A Brief History About Cryptocurrency
Summary: Ten years ago, a groundbreaking innovation, ‘Bitcoin’, emerged as the first ever
cryptocurrency. Fast-forward today and over a thousand of cryptocurrencies are available
in the market. The history of cryptos is certainly short in the grand scheme of things, but as
this post demonstrates, there have been incredible twists and turns throughout the decade-
Although it is often viewed as a new and futuristic technology, Bitcoin and its underlying
framework have been in existence for over a decade now. In fact, if you have invested $1,
000 in bitcoin the first year it became available, you’d be richer to the tune of about $40
million! With more and more cryptocurrencies emerging by the day, it becomes even
harder (or remember) how it all began. So, we put a brief cheat sheet that details some of
the most notable events, both good and bad, that sheds light on the history of Bitcoin and
other major digital currencies.
Before 2008, there had been attempts to create digital currencies with ledgers-secured
encryptions, but no project was fully developed. 2008 marked one of the most important
years in the development and emergence of the first digital currency. Firstly, on August 18,
the domain bitcoin.org was registered. Later, on October 31 st , a developer(s) using the
pseudonym “Satoshi Nakamoto” designed bitcoin (BTC), and published the underlying
paper—Bitcoin: A Peer-to-Peer Electronic Cash System.
Just a few days into 2019, the initial BTC block was created [mined], and were branded the
Genesis Block. In January 9 th the first iteration of the BTC software was released, and on
January 12 th the first-ever BTC transaction was completed when Nakamoto sent 10 BTC to a
certain developer and programmer, Hal Finney. In October, the New Liberty Standard
published the first BTC exchange rate valuing it at just $1 for 1309.03 BTC. Towards the
end of the year, Nakamoto released the second version of BTC software.
2010—Bitcoin Used to Make Actual Purchase for the First Time
After its value establishing its monetary value at the end of 2009, it was only a matter of
time before someone attempted to make actual purchases using BTC. In May 2010, a
Florida-based programmer Laszlo Hanyecz exchanged 10, 000 BTC for two pizzas to a
London man, valued at a total of only $25-30. Given that 10, 000 BTC would be worth
nearly $80 million today, these make those pizzas the most expensive ever!
On August 15 th , BTC is hacked exposing a massive vulnerability in the underlying
technology. Jeff Garzik, one of the developers, notes a highly unusual transaction involving
184 billion BTC and caused a significant drop in its market value. The transaction,
however, was reversed, erased, and vulnerability corrected.
2011—The Emergence of Other Cryptocurrencies
After addressing the susceptibility issue, BTC gradually regained its value, and in February
2011, a major milestone was witnessed: 1 BTC was worth $1 for the first time since its
launch. As the value of BTC grew along with its popularity, the significance of a
decentralized system and digitally-encrypted currencies started to catch on.
Alternative coins [otherwise known as Altcoins] began to emerge. Generally, the idea
behind most of the altcoins was to improved on BTC’s functionality in terms of anonymity,
efficiency, speed, storage, and other benefits. As a result, some popular cryptocurrencies
were created, including Ethereum (developed by Vitalik Buterin) and Litecoin (developed
by Charlie Lee). By the end of 2011, 1 BTC was worth about $30.
2013—The Crash of Bitcoin Value
By 2012 cryptocurrencies led by BTC has started to enter the popular consciousness and
gaining public attention. At the same time, the cryptos were used as a secure means to
conduct illegal selling of drugs. For example, since BTC transactions were private and
untraceable, the drug market used its to sell and purchase drugs online. Although this was
put to a stop in by the end of 2014, it played a hand in decreasing the value of the coin.
Shortly after BTC reached $1000 for the first time, the price swiftly declined. Most of the
investors suffered losses as the market value of 1 BTC plummeted to about $300—it would
take more than two years before it could rise back to $1000. Meanwhile, BTC holders
failed to agree on new rules for transactions which resulted in some kind of ‘fork’ where
the blockchain, for about six hours, literally split into two and played a big role in BTC’s
drop in value.
