As 2018 comes to an end, and Bitcoin celebrates its 10-year anniversary, let us revisit some of the highlights and key milestones in the journey of cryptocurrency.
What is Bitcoin? (also known as BTC)
Most cryptocurrencies and Blockchain technologies find their roots in Bitcoin. Bitcoin is a cryptocurrency, a digital asset designed to work as a medium of exchange that uses cryptography to control its creation and management, rather than relying on central authorities.
1. 2007 to 2008: Subprime Mortgage Crisis
Subprime mortgage crisis led to a financial crisis and global recession. The aftermath of the mortgage crisis led to a quantitative easing by US Federal Reserve, global recession, sky-high unemployment rates and the European Sovereign-debt crisis. There was a large scale erosion of public confidence in the reliabilities of the government and government-issued currencies.
2. October 2008: Emergence of a new Cryptocurrency
Although Bitcoin is the first established cryptocurrency, there has been many prior attempts at creating online digital currencies that are secured by encryption, such as B-Money and BitGold. However, many of these digital tokens were formulated by not fully developed or adopted. Most of the development of cryptocurrencies was driven by the cypherpunk community.
In August 2008, the domain name Bitcoin.org was registered. Later in 31 October 2008, a white paper authored by Satoshi Nakamoto (an anonymous person) titled "Bitcoin: A Peer-to-Peer Electronic Cash System" was published. Satoshi Nakamoto integrated many existing ideas from the cypherpunk community when creating Bitcoin, such as: securing of digital signatures, not requiring the use of a third party, proof-of-work system, and hashing the transactions together to form a chain (also known as the blockchain). Bitcoin managed to create "a system for electronic transactions without relying on trust".
3. January 2009: Bitcoin's "Genesis" Block
The “Genesis” Block represents the first of Bitcoin’s mining; which then led to the first transaction. On 3 January 2009, the Bitcoin network came into existence with Satoshi Nakamoto mining the "Genesis" block of Bitcoin (block number 0), which had a reward of 50 Bitcoins. Embedded in the coinbase of this block was the text: 'The Times 03/Jan/2009 Chancellor on brink of second bailout for banks'. The first open source Bitcoin client was released on 9 January 2009, hosted on SourceForge. The first-ever Bitcoin transaction occurred when Satoshi Nakamoto sent 10 Bitcoins (BTC) to Hal Finney, who was a developer and cryptographic activist.
4. 2010: Bitcoin's value & exchange rate established
As it had never been traded, only mined, it was impossible to assign a monetary value to Bitcoin. In May 2010, Florida-based programmer Laszlo Hanyecz sent 10,000 BTC to a London man in exchange for two pizzas, valued at a total of $25. This valued a single Bitcoin at less than a cent. If the buyer had hung onto those Bitcoins, at today’s prices, they would be worth more than $50 million. Till this day, May 22nd is widely recognised as 'Bitcoin Pizza Day', which celebrates the first real-world transaction using Bitcoin.
2010 was a pivotal year for the exchange of Bitcoin, with the first Bitcoin exchanges being established: Bitcoin Market and Mt. Gox. Slush, the first mining pool, also mined Bitcoin successfully for the first time that year. Mining pools are where several miners combine resources to get Bitcoin. By November, the market cap for Bitcoin surpassed $1 million for the first time.
This also marked Bitcoin's first security issue: Someone spotted a vulnerability in Bitcoin's protocol in October that allowed for transactions without proper verification and exploited it, and Bitcoin got hacked of 184 billion BTC, which caused a drop in its market value.
5. 2011 - 2014: New Cryptocurrencies & Cryptocurrency Exchanges
As Bitcoin increased in popularity and the significance of decentralized and encrypted currencies catch on, more alternative cryptocurrencies (also known as 'altcoins') started to appear. These altcoins generally try to improve on Bitcoin's functionality by offering greater speed, anonymity or other advantages. Some popular and prominent altcoin projects are: Litecoin (Created by Charlie Lee) & Ethereum (Created by Vitalik Buterin).
6. 2014 - 2016: Rise of Bitcoin (non-chronological order)
- Birth of cryptocurrency exchanges: Mt Gox, BitPay
- Bitcoin Foundation launched
- Silk Road
- Bitcoin Fork
- Ethereum launched
- Coinbase formed
- More than 100,000 merchants accepting Bitcoin
- Network rate exceeded 1 exahash/sec
- Bitcoin price doubles in 2016, Market Cap scales $14 Billion
- Bitcoin ATM launched globally (771 ATMs worldwide in 2016)
- Governments begin to recognize virtual currencies like Bitcoin as having similar functions to real money
- Scams & Hacks growing
7. Crazy Cryptocurrency Fluctuations - 2017
2017 was a crazy year. The rise of prominence and popularity of cryptocurrencies saw a surge in investors and traders which caused an ICO market boom of nearly 1000% growth. The cryptocurrency world recorded new highs in prices and market capitalization. In 2017, Bitcoin prices first crossed $1000, but by June, it was worth over $3000. The price of one Bitcoin (BTC) reached a new all-time high of $19,783.06 on 17 December 2017. Ethereum recorded prices of around $1,400, while Litecoin recorded prices of around $255. Unfortunately, 2017 was also the year that the Cryptocurrency bubble burst causing the fall of Bitcoin, altcoins and many ICOs.
8. Bear Market, New Regulations, Growing Adoption
2018 has been bearish for the financial stock markets and also for the cryptocurrency market. Prices of most cryptocurrencies have fallen around 80% since its peak in 2017. Bitcoin prices have fallen below $4000, and Ethereum prices have fallen below $100. The slump in the cryptocurrency world may have caused many ICOs to fail. Nevertheless, there is still a growing widespread adoption and usage of cryptocurrencies amongst retail investors and merchants. Even in the bear market, the Lightning Network Capacity for Bitcoin and Litecoin have reached new peaks.
Additionally, the introduction of new regulations and government intervention will continue to encourage widespread adoption and also encourage the entry of instituional investors. Bitcoin Futures contract like Bakkt, will also likely be available in 2019, thereby encouraging more investors to enter into the crypto world.
Other things in 2018: The fork of BCH brought lots of drama and volatility to the cryptocurrency world. Furthermore, the burning of USDT brought questions about the functionality and 'stability' issues of stable coins.
Regardless, the bearish market have not discouraged the development of cryptocurrency and blockchain applications. Governments are also actively exploring how they can leverage these Blockchain technologies or to develop their own stable coins.
9. Looking forward
How will Bitcoin, cryptocurrencies and blockchain develop in 2019? Have we seen the end of the financial slump? Are you convinced of cryptocurrencies' intrinsic value and functionality? Prices have indeed fallen greatly since 2017, but there are two ways of looking at these issues. One, cryptocurrencies are a complete flop. Two, price are now very cheap to starting investing in cryptocurrency because we are only starting to see the initial growth spurts of Bitcoin and cryptocurrencies.