Bitcoin, Timeline and Potted History

The Bitcoin Timeline

I’ve been searching for a timeline on Bitcoin for a while now and I finally found an excellent one at historyofBitcoin.org. For the Bitcoin enthusiast and maybe even for someone new to the whole mind-blowing idea of Bitcoin that wants the whole story, this timeline is absolutely brilliant. Once you have consumed this blog, I recommend that you spend some time taking a good long look. There was certainly some work put into the timeline and it maps the progress of Bitcoin beautifully. However, for a good potted version or a run-through if you like with just the highlights, then please read on…

Bitcoin, Basic Facts

For those new to Bitcoin completely that want a potted history that delivers a concise run-down of what Bitcoin is all about, delivered as bullet points well, you have that below if you read on past the image.

The highlights are that Bitcoin is the world’s first de-centralised currency. Bitcoin is controlled by no-one, no bank, no government no individual or group or corporate entity. It is self-sustaining computer code that is literally unbreakable and cannot be hacked. Why? Because it has been stress tested by thousands and because each new “block” of Bitcoin (which must be opened using sophisticated computer hashing programmes – this is referred to as Bitcoin mining) must match up with the previous block on the chain and be verified by several independent sources for the “block” to be confirmed and declared as the next real Bitcoin block. This all happens, of course, in nano-seconds because of the advancement of computer processing power and each block opened strengthens the validity of the next block coming along and the last block that came by. The more blocks there are, the stronger they and the chain becomes.

Once verified the contents of the block (Bitcoins) then belong to the code cracker (miner). Every movement of Bitcoin from one place/person to another has also to be verified in this same way so Bitcoin miners and other “entities” that are linked into the Bitcoin Blockchain also serve as its policing system. You can only acquire Bitcoin by mining it or buying it and it will come as no surprise to those that understand a little about Bitcoin that all the problems and bad press that has ever surrounded Bitcon has been to do with Bitcoin people and services for buying and spending Bitcoin and not the programme’s integrity itself.

If a transaction cannot be verfiied properly then it simply did not happen. And the verification process precludes any possiblilty of spending the same Bitcoin twice (or more than twice of course), The technicalities and detail of how all this happens would bore the pants off of anyone that wasn’t an out and out techy. So, what we need to know, all we need to know is that Bitcoin is real. It has a real value (as I write this, one Bitcoin is worth $437) and it is here to stay and as the timeline and my potted history will show. It is increasing in value. The image immediately below shows Bitcoin’s value graph over the last 12 months. The direction is very plain to see.

 

 Coindesk Price 20th April 2016

Bitcoin, Potted History

January 3, 2009

Bitcoin was a theory until January 2009 when its inventor Satoshi Nakamoto released what is now known as the “genesis block” on to the Internet. Bitcoin then passed out of academic theory into reality and the first real digital currency (or crypto currency, as some refer to it) had arrived. No-one to this day knows who Nakamoto really is or even if he was even one person or a group of people working together except of course, the man himself or the group themselves (whoever they may be).

The first (unofficial) transaction involving the transfer of Bitcoin from one person to another (Nakamoto to a man named Hal Finney) happened on January 12th 2009.

On October 5th 2009 the first Bitcoin exchange rate was established by New Liberty Standard. Giving 1,300.03 Bitcoin the value of one US Dollar. Oh how I wish I had acquired Bitcoin then!

On December 16th 2009 Bitcoin version 0.2 is released further strengthening the Bitcoin computer protocol and several more updates to strengthen the code occur over the years that follow. Two weeks later on December 30th 2009 the first increase in mining difficulty occurs in Bitcoin. In short, cracking the code to open a new block of Bitcoin (at that time the only way to acquire Bitcoin of your own) became harder (albeit still massively more simple than what it is today). This hardening of difficulty is an essential aspect of Bitcoin growth and its development over time and will continue throughout the life of Bitcoin. The more it is mined, the harder it will be to mine. And. in addition, as we will discover as we move on, if mining subsides and slows down, the difficulty lessens.

February 6th 2010 sees the introduction of the very first Bitcoin exchange when DWDOLLAR is created. It didn’t last as too few people were even aware of Bitcoin’s existence at that stage. Many other exchanges will appear over time. Some famously crashing amid suspicion of foul play. As with all things though, the viability and ethicacy of Bitcoin services improves as the currency establishes itself. But bent folk are bent folk and there will always be those that will latch on to any opportunity to defraud and steal.

