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A Brief History of Bitcoin

A Brief History of Bitcoin

Explainers Cryptocurrencies

18 Dec 2020

In December 2010, Satoshi Nakamoto published his last post on BitcoinTalkForum, pulled a vanishing act on everybody, and never looked back to grab a hold of the treasure locked in his Bitcoin wallets - $22 billion, today.

Everything started on the cypherpunk mailing list back in the 90s. A group of enthusiastic and libertarian-minded cryptographers from California had created a community to develop anonymous digital cash and pseudonymous reputation systems as well as talk politics, economy, and philosophy.

Cypherpunks considered privacy necessary for an open society in the electronic age and were upset with governments depriving them of such privacy. Think of the Julian-Assange-kind-of-angry vibe, because in his days he was also one of the leading voices in the cypherpunk movement.

Gifted programmers of that generation, Adam Back, Wei Dai, and Hal Finney included, contributed to the mailing list in one way or another. Satoshi put together the existing pieces of the puzzle and managed to solve the Rubik’s cube; to his credit, he did it just in time for the Lehman Brothers to shut down and the crisis to spin out of control. In his whitepaper, released October, 31, Bitcoin’s inventor blatantly criticized the current monetary system and proposed another form of money that would be cryptographically secure, anonymous, and independent of middlemen - yes, such middlemen as the Lehman brothers. In addition to being practically a political pamphlet, it was a proposal of a purely peer-to-peer version of electronic cash, the cash that would allow online payments to be sent directly from one party to another without going through a financial institution.

But while some cypherpunks got excited, Bitcoin received little attention. The proposal sounded great, but it lacked the most important thing for the algorithm to work: traction. To confirm financial transactions on Bitcoin in 2008-2009, you needed to be a super smart Bitcoin miner, a programmer almost. In order to become this super-smart Bitcoin miner, you kind of needed to be a cypherpunk or at least tech-savvy, smart, geeky, up to speed so to say. There were not enough people to take part in the network.

However, the idea was attractive and did see uptake. Unfortunately, Bitcoin was also popular among hackers, drug dealers, terrorists, and scam artists. As part of the dark web, Silk Road grew into the most sophisticated and extensive criminal marketplace on the Internet where unlawful goods and services were bought for Bitcoin. In October 2013, the FBI shut down the website. It could’ve been the end. But ironically, bad publicity is indeed better than no publicity, and it made Bitcoin more popular.

Over the years, with the rise of Mt. Gox, bitcoin became more and more like an investable asset, rather than a currency. Other exchanges, such as Bitstamp, Vircurex, or Btc-e, pushed the idea of spot trading.

The year that changed everything was undoubtedly 2017. Bitcoin broke way past expected price levels and reached an all-time high of just below $20,000 per unit. Not surprisingly, regulators started to get involved and Coinbase got fully transparent with the IRS, accumulating $300 million in a financing round right after.

Since the start of 2020, with the global economy shaking and covid rampant, Bitcoin has seen uptake from institutional investors. This is an important development for Bitcoin as we can expect it to bring some stability to its price and if the trend continues, we should see more price appreciation over the coming year.

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