,527.
Where Do We Stand Today?
The last twelve months have been marked by volatility and disappointment. The price erupted higher in December 2017 before starting its retrace to current levels. The entirety of 2018 so far has witnessed Bitcoin lose its value. The price action had been creating lower highs and the only attempt to break that streak failed a couple of years ago (Graph 1).
Graph 1. Bitcoin’s (BTCUSD) price last 12 months
If you pay attention to the highlighted circle on Graph 1, you will see that the recorded volume during the second week of October has been the lowest since December 2016, when the currency traded around the $800 handle. However, unlike other currencies which lost up to 90% of their value compared to the end of 2017, Bitcoin has lost “only” around 70%.
Moreover, Bitcoin is actually reporting an annual loss on its 10th birthday. According to Coindesk, the currency is currently down 0.16% on a yearly basis. It is the first recorded annual loss since 2015 when it was down 7.1% on its seventh birthday.
Despite the sharp price fall and failed attempts to recover, many argue that 2018 was an extremely important year for Bitcoin as the price has managed to reach and maintain a certain level of stability, which is seen as one of the key hurdles for the “king” of cryptocurrency to become a mainstream form of payment.
While many investors are waiting to see the next big move related to Bitcoin – for instance, NYSE offering bitcoin futures – the currency is finally entering a phase when it is starting to gain recognition and consideration from the financial giants as a legitimate asset. It was reported recently that Goldman, Citibank, ICE, and Morgan Stanley are all planning to launch cryptocurrency products and services. This, of course, implies that there is a growing demand from the institutional players to invest in Bitcoin-related products and assets.