The first mention of cryptocurrency dates back to 1983, but the concept of digital assets did not become a reality until 2008. Today, institutional investors are actively adding Bitcoin and altcoins to their portfolios. Therefore, it is the right time to review the history of the formation of such a promising industry and analyze the main stages of its development.
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When Bitcoins appeared
The official date of BTC cryptocurrency’s appearance is December 31, 2008. It all started with the publication of the article “The Bitcoin Roadmap”. Its author is Satoshi Nakamoto. He detailed the specifics and advantages of digital signature protection, direct payments without counterparties. This is the bible of cryptocurrency with a description of Blockchain technology, peculiarities of using coins.
Later it became clear that Satoshi Nakamoto was a pseudonym. To this day there are fierce debates about who is hiding under this nickname. The anonymous developer not only presented theoretical developments but also put them into practice by launching the first genesis block. The first-ever transaction was made on January 12: the developer Hal Finney received 10 BTC coins from Satoshi. In October, the cryptocurrency exchange rate was recorded – $1 = 1309.03 BTC.
Who invented Bitcoin and why
There are a lot of versions as to who is hiding under the mask of the creator of Bitcoin. Some media even suggest that Satoshi Nakamoto is a whole team of developers. However, there is no real evidence, only theories. Let’s consider the most popular and argued versions of who created Bitcoin and why. Mostly suspicions fall on rather famous faces in the crypto industry.
An anonymous person who used Blockchain technology to create a fully decentralized cryptocurrency. It is the computing power of the network participants that form the infrastructure. In 2008, Bitcoin was launched, at the same time the domain name “bitcoin.org” was acquired and the first wallet for storing the cryptocurrency was created. At the first stages of Satoshi Nakamoto was actively involved in the development of the project.
In 2010, an alternative currency interested American law enforcement agencies, namely, the CIA. However, it was much more difficult to find Satoshi Nakamoto, as no one knew the real name of this developer. The agency’s agents sought to reach the Bitcoin founder through one of his main assistants. Satoshi received an invitation but refused to meet with the CIA.
After this incident, Satoshi Nakamoto disappeared. He never contacted anyone again. All the information that he provided about himself earlier seems to be fiction. For example, his Japanese origin, because all the documentation was written in very good English and there was no Japanese translation at all.
Dorian Satoshi Nakamoto
If you try to find a picture of the creator of Bitcoin using Google or another search service, one of the first things you will see is an elderly Japanese man who is unlikely to have ever been heard of by programmers. Dorian Satoshi Nakamoto himself denies his involvement in the Bitcoin project and even threatens to sue those who continue to spread false information about it. The main flaw in this theory is that Dorian Nakomoto is strapped for cash, while the true creator of Bitcoin today is a billionaire.
Another contender for Bitcoin authorship. Nick Szabo denies any involvement in the creation of the cryptocurrency, although he admits to being well versed in the industry. There is real evidence that he was involved in discussions of such projects before Bitcoin even existed. Nick Szabo is one of the most authoritative speakers at various cryptocurrency conferences, and he also has his projects.
Sometimes he hints that he created Bitcoin and even provides proof. However, the community does not believe in this theory. Craig Wright has an excellent understanding of the crypto industry, for example, he was actively mining BTC back in 2009. He is one of the main holders of this asset. The police have also been investigating him regarding his involvement in the creation of bitcoin.
In 2015, Craig Wright’s home was even searched, but no evidence was found linking him to Satoshi Nakamoto. However, it is not entirely clear what exactly the U.S. law enforcement authorities want to incriminate the creator of Bitcoin because formally he did not violate any laws. Refusing to meet with the CIA is hardly a crime.
The Canadian developer of Russian origin is the founder of Ethereum, the second-largest cryptocurrency by market capitalization. He is public and not hidden from the public. Vitaly Buterin was born in 1994, from an early age he was interested in the exact sciences and computer technology. Today he is one of the main popularizers of Blockchain technology.
Ether is more than just a cryptocurrency. The Canadian programmer managed to create a decentralized platform based on which new projects can be created. His idea is larger than Bitcoin. Buterin is confident that his development can change the financial industry and the work of government agencies forever. The widespread use of blockchain will eliminate banks and many regulatory agencies.
The creator of the cryptocurrency silver, Litecoin. He was also inspired by Bitcoin and started to develop his projects. The LTC network is an improved version of Bitcoin. Litecoin coins are much easier to mine, but in terms of globality, Charles Lee’s project is significantly inferior to the world’s first cryptocurrency. The founder of Litecoin doesn’t avoid publicity, but he doesn’t strive for fame; he simply improves his project. Previously, he worked at Google, and today he cooperates with one of the most famous cryptocurrency exchanges.
Another revolutionary in the cryptocurrency world. First, he created the sensational Ripple project, and then he took part in the launch of Stellar. Jed McCaleb never limited himself to digital currencies, he launched exchanges, file exchanges, and other startups. Many promising projects had to be abandoned to concentrate on more important ones.
