History of Bitcoin

Updated: September 27, 2026

The Early Days

Before bitcoin existed in any form, a variety of different digital cash technologies were making their way to the forefront. This journey began with issuer-based ecash protocols conceived by David Chaum and Stefan Brands. To complement this, a proof-of-work scheme to aid in spam control was devised by Adam Back and dubbed Hashcash. This was indeed a breakthrough.

The first proposals for cryptocurrencies came from Wei Dai - a Chinese computer engineer who envisioned b-money - and Nick Szabo - a US developer credited with a digital currency he called Bit Gold. These two men were joined by a third, Hal Finney, who developed a reusable proof of work using the Hashcash protocol as an algorithm. These innovative ideas were revolutionary.

Bitcoin is claimed to be the creation of a person named Satoshi Nakamoto. However, very little is known about this individual. A number of people have come to believe that the name is a pseudonym used by one of the three men mentioned above (Dai, Szabo, and Finney). Interestingly, however, this claim has been denied by all three. Speaking of Nakamoto, in October 2008, a link to a paper written by Nakamoto surfaced. This document was entitled Bitcoin: A Peer-to-Peer Electronic Cash System. The mystery deepens.

Nakamoto's paper outlined various methods of using a peer-to-peer network to create what he called "a system for electronic transactions without relying on trust." This innovative system was implemented on January 3, 2009. At that time, Nakamoto mined the first block of bitcoin, resulting in a reward of 50 bitcoins. Half a dozen days later, the first open source bitcoin client became available. This was the beginning of a new era.

The aforementioned Hal Finney became one of the cryptocurrency's first adopters and major contributors. He even became the first recipient of a bitcoin transaction, downloading the software on the day of its release. He accepted 10 bitcoins from Mr. Nakamoto in the inaugural transaction, which took place on January 12, 2009. Szabo and Dai were also key supporters of the bitcoin cryptocurrency. Their contributions have been invaluable.

Initially, the value of bitcoin transactions was determined by individuals through the bitcoin forum. This allowed for notable transactions, such as the indirect purchase of two pizzas for 10,000 BTC. However, bitcoin suffered its first setback in August 2010 when a significant vulnerability was discovered. Transactions were not properly validated before being recorded in a transaction log or blockchain system. This flaw allowed users to circumvent the economic limits, giving them the ability to create an unlimited number of bitcoins. This vulnerability resulted in over 184 billion bitcoins being created in a single transaction. However, this was the only significant vulnerability discovered and exploited in the history of the cryptocurrency.

Years of Growth

It did not take long for bitcoin to be recognized as a big deal, especially in the online world. By January 2011, the Electronic Frontier Foundation (an international digital rights group based in San Francisco) had begun accepting bitcoin. This activity stopped in June of the same year, with certain concerns raised about the lack of legal precedent. However, on May 17, 2013, the organization began accepting them again.

This acceptance of bitcoin spread to other companies, including WikiLeaks (a non-profit organization that publishes classified information, news leaks, and other classified media from anonymous sources). The Bitcoin Magazine was founded in September 2011, and by early 2012, bitcoin had made its way onto television, being featured as a major topic in the fictional CBS legal drama The Good Wife. It was also in September 2012 that the Bitcoin Foundation was established. Its sole purpose was to ensure that bitcoin experienced accelerated growth around the world.

In February 2013, the Coinbase exchange reported that it had sold $1 million worth of bitcoin in a single month, setting the price at $22 per bitcoin.

Problems Arise

Throughout 2013, certain issues arose with the bitcoin exchange known as Mt. Gox. Launched in July 2010, Mt. Gox quickly rose to prominence, handling over 70% of all Bitcoin transactions between 2013 and 2014. But in February 2014, the company suspended trading and shut down its website, along with the exchange service it offered. A security breach had caused the face value of a bitcoin on the Mt. Gox exchange to fraudulently drop to one cent.

At that time, the company also filed for bankruptcy protection from creditors before beginning liquidation proceedings in April of that year. That was not the half of it, however, as Mt. Gox also announced that approximately 850,000 bitcoins belonging to customers and the company had gone missing, most likely stolen! At the time, this number of bitcoins was valued at over $450 million. Since then, about 200,000 of them have been located, but the reasons for their initial disappearance were not very clear at first.

