Welcome fren! When did Bitcoins start? Well the 3rd of January, 2009 was when the first Bitcoin block was mined, but real Bitcoiners know that there’s a number of different “starting points” for Bitcoin. From the genesis block to the first economic transaction to the Bitcoin Whitepaper, today we’re going to go through all of them plus some hilarious history too.
Table of Contents
When Did Bitcoins Start?
Bitcoin Was Created when Satoshi Nakamoto released the famous Bitcoin Whitepaper in October of 2008. On the 3rd of January, 2009 the first Bitcoin block was mined, called the “genesis block” or Block 0. They continued working on the project with other developers until 2010 when they left the project.
Who Invented Bitcoin?
A person or group of people under the pseudonym Satoshi Nakamoto authored and released the first copy of the Bitcoin Whitepaper title Bitcoin: A Peer-to-Peer Electronic Cash System.
With its release they wrote: “The root problem with conventional currencies is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”
To this day it’s still not know who this person or persons were. While many have claimed to be Satoshi, none have been able to do the one thing that would prove beyond a shadow of a doubt that they were actually them: spend Satoshi’s bitcoins.
As Satoshi started Bitcoin, they were the first to mine it, which allowed them to build up a huge amount of bitcoins from all the block rewards. It’s estimated that they mined at least 1 million bitcoins between January of 2009 and January of 2010 which would now be worth tens of billions of dollars.
Since it was originally mined all those years ago, these bitcoins have never moved. Any person wishing to prove beyond any reasonable doubt that they are Satoshi should have access to, and thus be able to spend / send those original bitcoins. So far, no one has stepped forward and proven their claim.
Basic Properties Of Bitcoin
Created by cryptographers (Cypherpunks technically) to cure the money problems caused by big governments and big banks it joins their other world changing technologies such as encryption of the Internet, encrypted messaging and the Tor project.
Some basic properties of Bitcoin:
- Limited Supply: There will only ever be 21 million bitcoins
- Distributed: All transactions are stored on thousands of computers all across the world
- Always Open: Unlike legacy banks, you can buy, sell, send or receive it globally, 24/7/365
- Transparent: The Bitcoin blockchain is public and viewable to anyone world wide
- Peer-To-Peer: No banks are involved, transactions go from one person to the other
- Permissionless: It can be used without having to ask anyone for permission
- Censorship Resistant: You’d have to stop the Internet to stop it
- Easily Divisible: 1 BTC can be divided into 100 million pieces called “Satoshi”
- Protected: The worlds biggest supercomputer made up of miners protect every Bitcoin
- Final Settlement: Bitcoin transactions, once confirmed in a block are irreversible
- Pseudo-Anonymous: There are no names or accounts. It should be noted that it’s still possible to link Bitcoin Addresses to real life names if care is not taken to protect your Bitcoin Privacy
Bitcoin’s History & Early Growth
While Bitcoin has been around since 2009, there were many attempts at creating online “digital cash” long before that. There was DigiCash in 1992, CyberCash in 1994, E-gold in 1996, WebMoney in 1998, Liberty Reserve in 2006 and Perfect Money in 2007. All of these attempts failed – which is why you’ve probably never heard of any of them – before Bitcoin burst onto the scene.
Some noteworthy points through its early growth include:
- October, 2008: Bitcoin Whitepaper is released under the pseudonym Satoshi Nakamoto
- 3rd January, 2009: The first Bitcoin block was mined, called the “genesis block” or Block 0
- 22nd May, 2010: One of the first Bitcoin transactions took place that was an economic trade. Two Papa John’s pizzas that cost around $25 at the time, were bought with 10,000 bitcoins
- 2010: Bitcoin exchanges launched, including Mt. Gox which at the time handled over 70% of transactions
- 2011: Bitcoin started growing exponentially from around $1 to $32 before crashing back to $2. Other cryptocurrencies such as Ethereum were also created
- October, 2012: BitPay announces that it has over 1,000 merchants accepting bitcoin
- 2013: Universities and many businesses such as Overstock.com, OkCupid and Foodler begin accepting bitcoin
- February, 2014: The Mt Gox exchange ceases operation and files for bankruptcy after losing hundreds of millions of dollars worth of its customers bitcoins
- February, 2015: Over 100,000 merchants globally accept bitcoins
- 2016: Over 700 Bitcoin ATMs are deployed globally
- June, 2017: The symbol for Bitcoin ₿ is officially encoded in the Unicode version 10.0
- 2020: Multiple multi-billion dollar companies turn to Bitcoin as a hedge against the US Dollar
- 9th June, 2021: The world first country, El Salvador, announces that they have approved law making Bitcoin legal tender
In Bitcoin’s relatively short history so far, its growth has been extremely fast relative to other new technologies. It is even managing to outpace the growth of the Internet itself and seems to be taking hold in developing countries first rather than how most new technologies evolve, which is going from rich to poor countries over time.
Bitcoin’s Price History
Bitcoin has gone through a number of huge bear and bull markets over its first decade. From gaining almost 3,000% in just three months to loosing almost 40% in one day it has been – and still is! – a wild ride for investors.
The tables values are taken from CoinGecko.com and is reliable for the 2013 period onwards, however in the earlier years of 2009 to 2013, valuations were difficult to pin down given its immature market.
|Last Updated: Aug 2022. 10Y (2012->2021) Historic CAGR: 149% p.a.|
What Are The Risks Of Investing In Bitcoin?