Jed McCaleb is not creating forks of Bitcoin, but truly independent products. Ripple is not a cryptocurrency, but a functional system for financial transactions. It is based on Blockchain technology. Stellar is a project based on Ripple after Jack McCaleb left his position as CEO.
This is the creator of the cryptocurrency Dash, which stands out from others for its complete anonymity. Evan Duffield has long been an active member of the Bitcoin community, offering to implement his developments. The developer did not like the BTC network for too long transaction processing. In addition, he saw real gaps in the issue of anonymity.
The Bitcoin community did not accept Duffield’s ideas, so he concentrated on creating and developing his project – Darkcoin, which was later renamed Dash. This network is also based on a peer-to-peer system and other important Bitcoin principles, but the mining rewards are distributed in a slightly different way. 10% of the money earned is reinvested in the development of new projects, allowing for faster development of infrastructure and improvement of the network.
A brief history of cryptocurrency
The digital asset industry has evolved very quickly and dynamically. Bitcoin has already renewed it’s historical high several times in 2021. Therefore, now is a good time to take a closer look at the history of the formation of this industry and get acquainted with the most important moments that influenced the development of cryptocurrency in general.
The concept of electronic money was first proposed in 1982 by scientist David Chaum. As a computer scientist, he was actively interested in privacy issues in the digital environment. In the early 1980s, he published an article entitled “Blind Signatures and Untraceable Payments,” in which he detailed the feasibility of using cryptography to create a new automated payment system.
In 1990, Chaum tried to put his theoretical work into practice. The information scientist founded his company DigiCash in the Netherlands. It was engaged in the creation of a secure Internet currency. The scientist’s impeccable reputation made it possible to attract investors, but the project did not work. Therefore, already in the early 90s, the company declared bankruptcy.
David Chaum’s labors were not in vain. In 1997, Adam Beck presented his hashish project, which was based on a consensus proof-of-work algorithm. This is quite similar to the principle used in Bitcoin today. However, this project also did not pay significant dividends.
At the end of that year, Wei Dai published an article in which he exhaustively described the idea of b-money. It was a cryptocurrency with a very similar storage mechanism to Blockchain. The project was also based on the Proof-of-Work algorithm. Transactions within this network were made by solving mathematical problems.
At the same time, Nick Sabo presented a similar project, which was called Bit Gold. He tried to launch a payment system that would not require counterparties, such as the Central Bank. Solving mathematical problems gave the user the elements of a signature string. The last piece was needed to sign the next transaction. However, both projects were well ahead of their time and proved unsuccessful.
The first projects that preceded Bitcoin appeared 2 decades before the launch of this cryptocurrency. We have already talked about the terms of Satoshi Nakamoto’s project. Therefore, we will concentrate more on the theory. A continuous chain of transactions was formed by hashing, the same PoW was used as an algorithm to achieve consensus.
On the 9th of January the first version of Bitcoin software was presented, and 3 days later the debut translation was made. In October, the cryptocurrency was formed against the U.S. dollar. A few months later, Satoshi Nakamoto presented an updated version of the software.
The emergence of the official exchange rate brought Bitcoin closer to the coins being used as payment. This happened in May 2010, when programmer Lazlo Khanesh transferred $10,000 to get 2 pizzas totaling $25. Of course, the cryptocurrency was priced too cheaply, but deals like this showed its potential. A couple of months later, BTC finally rose to $0.01.
The infrastructure continued to develop. The first online cryptocurrency exchanges – Bitcoin Market and Mt.Gox – were launched in 2010. At the same time, the first pool for mining coins – Slush – was created. In November, the market capitalization of the project finally broke the bar of $1 million. A month before that, hackers found a weakness in the code, which resulted in the creation of 184 billion BTC. However, later the vulnerability was fixed and the transaction was canceled.
Having surpassed the limit of 1 cent, the rate of the cryptocurrency kept growing. In February 2011 there was a historical event because the quotation of BTC was finally equal to the U.S. dollar. More and more information about Bitcoin started to appear in mass media. Time magazine was one of the first to publish an article, and then Gawker published a detailed description of the Silk Road black market and Bitcoin’s role in it.
The interest from the press had a favorable effect on the value of the cryptocurrency. It rose to $30 but then fell back to $10. In June, the Mt.Gox exchange was hacked. However, Bitcoin was becoming increasingly popular. At this time, altcoins were beginning to emerge, for example, Charlie Lee launched Litecoin.
If 2011 was marked by variable success for cryptocurrency in general and Bitcoin in particular, 2012 was more unambiguous. Already in April, the value of the digital coin BTC exceeded $100.
This year was unstable and was remembered for powerful fluctuations of quotations. For the first time in its history, the value of Bitcoin crossed the $1,000 threshold, and the asset finally became the most recognizable cryptocurrency, which secured the status of a blue-chip.