May 22nd 2010 became a very famous day for Bitcoin when a man in Florida, Laszlo Hanyecz, paid another man in London 10,000 Bitcoin to have a Pizza ordered and delivered to his door. This became the first real point of value for Bitcoin establishing a value based on using Bitcoin for a real-world purchase. By my calculation, a $25 pizza payment for 10,000 Bitcoin equates to $1 = 400 Bitcoin. Or 1 Bitcoin equals 0.0025 of a dollar.

On July 11th 2010, fuelled by increasing chatter about the new age currency and its potential, along with increasing talk about the Pizza transaction, SLASHDOT (call it an online digital radio station for techies and nerds) raves about Bitcoin and several more users are drawn into the Bitcoin world.

On July 12th 2010 as a result, the value of Bitcoin officially increases ten-fold from 0.008 dollars per Bitcoin to 0.08 dollars per Bitcoin. We can now quantify Bitcoin in a real sense as it has a worth of 8 cents.

On September 18th 2010 the first “pooled” mining operation mines its first Bitcoin block. This is the beginning for the advent of the biggest single factor to affect the value of Bitcoin. Individuals could now join together as a group and mine Bitcoin effectively. Previosuly, individuals would mine Bitcoin blocks from a PC or even a laptop. But now the age of Bitcoin mining on a larger scale had begun and the acceleration of mining difficulty moves with it.

Throughout all of this early period on Bitcoin’s evolution of course, problems, bugs and inconsistencies were discovered, exploited and tested and this constant “stress testing” of Bitcoin by many different and diverse sources led to the constant strengthening of the Bitcoin programme or protocal. That is why Bitcoin has now become the unbreakable code that it is today. In October 2010 after, no doubt, throwing much computerised muscle at trying to break Bitcoin, the first signs of any Government body taking an interest in this new age currency becomes appparent. The US Financial Task Force (as you’d expect) warns of the dangers of an unchecked, de-centralised, computer based currency and the effect it could have on money laundering, crime etc. (so cash, property, bearer bonds and so on are never used for money laundering then?).  You don’t need to be a cynic to conclude that any financial system that isn’t totally controlled by “Governments” is going to be sniped at by our esteemed leaders. Governments love to control and Bitcoin to them is anarchy!

October 7th 2010 after a longish period of no changes in value, Bitcoin value does start to increase. It had been around $0.06 = 1 Bitcoin for months up until this point.

On October 17th 2010 the first real Bitcoin trading channel opens and it is possible to buy and sell between the movement of Bitcoin value.

November 6th 2010 and the market capitalisation of Bitcoin finally exceeds $1 million. One Bitcoin is now worth $0.50 after being just 6 cents one month earlier. What we see today with Bitcoin has really begun in earnest.

December 8th 2010 and the first mobile phone based Bitcoin transaction takes place.

December 9th 2010 sees the first Bitcoin CALL option sold on the Bitcoin-OTC market and financial institutions begin taking an interest.

In 2011 the infamous Silk Road on-line marketplace opens. Sometimes referred to as the e-bay of drugs. Nothing in the history of Bitcoin does more to damage the fledgling currency’s development as a serious financial tool. Fortunately and inevitably (in October 2013), Silk Road is shut down again albeit after blackening Bitcoins image for a long time to come.

By January 28th 2011, 25% of all Bitcoin that will ever be generated has beem reached. Of the overall 21 million Bitcoin that will ever exist, 5.25 million of them have now been mined.

February 9th 2011 sees Bitcoin get to parity with the US Dollar. One Bitcoin = 1 USD and there is no holding back the flood of interest in the new age crypto currency.

Want to buy a 1984 Toyota Celica Supra? The first recorded offer of a car in exchange for Bitcoin occurs on February 14th 2011 as an Australian chap asks for 3,000 Bitcoins in exchange for his car.

On March 25th 2011 following a very slow period of activity and a decline in Bitcoin price from $1 to around 60 cents, for only the second time ever since creation, Bitcoin mining difficulty reduces by 10%. Yes, mining difficulty can also reduce when mining activity reduces. People are reminded that the programme is clever enough to compensate for real time activity and will increase difficulty when more mining occurs and reduce when less occurs. This is critically important because when Bitcoin block rewards halve (and they will through pre-set automation built into the programme over time) and if mining drops off as a result then difficulty will reduce until mining picks up again. In short, when difficulty reduces, smaller and less capable machines with less hashing power can successfully mine Bitcoin. When diffculty increases, those smaller machines cannot compete.

It is interesting to note that, not for the first time, there are many loud voices in the world now proclaiming the death of the Bitcoin revolution following the fall in value from $1 to 60 cents. This becomes a recurring theme just about every time any bad news or slow down in Bitcoin value growth occurs.