Around the same time, different countries in the world were attempting to work out the
best possible ways to deal with the increased prominence and issues regarding the digital
currencies. While in Vancouver, Canada, the first BTC ATM was launched, other countries
were prohibiting any transactions with cryptocurrencies. For example, China restricts all
financial institutions from dealing with Bitcoin and other cryptos, which promoted another
drop in market value. In Germany, the ministry of finance avoids accepting digital
currencies as official currencies for business, while Thailand bars BTC, pronouncing that all
trading with cryptos illegal.
2014—Theft and Scam
2014 continues what was some sort of major decline of BTC, with increased issues to do
with theft and scam. In January 2014, the biggest BTC exchange Mt. Gox went offline and
filed for bankruptcy. Investors of about 850, 000 BTC never saw their cash again.
Investigations are still underway, trying to determine what actually happened. But,
whatever the story, it is believed that this had everything to do with theft and scamming for
a haul [then] valued at $450 million; that’s about $6.8 billion in the current market.
Due to BTC struggles, Ethereum gain prominence endeavoring to succeed where BTC failed.
With its diverse system, Ethereum brought smart contracts to the crypto world, and
although it has not yet managed to overtake BTC in terms of market capitalization, it
remains the second largest. This crypto’s arrival coincided with the emergence of Initial
Coin Offering—the fundraising systems that allow investors an opportunity to trade shares
or stocks in startup ventures, in the same way, they would do with the digital currencies.
2017—Bitcoin Rise Again and Hits (Almost) $20, 000
2017 was a crazy year for most prominent cryptocurrencies. The rise of popularity and
prominence of digital currencies saw a surge in traders and investors, causing the ICO
markets upsurge of about 1000% in growth. Most cryptos recorded record highs in market
value and capitalization. While most altcoins were rising by each passing day, BTC
benefited the most and experienced a massive growth. Not only did the BTC
cryptocurrency hit back its $1, 000 value, but it also hit $3, 000 by June, $10,000 by
October, and recorded its all-time high of $19, 783.06 by December 17 th , 2017. The same
year, Ethereum was valued at $1400, while Litecoin was $255.
2018—Coincheck Exchange Hack
Coincheck, one of the largest cryptocurrency exchanges in Japan lost $534 million in bitcoin
in what is described as the biggest crypto heist ever. The sum [in terms of value] of the
stolen BTC was astonishing, even surpassing the infamous Mt Gox hack of 2014 where 850,
000 BTC [about $450 and 6% of BTC in circulation at the time] was stolen from the
pioneering BTC exchange. Surprisingly, while Mt. Gox filed for bankruptcy after the hack,
Coincheck remained in business and reimbursed some of the money [about $430 million]
to those impacted by the heist.
2018 also market the year that nearly all leading cryptocurrencies experienced major
crashes. The total market cap for all cryptos fell to around $138.6 billion, down by more
than 80% since 2018 January peak. By the end of 2017, bitcoin was approaching a market
value of $20, 000, but within early days of 2018 its value fell to about $4, 300. In the first quarter of 2018, the entire cryptocurrency market lost over $342 billion, the largest
loss in cryptocurrency ever recorded.
2019 and Future—Bitcoin Value to Rise
As other altcoins continue to scramble for market space, forecasts predict that BTC will
continue to rise in 2019, and the coming years. According to a recent report published by
A.T. Kearney, BTC will regain approximately two-thirds of the crypto-market capitalization
as the majority of altcoins luster due to the growing risk of aversion among crypto
investors. In terms of market value, some reports show that BTC will even hit $23500
by the end of 2019. Recently, BTC touched $8000, which is the first time since July 2018
after overcoming the January 2018 crash. Although issues of hacking are still prevalent
recently 7000 BTC got hacked in Binance, a number of estimates still believe BTC will hit
over $20, 000 in 2019.