Bitcoin Genesis

Satoshi Nakamoto

November 1 2008 - a computer programmer going by the name of Satoshi Nakamoto, sends an email to a cryptography mailing list, announcing he has created a new electronic cash system that is fully peer-to-peer, dependent on no trusted third-party. Bitcoin is born. Bitcoin offers the world a payment network with its own native currency, using a sophisticated method to verify all transactions, without the need to trust any single member of the network. The members spend their processing power verifying the transactions, and are rewarded with currency issued at a pre-determined rate. There have been many failed attempts at creating digital cash before, but Bitcoin is different. Bitcoin actually works!

Slow Start

Bitcoin adoption gets off to a slow start. It captures the interest of a few cryptography enthusiasts, but doesn't gain much traction in the wider world. So, there are a few dozen users spread around the world, mining bitcoin and sending each other tokens, as a kind of hobby.

Market Good

October 2009 - an Internet exchange sells 5,050 bitcoin for $5.02. 1,006 bitcoin are offered for one dollar. This is the first purchase of bitcoin with money. The price is based on the cost of electricity required to produce a bitcoin. Bitcoin is no longer a plaything for the amusement of a fringe community of programmers. It has become a market good with a price.

Medium of Exchange

May 22 2010 - Someone uses 10,000 bitcoin to buy two pizzas with a value of $25. (Wow! I hope those pizzas tasted good!) This is the first use of bitcoin as a medium of exchange. It has taken seven months for bitcoin to transition from being a market good to a medium of exchange. And the rest is history. Since that moment, the number of users worldwide has increased substantially and the value of bitcoin has risen rapidly. By November 2017 bitcoin was selling for more than $7,000.

Maintaining Perspective

By 2022, bitcoin has established itself as a technology that has passed the market test and withstood the passage of time. It is distributed software that allows the transfer of value, using a currency which is inflation-proof, without the need for trusted third-parties. The code is decentralized across thousands of user nodes, and no user can alter the code without the consent of the other users.

In these volatile times, with markets crashing across the board, it's worth reviewing the early days to keep things in perspective. 12 years ago, 10,000 bitcoin bought two pizzas. Now one bitcoin sells for more than $30,000. And people complain that the price is low!

(Inspired by 'The Bitcoin Standard', by Saifedean Ammous)