From the "Genesis Block" to Tim Draper's big buy: A History of Bitcoin
On a day that’s all about looking back and celebrating the milestones in the birth of this country, it seems only fitting to take a look at the history of bitcoin and the pivotal moments that precipitated this crypto-currency revolution.
Bitcoin enthusiast and BitcoinWebHosting founder Rob Lons has created just such guide at HistoryofBitcoin.org, combining more than 150 critical events into an interactive timeline (embedded below). Below are select highlights from that tumultuous journey.
The Early, Early Days
The first event on Lons’ timeline is in 2007 when bitcoin’s pseudonymous creator Satoshi Nakamoto reportedly began working on the crypto-currency concept. This is followed by the August 18, 2008 registration of the Bitcoin.org domain and the subsequent October 31, 2008 publishing of the seminal Bitcoin white paper, distributed through the meltzdown.com cryptography mailing list. The Genesis Block was mined on January 3 of the following year, with Version 0.1 of the Bitcoin protocol released six days later, and the first transaction three days after that on January 12. Bitcoin was off and running.
A Community is Born
Protocol updates followed and a growing enthusiast community emerged over the following year, but things were relatively boring in bitcoin land for a while. The now infamous “pizza transaction” occurred on May 22, 2010, as a Jacksonville, Florida programmer spent 10,000 bitcoins for a pizza, a sum that today would be worth $6.34 million and which was valued at $11.4 million at Bitcoin’s December 2013 peak.
Mt. Gox was established as a bitcoin exchange on July 17, 2010. If only we knew then how that saga would end. Silk Road opened for business in January 2011. Perhaps fittingly, it was around this time bitcoin had its first run in with regulators in October 2010 as the Financial Action Task Force, an inter-governmental anti-money laundering group published the Money Laundering Using New Payment Methods paper warning about the use of digital currencies to finance terrorist groups.
This period saw a number of exchanges and wallet services hacked, offering a glimpse into what would become a troubling pattern throughout much of bitcoin’s existence.
Out of the Shadows
Bitcoin went mainstream when Time Magazine published an article on April 16, 2011 titled “Online Cash Bitcoin Could Challenge Governments, Banks,” beginning a love-hate relationship between they crypto-currency community and the mainstream (read, uninformed) media. Just days later, bitcoin passed parity with the Euro and British Pound, with the total bitcoin money stock surpassing $10 million for the first time.
Gawker's June 1, 2011 Sik Road expose titled The Underground Website Where You Can Buy Any Drug Imaginable didn't help Bitcoin's public image. The crypto-currency got more of this king of unwanted attention in May 2012 with the leak of an FBI report titled “Bitcoin Virtual Currency: Unique Features Present Distinct Challenges for Deterring Illicit Activity,” which highlighted bitcoin’s use in facilitating trade in illegal weapons and narcotics.
The bitcoin ecosystem began to formalize with the formation of the Bitcoin Foundation on September 27, 2012. The total bitcoin money stock crossed the $1 billion mark for the first time on March 28, 2013, around which time I wrote on Pando, “Welcome to the Bitcoin revolution, there’s no going back now.”
In Search of Legitimacy
2013 was the year that bitcoin began getting serious attention from venture capitalists and meaningfully engaging with regulators. Coinbase raised a $5 million Series A round in May led by Union Square Ventures, the largest such bitcoin-related funding round up to that point. The Winklevoss twins soon after filed with the SEC to launch their publicly traded Bitcoin ETF.
Then some 22 entrepreneurs and investors were subpoenaed by the New York State Department of Financial Services (NYSDFS) on August 12, leading to a subsequent series of private and public hearings and then, ultimately, the first ever specific digital currency money transmission license being issued by the state.
Unfortunately, 2013 it was also the year that Mt. Gox began showing signs of insolvency – the Department of Homeland Security seized the company’s US accounts on May 14 – the FBI shuttered Silk Road (October 2), and China revealed its anti-bitcoin policy initiative, with the country’s Central Bank banning bitcoin transactions on December 17.
Despite the bi-polar nature of the surrounding headlines – or perhaps, in part as a result – Bitcoin reached its all-time high price of $1147 on December 4, 2013.
Present day: The March Continues
The HistoryOfBitcoin timeline hasn’t been updated beyond January 26 of this year, but the crypto-currency community has continued to mature, while enduring additional trying moments in the five months since.
After falling to $360 on April 10, more than 65 percent off its all time high, the bitcoin price has recently rebounded and to today sits above $630. More importantly, there are now tens of thousands of global merchants that accept bitcoin as a payment mechanism, and millions of consumers with bitcoin wallets.
Bitcoin adoption may not yet be mainstream, but bitcoin curiosity certainly is. As Silicon Valley venture capitalist Tim Draper explained this week when discussing his purchase of $17 million worth of bitcoins in a US Marshals auction, he knew bitcoin had “crossed the chasm” when his 78-year-old aunt, who lives in South Carolina, first asked him about the crypto-currency.
And so it is. The growing bitcoin community will continue to dot this timeline with milestones, almost certainly mixing in the positive with the negative. But if the adage holds that what doesn’t kill you makes you stronger, bitcoin will look like Hercules by the end of this journey.
***History of Bitcoin, by Rob Lons