The vast majority of the missing bitcoins belonged to customers, with 100,000 belonging to the company. Mt. Gox blamed hackers for the disappearance of these Bitcoins, with the CEO saying that technical issues had opened a loophole for fraudulent withdrawals. He was arrested in August 2015 and charged with fraud and embezzlement in Japan.

During these problems, the value of bitcoin fell from around $1,242 per bitcoin in November 2013 to $550 after the shutdown of Mt. Gox in February 2014. The price continued to fall, hitting a low of $340, a level not seen since the Cypriot financial crisis in 2012.

Getting Back on Track

While certain issues contributed greatly to bitcoin's decline in 2014, many companies were still very interested in using the cryptocurrency. For example, in January of that year, Zynga announced that it was testing bitcoin for the purchase of in-game assets related to seven of its own games. A number of hotels in Las Vegas also announced that they would begin accepting the cryptocurrency bitcoin at various hotel locations, including at the front desk and in their restaurants.

Toward the end of 2014, Microsoft began accepting the cryptocurrency as a way for people to purchase Xbox games and Windows software. By the time 2015 rolled around, Coinbase had raised about $75 million in a funding round. Although British exchange company Bitstamp announced that it was suspending operations while a potential hack involving 19,000 bitcoins was investigated around the same time, the cryptocurrency wasn't hit as hard.

As of August 2015, it was estimated that approximately 160,000 merchants were accepting bitcoin payments, and Barclays Bank announced its intention to become the first UK bank to accept bitcoin. Throughout 2015 and 2016, the price of bitcoin fluctuated between lows of $200 and highs of $780, influenced by various factors. However, in January 2017, it reached an enormous high, reaching the $1,150 mark.

Bitcoin in More Recent Times

Throughout 2017, the number of businesses and corporations accepting bitcoin payments continued to grow, with high-profile organizations such as Norway's largest online bank, Skandiabanken, integrating the cryptocurrency.

Exchange trading volumes also continued to rise throughout 2017, with the Mexican exchange known as Bitso reporting that trading volumes had increased by 1500% in the six months to March of the year. In early August, bitcoin split into two separate currencies - bitcoin (BTC) and bitcoin cash (BCH). But in December of that year, the software marketplace known as Steam announced that it would no longer accept bitcoin payments, citing slow transaction speeds and price volatility.

Despite all of this, the price of the cryptocurrency skyrocketed, hitting new highs week after week and month after month. For example, on December 15, 2017, it reached $17,900 per bitcoin - the highest it has ever traded at. However, with such a huge spike came a huge drop, which happened just a week later. The cryptocurrency lost a third of its value in 24 hours, dropping below $14,000.

As 2018 progressed, various other security measures were put in place with regards to bitcoin transactions. For example, South Korea enacted a regulation that requires all bitcoin traders to reveal their identities. This, of course, puts an end to all anonymous trading of the cryptocurrency. Just two days later, the online payment company known as Stripe announced that it had decided to stop supporting bitcoin. The reason? Declining demand, rising fees, and longer transaction times.

Other Pieces of Information About Bitcoin

Though bitcoin has gone through several ups and downs during its decade-long existence, one thing is for sure - it has maintained its status in the financial world. As of April 2018, there were more than 2,668 bitcoin ATMs around the world. The countries with the highest number of them were the United States, Canada, Austria, the United Kingdom, and Spain.

Furthermore, the number of bitcoins currently in circulation is just shy of 17 million as of March this year. It remains the cryptocurrency with a significantly higher value than many of its digital currency counterparts, including popular options like Ripple, Litecoin, and Ethereum.

Throughout its years of existence, bitcoin theft has been widely documented on several occasions. At other times, bitcoin exchanges have shut down, taking customers' bitcoin with them. In addition to Mt. Gox, exchanges such as Bitomat, MyBitcoin, and Bitcoinica have shut down, citing allegations of fraudulent activity and security breaches by hackers.

Today, a vast collection of online and offline companies, organizations and businesses accept Bitcoin payments, including hotels, restaurants, e-commerce sites, airline companies and, of course, online gambling platforms. Bitcoin has certainly revolutionized the way people are able to use finance, creating a modern and decentralized currency with its own set of benefits.