To begin with, you should always consult a registered financial professional on whether or not you should invest in anything, even Bitcoin, as only they will have access to your full financial situation, personal details and thus be able to make a properly informed opinion on whether it is a good investment for you or not.
As Bitcoin has seen phenomenal growth over the past decade – going from under $100 to more than $20,000 USD per bitcoin at a growth rate of 200%+ per year – there has been a huge rush to speculate and day trade with it. As such, it should be made clear that speculating is very different to investing.
Speculative Trading refers to the act of conducting a financial transaction that has substantial risk of losing value but also holds the expectation of a significant gain or other major valueInvestopedia
Investing, broadly, is putting money to work for a period of time in some sort of project or undertaking in order to generate positive returnsInvestopedia
One of the key differences between the two is how long you trade/invest for. For the purposes of this piece, we are exclusively referring to the risks of investing in Bitcoin, not day trading / speculating. We believe that this is basically just gambling and shouldn’t be done unless you’re 100% happy to lose all your money. Risks of investing in Bitcoin include:
- Volatility: Bitcoin is still a highly volatile asset that changes price every second of every day. While its volatility has reduced over time, it still has extremely wild swings up and down with drops as big as 61% in a single day back in 2013.
- No Insurance: While many deposits in banks around the world are insured by the government in case the bank goes bankrupt, Bitcoin has no backup or insurance policy (unless you take one out yourself). If you lose access to or forget your private keys, your bitcoins are lost forever.
- Fraud / Bankruptcy: While holding your own private keys secures you against this risk, many users still allow other third parties to custody their funds for them (or hold the private keys on their behalf). This trust in a third party then exposes them to other risks such as that company going bankrupt, being a victim of hacking or simply doing fraudulent things. To avoid this, it’s recommended you always remove your bitcoins from any exchange and hold your own private keys.
- Regulation: As Bitcoin is so new, the official regulatory status of it is still quite unknown and evolving as time goes on. This could mean that it may change dramatically in the future, adding new risk to your investment that wasn’t there before.
- Hacking: While this is a risk with virtually all assets in today’s modern world, Bitcoin is often stored by the user and not a financial institution and as such, may not be secured as well if the user isn’t very technical. This can lead to users losing their bitcoins to any number of hacking tricks that wouldn’t otherwise be possible. It should be noted though that using a dedicated Signing Device (also sometimes called a Hardware Wallet that’s basically just a USB drive) can significantly eliminate this risk.
Is Bitcoin A Good Investment?
While most asset classes like real estate or shares have had literally hundreds of years worth of history Bitcoin is still a relatively new investment class. It also has been very volatile and so whether or not it’s a “good investment” depends heavily on your unique personal and financial situation.
You should consult a registered financial professional on whether or not you should invest in anything, even Bitcoin, as only they will have access to your full financial situation, personal details and thus be able to make a properly informed opinion on whether it is a good investment for you.
The Athena Assessment
Bitcoin is being integrated into more and more ground breaking use cases such as the Lightening Network every day. If you’d like to learn more about it, check out our quick and easy How Does Bitcoin Work For Dummies? piece or our more in depth, 5,000+ word What Is A Bitcoin? guide!
When Was Bitcoin First Sold?
Bitcoins were traded here and there after the network started on 3rd January, 2009, however the first bitcoins were sold on the 12th October, 2009.
This was when Martti Malmi, a developer that helped Satoshi work on Bitcoin, sold 5,050 bitcoins for $5.02. This gave 1 bitcoin the value of $0.0009.
What Was The Lowest Price Of Bitcoin?
The lowest price bitcoins technically have ever been was right at the beginning, just after the first block was mined on 3rd January, 2009 and was $0 as no one was trading it.
After that initial period though Bitcoin was still very new which meant there wasn’t a lot of trading going on with it, which makes it hard to pin down an exact “lowest” value.
Two of the best records we have is of the a developer selling 5,050 bitcoins for $5.02 back on the 12th October, 2009. This valued bitcoins at $0.0009. The second one is from the Bitcoin Pizza transaction that traded 10,000 bitcoins for two Papa John’s pizzas that were valued at around $25 USD. This puts the price at $0.0025 on the 22nd May, 2010.
What Is The Average Return On Bitcoin?
The average return of anything depends on both your starting and finishing times. It’s easy to make an investment look like it has amazing returns if you pick the right two points in time.
For this reason most financial statements give the returns of an asset over multiple periods, typically the last 1, 3, 5 and 10 years. Given we only have meaningful data for about 2013 onwards, you can see the Combined Annual Growth Rate (CAGR) figures for Bitcoin below.
1 Year (2021): 67% ($28,665 -> $48,022)
3 Years (2019-2021): 135% ($3,692 -> $48,022)
5 Years (2017-2021): 117% ($998 -> $48,022)
Who Gets The Money When You Buy Bitcoin?
Buying bitcoins is typically done in one of two ways:
1. You do a peer to peer trade directly with another person. You get their bitcoins, they get your fiat cash. This can be coordinated through a decentralised exchange like Bisq or even just between your friends and family.
2. You buy bitcoins on a centralised exchange such as Kraken, Binance or Coinbase. Here the exchange is a little more complex as it involves a trusted 3rd party, the exchange, in the middle of everything. Usually the exchange will match up your request to buy bitcoins with another persons request to sell the same amount in their order book. The exchange is completed via their servers and once again, the other person is the one who gets your fiat cash.
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