The history of Bitcoin

In addition to being the most recognized and most valuable cryptocurrency on the planet, Bitcoin was also the world’s very first cryptocurrency. It gave birth to the entire industry when it made its official debut in 2009, and despite many ups and downs over the years, Bitcoin has become an overwhelming success, with a market value of more than $387 billion today.

So, how did it all start, and what exactly happened over the last 13 years that made Bitcoin the industry giant that it has become? Will its value continue to grow, or will the excitement surrounding Bitcoin and other cryptocurrencies eventually fade out? Find out right here in our AAG Academy guide to the history of Bitcoin.

What is Bitcoin?

Bitcoin is a digital currency or cryptocurrency — the world’s original cryptocurrency, in fact — that is powered by blockchain technology. It was designed to be an alternative to traditional fiat currencies like the U.S. dollar or the euro that is less susceptible to many of the problems traditional currencies face, like counterfeiting, inflation, and a flawed banking system.

Its ability to act as a means of payment means Bitcoin can be used for almost anything regular cash might be used for, such as paying for goods and services, or sending money to others. Except Bitcoin does not require a middleman, such as a bank or credit card company, in the same way that traditional cash transactions do.

What’s more, Bitcoin is more accessible than traditional currencies in many ways. It does not require a bank account or credit card at all, which means there are no age restrictions, no need to prove your identity, and no need for a good credit rating. It’s also easier to obtain Bitcoin than other cryptocurrencies since it is available from most centralized exchanges.

Bitcoin itself, however, is completely decentralized. Unlike other currencies, it is not controlled or governed by a single entity, such as the government or a central bank. It relies on a process called proof-of-work (PoW), which uses complex mathematical problems and powerful computer hardware to verify all transactions and record them in a distributed ledger.

Today, there are tens of thousands of cryptocurrency projects in existence, and while most of them were designed to do different things and achieve different goals, every single one of them builds upon the foundations laid by Bitcoin.

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When was Bitcoin launched and who invented Bitcoin?

Bitcoin made its official public debut on January 3, 2009, when its creator, who used the pseudonym Satoshi Nakamoto, mined the first block, known as the genesis block. It is believed that in the seven months that succeeded this, Nakamoto mined around 1.1 million BTC coins in total, which would be worth almost $22 billion at the current Bitcoin price.

According to reports at the time, one of the first proper Bitcoin transactions took place in May 2010, when a Florida man negotiated a deal to buy two Papa John’s pizzas, worth about $25, for 10,000 BTC. The deal valued the price of one BTC at roughly one fourth of a cent. Today, however, that 10,000 BTC would be worth a staggering $199 million.

When was Bitcoin invented?

Bitcoin’s history actually goes back a lot further than 2009. Nakamoto first laid out their vision for the currency in a whitepaper that was published in 2008, right in the midst of what we now call the Great Recession — one of the worst economic disasters the world has ever faced. The whitepaper was titled, “Bitcoin: A Peer-to-Peer Electronic Cash System.”

In the paper, Nakamoto outlined what he believed was the “root problem” with traditional fiat currencies — such as having to place so much trust in central banks — then proposed his solution. “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party,” Nakamoto wrote in a mailing list that followed in the same year.

Bitcoin “would allow online payments to be sent directly from one party to another without the burdens of going through a financial institution,” the announcement continued. Nakamoto also credited earlier technologies that inspired Bitcoin’s creation, including Hashcash by Adam Back and b-money by Wei Dai, which date back to the late 1990s.

Bitcoin’s price history

It’s difficult to believe now, but during the early days of Bitcoin, its coins were virtually worthless and the only people who had any interest in them were cryptocurrency enthusiasts. In fact, in March 2020, one fan put 10,000 BTC up for sale for a mere $50, but no buyer was found. It wasn’t until February 2011 that BTC reached a value of $1 per coin.

By late 2013, the price of a single BTC exceeded $150, and less than a month later, it surpassed $1,200 for the first time. However, Bitcoin’s value crashed in April 2014, causing the price of one BTC to fall to $340. At the time, the cryptocurrency industry had no idea that this would be just one of many sharp rises and falls that Bitcoin would experience.

By December 2017, Bitcoin was worth a staggering $17,900 per coin, but that price had dropped to just $3,300 a year later. In July of 2019, it again surpassed the $10,000 milestone, and despite a drop in the spring of 2020 as a result of the COVID-19 pandemic, it only took a few months for the price of BTC to hit more than $10,000.

That’s when BTC prices really started to skyrocket. By late 2020, a single coin was worth almost $20,000, and in early 2021, its value more than doubled to over $41,000. February 2021 saw the price of BTC rise above $50,000, while in April it hit a new all-time high of $64,800. That record was beaten in October 2021, when BTC reached $66,974.

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Bitcoin today

Since the price of BTC surpassed $66,000, its value has fallen quite significantly and now sits at around $20,000 per coin today. This can be attributed to a number of different factors, including the crash of Terra Luna in May 2022, and the freeze of Celsius Network due to “extreme” conditions in June. The current economic climate also hasn’t helped.

13 years on from its launch, Bitcoin probably hasn’t become as ubiquitous as its creator would have hoped, but the cryptocurrency has seen significantly greater adoption than others. It is now accepted as a form of payment by many merchants, including the likes of Microsoft and Twitch, and it is even an official currency in some countries, such as El Salvador.

Bitcoin also remains the world’s most valuable cryptocurrency by some margin. Its current market capitalization of over $387 billion means that it is more than twice as valuable as Ethereum ($165 billion), the second-most valuable cryptocurrency. And given that the gap between these industry giants is so big, it’s unlikely Bitcoin will be dethroned any time soon.

Bitcoin tomorrow

Unlike traditional cash and many other cryptocurrencies, the number of Bitcoins (BTC) that will enter circulation is finite. The Bitcoin halving process, which cuts the number of new BTC coins minted during the mining process in half every four years or so, ensures that when almost 21 million BTC have been produced, it will be impossible to mint anymore.

Current predictions suggest we will reach almost 21 million BTC by the year 2140. Until then, it will become more and more difficult to acquire coins using the PoW consensus mechanism since even more powerful computers will be required and there will be even greater competition. This scarcity will only make Bitcoin even more valuable.

It may be down right now, then, but it’s likely only a matter of time before Bitcoin’s price rises again — and indeed surpasses its previous all-time high. Experts predict that hitting $100,000 per BTC is a matter of when, not if, and some believe it could happen by 2025. By then, it’s possible that Bitcoin adoption will have increased as well.

Bitcoin has already achieved the mission it set out to complete, which is to be a digital, decentralized alternative to traditional cash that’s immune to counterfeiting and considerably less susceptible to pitfalls like inflation. However, whether it will eventually see mainstream adoption and become a true alternative to cash in major economies remains to be seen.

References

• History of Bitcoin
• The History of Bitcoin, the First Cryptocurrency
• Bitcoin prices and value history
• Bitcoin price predictions