Britcoin opens for trading on 27th March 2011 and the first trading between GBP and Bitcoin is enabled. On March 31st 2011, Brasil follows suit with Bitcoin Brasil and now Bitcoin can be exchanged and traded against Brazilian Reals. Similar trading environments start to appear across Europe commencing in Poland on April 5th 2011.

The first PUT option is sold on the Bitcoin-OTC market on April 12th 2011.

Another landmark occurs on June 2nd 2011 as Bitcoin hits a US Dollar value of $10 = 1 Bitcoin.

On June 8th 2011, market capitalisation of Bitcoin exceeds $206 million and Bitcoin hits a new all-time high of $31.91 = 1 Bitcoin.

What became known as “the Great Bubble” occurs on June 12th 2011 and, having hit an all-time high of $31, Bitcoin price slides to $10 in 4 days flat. The doom brigade have a field day, Bitcoin, they say, is 100% dead and buried now. The next few months see probably the hardest and most challenging period of all for Bitcoin.

June 14th 2011 and Wikileaks starts to accept annonymous Bitcoin donations, well there’s a surprise.

June 29th 2011 and Bitpay, perhaps surprisingly given the recent decline in Bitcoin fortunes, launch the first smartphone based Bitcoin wallet and it serves as a timely reminder that many people and organisations were still very much behind Bitcoin and its inevitable success. This is followed on July 20th 2011 by the first ever Bitcoin app for iPad and iPhones.

The first Bitcoin conference and World Expo was held on August 20th 2011 in New York City.

On February 27th 2012, Bitcoin magazine is launched. The first ever magazine devoted entirely to news matters relating to the digital currency. It appears on-line at first and produces its first printed edition in May 2012.

The Coinbase Bitcoin platform and wallet service is launched in June 2012.

The first Bitcoin conference in London occurs on September 15th 2012.

On Septmeber 27th 2012 a group of Bitcoin enthusiasts set up the Bitcoin Foundation as a self-governing body to implement a core development team for the protocol and a body to oversee the digital currencies ongoing development.

The first halving day occurs with Bitcoin on November 28th 2012. Block 210,000 is the first Bitcoin block to produce 25 Bitcoins instead of the previous 50 Bitcoins from every block prior to that. Now Bitcoin halving is proven to be more than just a theory. It is halving that will insure Bitcoin scarcity into the future and will eventually lead to more demand than supply and a probable massive increase in Bitcoin value over time as a result. The next halving is due to occur in or around July 2016. This will take the Bitcoin block reward down to 12.5 coin per block.

Bitpay annnounces on January 22nd 2013 that its merchant platform (a platform that enables Bitcoin transactions in exchange for goods and services) hits 10,000 transactions completed. Merchants around the world are starting to see the bigger picture and possibilities with Bitcoin.

In the run up to version 0.8 of Bitcoin being released on February 19th 2013, the worldwide acceptance of Bitcoin is growing at pace.

On February 22nd 2013, Bitcoin has got back to $30 in value.

For the first time since June 8th 2011, some 601 days earlier,  Bitcoin once again breaks its previous all-time high price and goes past $32 on February 28th 2013 and by March 21st 2013 it has spiked at $74.90 = 1 Bitcoin.

The market capitalisation of Bitcoin surpasses $1 Billion on March 28th 2013.

Nothing seems to put a dent in Bitcoin’s progress now as it hits a value of $100 in April 2013 much to the stunned amazement of those that had previously and frequently declared the project dead. They would have plenty of other oppotunities, however, to make that declaration again as time goes on.

April 10th 2013 and Bitcoin hits another peak of $266 = 1 Bitcoin.

Following a hacking scandal, on April 20th 2013, Bitcoin crashes back to around $120, The doomsayers are back out in full voice.

In May 2013, Coindesk is launched and will become one of the most popular of all Bitcoin news sources.

On May 2nd 2013, the first Bitcoin ATM in the world is sited in California, USA.

The biggest funding of any Bitcoin based operation occurs on May 7th 2013 as Coinbase receive an investment of $5 million.

Bloomberg gets a Bitcoin price ticker on August 9th 2013 so it can track the price of Bitcoin. Is big finance starting to take a real interest?

Following on from an August 6th 2013 ruling by a judge in Texas, USA that Bitcoin was a currency, Germany announces that Bitcoin is “private money” on August 20th 2013 and exempt from tax after being held for 1 year. Who’s for moving to Germany then?

October 2nd 2013 and the FBI shut down Silk Road and Bitcoin price drops from $139 = 1 Bitcoin to $109.71 = 1 Bitcoin in less than three hours in response to the Silk Road shutdown. It then recovers to $128 = 1 Bitcoin.

