Bitcoin is undoubtedly the biggest star in the world of cryptocurrencies. Although it was not the first attempt at creating digital money, it revolutionized the way we think about finance. But how did it all start? Let’s go back to the beginning.
The birth of cryptocurrencies – an idea that evolved over time
The idea of digital money emerged in the 1990s. That was when the first concepts of a decentralized payment system, operating without banks or intermediaries, began to take shape.
At the time, projects like Hashcash and Bit Gold were developed to enable fast and anonymous transactions on the internet. However, the real revolution came in 2008 with the arrival of Bitcoin – the first cryptocurrency to stand the test of time.
What was the turning point? The manifesto of Satoshi Nakamoto, a mysterious figure (or group of people) who published a document on October 31, 2008, titled:
Bitcoin: A Peer-to-Peer Electronic Cash System.
In this document, known as the white paper, Nakamoto outlined the idea of an electronic payment system that would operate without intermediaries, based on a Peer to Peer network. In short, Bitcoin was designed to give people full control over their money.
How does Bitcoin work? Proof of Work and the first mining
To acquire the first Bitcoins, they had to be mined – meaning generated using computer processing power. This process was called Proof of Work (PoW), in which computers around the world solve complex mathematical problems, receiving BTC as a reward.
The first Bitcoin block, known as the genesis block, was mined by Satoshi Nakamoto on January 3, 2009. The reward at the time was 50 BTC.
But how was Bitcoin’s value determined? At first, it was purely theoretical. It wasn’t until October 5, 2009, that an attempt was made to assign it a real price, based on the cost of electricity required to mine one Bitcoin. The result: 1 US dollar = 1,309 BTC.
The first Bitcoin transaction and the story of the “most expensive pizza in history”
The first Bitcoin transaction between two people took place on January 12, 2009 – Satoshi Nakamoto sent BTC to Hal Finney, a programmer and one of the earliest cryptocurrency enthusiasts.
However, the most famous story is about buying pizza. On May 22, 2010, programmer Laszlo Hanyecz paid 10,000 BTC for two pizzas from Papa John’s. At the time, that was worth about 30 dollars.
Today, this transaction is remembered as “Bitcoin Pizza Day” because if Laszlo had kept those Bitcoins instead of spending them on pizza, they would now be worth hundreds of millions of dollars.
What happened to Satoshi Nakamoto?
The creator of Bitcoin disappeared on December 12, 2010. Officially, he handed the project over to Gavin Andresen, who later passed it on to other developers. To this day, no one knows who Satoshi Nakamoto really was.
Some believe it was a group of programmers, while others think it was a pseudonym for a well-known figure in the tech world. One thing is certain – Satoshi never touched his fortune, which is estimated to be over 1 million BTC.
How did Bitcoin gain value?
Although Bitcoin was almost worthless at first, its price began to rise as interest in it grew. Some key moments include:
- 2010 – the launch of the first Bitcoin exchange, Bitcoin Market (which failed), and the rise of the legendary Mt. Gox, which dominated the market for years.
- 2011 – Bitcoin surpassed 1 USD per coin.
- 2013 – Germany officially recognized Bitcoin as a legitimate private means of payment.
- 2015 – major companies like Overstock started accepting BTC payments.
- 2021 – Bitcoin reached 64,800 USD, setting a new all-time high (ATH).
- 2024 – on March 13, Bitcoin reached 73,664 USD, and on December 5, it broke 100,000 USD.
Bitcoin as a currency, store of value, and modern payment system
Today, Bitcoin serves several functions:
- Currency – it acts as a unit of account and a medium of exchange.
- Store of value – similar to gold or real estate, people see it as a hedge against inflation.
- Payment network – it can be used to pay for goods and services worldwide.
Bitcoin vs gold – which is better?
Bitcoin is often called “digital gold” because its supply is limited to 21 million BTC. But how does it compare to physical gold?
- Supply – around 208,874 metric tons of gold have been mined worldwide, while Bitcoin’s total supply is fixed at 21 million coins.
- Predictability – Bitcoin’s supply is mathematically fixed, whereas gold can still be mined.
- Portability – Bitcoin can be stored on a phone, USB drive, or even written on paper, while transporting large amounts of gold is a logistical challenge.
- Transparency – every BTC transaction is recorded on the blockchain explorer and cannot be reversed.
Does this mean Bitcoin could become “gold 2.0”? The market is still looking for the answer.
Summary
Bitcoin was created as a response to the financial crisis and a lack of trust in banks. Today, it is one of the most significant innovations in finance. While it remains controversial, there is no doubt that it has changed the way we think about money.
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