This period was marked by a kind of pause in the history of the crypto industry. In January 2014, Bitcoin once again fell below the $1,000 mark. Over the next few years, it would again return to this level and even surpass it. The bankruptcy of one of the first exchanges, Mt. Gox, is noteworthy among important events. The platform announced its closure.
Perhaps this is one of the major milestones in history. After the imbalance of 2016, the cryptocurrency again conquered the bar of $1000. Quotes overcame this level, and already in June, the coin was worth more than $3000. Although there was some dissatisfaction as well. Bitcoin’s popularity was provoked by an increase in the number of miners, which led to higher transaction fees. On this wave, a hard fork took place in August 2017, resulting in the creation of the Bitcoin Cash cryptocurrency.
For most of that year, Bitcoin’s value skyrocketed. It soon surpassed the $6,000 mark. In November, it almost hit the $10,000 mark. In December, there was a sensation, because 1 BTC coin was estimated at $19,783. Naturally, as the cryptocurrency went up in price, the public’s interest in it grew as well.
Naturally, the uptrend could not last forever, so the correction soon began. This year was a period of disappointment because many investors came to the industry on the wave of hype and wanted to make money, but in the end, they only lost their money. As a result, in 2018, everyone was actively selling BTC, as a result of which the price was falling inexorably. It fell below $4000. Mining was rapidly losing its profitability.
On February 7, quotes finally bottomed out at $3300. However, the price then pushed back and began a smooth rise. First, the price settled at $4200, and in April, it broke through the $5200 bar. After numerous short-term corrections, Bitcoin will rise to $8700. The bull run continues, with quotes first rising to $12600 and then breaking through the $13689 level. Experts tend to highlight several main reasons why the value of the cryptocurrency grew so vigorously during this period:
- mass acceptance of digital assets – institutional investors began to actively invest in Bitcoin, in the U.S. and Switzerland normalized legal cryptocurrency trading;
- popularization and strengthening of promising altcoins – banks and financial companies began to support Ripple, Ethereum, and many other projects with potential for development;
- user-friendly technology – paying for goods and services with cryptocurrency has become more practical. Coins can be transferred from mobile wallets, special cards appeared, and users finally got a practical interface;
- Google and Facebook lifted a temporary ban on crypto advertising. Mark Zuckerberg has even considered creating his own Libra coin;
- Bitcoin stabilized – implementation of SegWit protocol significantly improved network throughput, and Lightning Network offloaded miners by an additional 20%. When the exchange rate stabilized, the network’s processing power recovered, and more miners appeared;
- U.S.-China trade standoff – experts believe the upward rally in July is due to the revival of the Asian market. Despite the ban by the authorities, many companies and Chinese citizens continue to invest in Bitcoin.
The main cryptocurrency corrected at $9500 at the end of August, but then crossed the psychological level of $10,000 again. Experts predicted that the coin’s quotes would be able to consolidate at this level, but the situation developed differently. Bitcoin has considerably sagged, and December closed at $7750.
This year the real American race began. Already in January, the cryptocurrency began to climb out of the abyss, and in February Bitcoin finally rose to $10,000. Then came perhaps the biggest blow in history – Black Thursday. On March 12, news of the COVID-19 pandemic and mass lockdown caused all financial markets to collapse, Bitcoin also fell in price. For a moment, the coin was even trading at $3778.
Then a very explosive growth began. Some analysts even compared it to 2017. Already in December, Bitcoin crossed the important level of $20,000. After that, it renewed its historical maximum. The cryptocurrency celebrated the New Year with a record high of $35,000. In 2021, the value first went up to $50,000 and then hit the $60,000 bar.
Who is now developing Bitcoin?
There is no single public leader of the main cryptocurrency. Satoshi Nakamoto’s identity is still unidentified. The development of the network is engaged in the community. Every user takes part in votes, influencing important processes. Naturally, the key coin holders have more weight. This primarily concerns international mining pools, as well as Bitmain, which develops ASIC devices.
The abnormal growth of cryptocurrency in 2021 is due to the tremendous support from institutional investors. Hedge funds, banks, and financial companies invest in BTC coins, thus supporting the network. Naturally, this support also contributes to the development of the network and the popularization of the crypto industry as a whole.
Where does the money come from when mining
Bitcoin has a fixed issue. There may be a total of 21 million coins in circulation. They are mined gradually. As of the first quarter of 2021, 88% of the cryptocurrency has already been found. Issuance is closely intertwined with mining. Users solve complex problems with their computing power, thus keeping the network up and running. They search for new blocks into which transaction information is recorded. They get BTC coins for doing this.
Bitcoin is often compared to gold. This is a valid analogy because BTC coins are an exhaustible resource. It is also worth considering that about 4 million BTC are lost forever. This issuance structure creates a shortage of the asset, which keeps its value high. The mining fee is a fee for keeping the network running.
Bitcoin is the main cryptocurrency created by the anonymous developer Satoshi Nakamoto.
The first attempts to launch decentralized digital money were made back in the 1980s.
BTC coins are mined through mining, which helps keep the network running.