On October 31, 2008, someone using a pseudonym of Satoshi Nakamoto published a paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. This paper introduced the framework of ideas and implementations behind a new form of digital currency which relied not on a government or bank for centralized trust, but the whole network for decentralized, consensus-based trust through something called a blockchain.

On January 3, 2009, Satoshi successfully hashed the first block on the Bitcoin blockchain and mined the first bitcoin. Embedded in the code base for this block was a message:

The Times Jan/03/2009 Chancellor on brink of second bailout for banks

It was clear that Bitcoin was meant to create a system of value exchange independent of the dominant financial system which at the time was reeling from the real estate bubble collapse in the US. This same system still controls most people’s lives to some extent today, and we’re seeing similar cases of big bank failures at the time of this writing (April 2023). In the early days, anyone with an average computer could install a miner program and earn bitcoins for contributing their processing power to solving hashes for the blockchain. I did this and wrote a bit about it in a previous post, but this post is mainly about Bitcoin rather than me. This collaborative effort that almost anyone could freely join helped get the Bitcoin blockchain off the ground and functioning. Few back then realized the magnitude of potential it held, but a lot of interest was created by the idea that everyday people could step out of the system imposed on them by central authorities who are inevitably driven by conflicting interests. Bitcoin aimed to cut out middlemen and facilitate value exchange directly between individuals without centralized intermediaries.

This was a revolutionary idea, as the banking industry is one of the most heavily regulated in the US, although those regulations are often more inclined towards protecting the banks themselves rather than their customers and investors. Many justifiably opposed bank bailouts based on the idea that institutions which fail should be allowed to collapse rather than be rescued by the government with taxpayer money. In a bank, all the accounts are held centrally with that bank, which is controlled by a small set of owners. In a public blockchain, no one owner or small group of owners controls it as it is communally owned and cooperatively generated.

In 2011, the price of a bitcoin jumped from about $1 to a high of $32, only to later that same year fall back down to $2. In 2013, it went from $13 to $220 only to later fall to $70, and then later from $123 to $1,200! In 2015, popular cryptocurrency exchange Coinbase raised $75 million in funding, which boosted Bitcoin from its trending value of about $180 to $465. In 2016, Japan designated Bitcoin as a legal form of tender on par with fiat currency. Also that year, hackers targeting Bitfinex, another large Bitcoin exchange, stole 119,756 bitcoins and made worldwide headlines. In 2017, Bitcoin started the year around $776 and experienced a significant growth in places accepting it as payment. A hard fork of the community also happened this year resulting in the creation of an alternative blockchain called Bitcoin Cash which had somewhat different visions for the future of Bitcoin and how it should be managed. Bitcoin (the original) ended the year at a new high of $19,343.

In 2018, Google and Facebook announced they would block any advertisements related to cryptocurrencies. Bitcoin trended downward to as low as $3,700. In 2019, it fell further to $3,383, later climbing back up to over $10,000. However, it resumed its downward trend which was accelerated by the COVID-19 pandemic in 2020. Bitcoin started 2020 around $7,200 and fell to about $5,000. Closer to the end of the year, however, fear in traditional finance markets drove the price back up to $18,353. In 2021, it continued climbing to $29,800 and later to a new high of about $68,000. Over 2022 the price trend was largely negative, causing Bitcoin to decline to about $15,400 at the start of 2023. As I type this post in late April 2023, the price is approximately $29,250.

These wild fluctuations in value are based largely on the variable demand for Bitcoin. Supply is rather stable, growing gradually as it was designed to increase at a controlled rate to reach a programmed cap of 21 million bitcoins. At the time of this writing, 19,357,508 of them have already been mined, but the expectation is that the final fraction of the last bitcoin will be mined in the year 2140!

But Bitcoin was only the first cryptocurrency to make waves in the financial world. Others were created over the years since its launch to the point that we now have well over 10,000 of them floating around. Most of them have come nowhere close to making the same level of impact as Bitcoin, but then there’s the special case of Ethereum, which will be the topic of my next post.

I hope you’re enjoying reading this blog. While this is only my 5th post so far, there are plenty more to come with lots of interesting information and ideas. I intend to build this blog over time to become the best I’ve ever made. So I hope you’ll join me for that journey and subscribe to keep up to date with what’s yet to come! Also consider collecting this post (and any others you value) as that’s a direct way to support this blog’s current goal of registering an ENS domain to give it a more user friendly web address, as well as enable some other future enhancements of functionality!