November 6th 2013 and another new all-time high in Bitcoin price after the Silk Road revelations settle down. Bitcoin hits $269 = 1 Bitcoin.

Subway starts accepting Bitcoin on November 10th 2013 at its restaurant in Allentown, Pennsylvania. High profile names are coming to the party at long last.

Bitcoin price hits a landmark figure at 11.50am GMT on 17 November 2013, reaching $503.10 = 1 Bitcoin on the exchanges. Bitcoin evangelists believe there is no turning back but the Bitcoin story is nothing if not surprising and the Bitcoin price is shooting up as more people want in on what the early adopters have been holding on to for the last few yers.

Against all expectations following the Senate hearings in the wake of the Silk Road case, the price of Bitcoin surges to a record $1,242 = 1 Bitcoin on November 19th 2013 and several overnight (short-term) millionaires are created. This naturally heralds the beginning of a massive selling spree. Some sources attribute the sudden burst in value to rumours about controls coming in China to restrict the use of the digital currency and the rapid movement of Bitcoin around and out of that region. Bitcoin officially now moves more money around the world than Western Union.

Academia accepts Bitcoin. On November 21st 2013 the University of Nicosia in Cyprus becomes the first university to accept Bitcoin for tuition.

On November 22nd 2013, Richard Branson’s Virgin Galactic begins accepting Bitcoin for space travel.

November 27th 2013 and Shopify officially integrates Bitcoin as a payment option for its 70,000+ merchants.

December 5th 2013 and China’s central bank bars financial institutions from handling Bitcoin transactions, causing a price drop of more than 20 percent to below $1,000 = 1 Bitcoin.

The Biggest Dip

December 17th 2013 and Bitcoin crashes to nearly $500 = 1 Bitcoin following further bans on Bitcoin transactions in China. The Bitcoin doom brigade are setting up parties everywhere!
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Moving on, the news surrounding Bitcoin after this comes at us too fast and too furious to note in individual snippets. So, as we enter the current stage of Bitcoin, running up to the next halving we note that it has been a period of price stabilisation and investment into the Bitcoin space. The huge growth in mining operations (strangely – particularly in China) and the realisation that the Bitcoin Blockchain technology is tough enough to survive and improve.
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The price continued to fall after the “China Syndrome”, with the odd correction taking it back up a little for a time. Ultimately, the drop in price continued almost unabatted right up, that is,  until Januaary 12th 2015 and it seemed quite possible that the Bitcoin dream was running out of steam. That is until you remove the crazy hike in price from the equation that saw Bitcoin soar past $1,000 = 1 Bitcoin and you understand that spike for what it really was. I’m going to call it an anomaly.
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The world had started moving Bitcoin around like mad and a whole bunch of early movers on Bitcoin had, literally started to become millionaires. Suddenly, this thing they had been storing on their computers was not a novelty. It had real value and people were prepared to buy it from them for hundreds of dollars per Bitcoin.
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If you’d acquired Bitcoin at zero cost or for just a few pennies per coin, wouldn’t you have sold it when you were all of a sudden being offered hundreds of dollars for it? Of course you would. And it appeared, for a time, to those that were just discovering Bitcoin, that all it could do was increase in value as more and more people started to buy it in anticipation of just that. Then, of course, the inevitable meltdown occured when all that were prepared to sell had sold out and the boost to supply came to an end.
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Enter the announcements from China following on the back of this and then those that had been buying were suddenly in a rush to sell. As we always see when there is panic selling in any market, once it starts it takes a lot to stop it. The cynic in me believes that the price hike was fuelled mostly by the those that had acquired so many Bitcoin in the early days when you could mine it from your own laptop. They realised that they could now sell and be rich!
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At the peak of this price hike, you could sell 1,000 Bitcoin and get $1,000 per coin. That is enough to make you a millionaire. Now imagine if you had 5,000 or 10,000 or 100,000 Bitcoin…
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But the illustration below shows you quite clearly that Bitcoin has not finished what is actually a very clear and determined and longer-term increase in value that has been occuring since the last block reward halving in November 2012. It had a value then of around $11/$12 = 1 Bitcoin. So, if we remove what I have called the “anomaly” when the Bitcoin world went crazy and we add in what I call the “reality line” that starts at the last halving point, it seems that Bitcoin is still moving quite determinedly towards great future value.
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From the November 2012 halving at a price of $11 = 1 Bitcoin roughly, we see a reality line taking us up to today’s level of over $430 = 1 Bitcoin. If the line stays even close to that trajectory then Bitcoin will be worth $1,000 = 1 Bitcoin again but I believe next time it will hit that level on a sustainable trajectory and with most of the early Bitcoin adopters out of the way.
Reality line Bitcoin price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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