10 years of Bitcoin – the first decade of the most important cryptocurrency

The Bitcoin inventor, Satoshi Nakamoto, started developing the Bitcoin blockchain back in 2007. On October 31, 2008, Nakamoto released the famous Bitcoin white paper, which laid the foundation for blockchain technology. The white paper was only eight pages long and presented a solution to Byzantine errors – a mistake in modern information technology. The Genesis Block, the first block of the Bitcoin Blockchain, already followed on January 3, 2009. At the BitcoinTalk.org forum, Nakamoto discussed with developers such as Mike Hearn, Gavin Andresen and Hal Finney. At that time, the decentralized currency was still in its infancy – today Bitcoin is probably the largest and best-known cryptocurrency. Below is an insight into the most important events of the past ten years.

 

The first transaction in the Bitcoin network

After the Genesis block was completed on January 3, 2009, it only took nine more days for the first Bitcoin transaction to take place. Nakamoto transferred bitcoins (BTC) to cryptographer Hal Finney. Finney is said to have created a proof-of-work system before Bitcoin existed.

Finney was living in the Los Angeles area at the time. The identity of Satoshi Nakamoto is still unclear. However, the US news magazine Newsweek claimed in March 2014 that Dorian Nakamoto was the person behind the famous pseudonym. The close proximity to Finney inspired this theory – from today’s perspective, however, this theory is largely invalidated.

 

WikiLeaks accepts payments in BTC

In 2011, WikiLeaks, a platform for anonymously publishing secret documents, announced acceptance of BTC.

“The project has to be expanded step by step so that the software can be improved in this way. I appeal to WikiLeaks not to use Bitcoin. Bitcoin is a small beta community in its infancy. ”- Satoshi Nakamoto

Nakamoto feared that the public discussion about WikiLeaks could throw negative light on the blockchain. The negative image could have kept the currency from considering this early stage. After WikiLeaks gave the green light to BTC donations, Nakamoto noted that he welcomed the generated attention in a different context. Instead, the unveiling platform stepped into a hornet’s nest and directed the swarm directly onto the young blockchain network.
Nakamoto’s resignation – Gavin Andresen takes on the role of chief developer

In 2011, Nakamoto finally handed the Network Alert Key and control over the Bitcoin code repository to Gavin Andresen. According to analyst estimates, the Bitcoin inventor has been able to mine approximately one million BTC by this time. With the handover, Andresen assumed the role of chief developer for this open source code. Andresen founded the Bitcoin Foundation in 2012 to educate regulators about the digital currency. At the same time, the developer received invitations from government agencies, such as the CIA.

A lively discussion broke out in the community about the cooperation with the CIA. In a mail from 2012, developer Nakamoto announced the pioneering decision.

“In the last mail I sent him, I told him that I would speak to the CIA.” – Gavin Andresen

 

Use of the first ASIC Bitcoin miners

On January 30, 2013, the first ASIC bitcoin miner was to be used to mine the popular BTC. Bitcoin developer Jeff Garzik – who now operates Bloq – put the first official Application-Specific Integrated Chip (ASIC) into operation.

An ASIC enables GPU-based mining of new BTC and is designed for hashing the SHA-256 algorithm. The same algorithm was also used in the Bitcoin network.

“My wife tells me that a package has arrived from China. I will investigate when I get home. ”- Tweet from Jeff Garzik after receiving his Avalon A3256 in 2013

Looking back, Garzik can confirm that the purchase of his Avalon A3256 was worth it. The device and the operating costs incurred were already amortized on February 9th.

 

The Bitcoin Pizza Day

Another milestone in the history of the leading cryptocurrency is the first documented transaction for a real asset. Laszlo Hanyecz transferred exactly 10,000 BTC to Jeremy Sturdivant (jercos) on May 22, 2010 and in return received two pizzas from Dominos Pizza. Previously, Hanyecz was involved in the further development of the Bitcoin source code.

 

Hanyecz published the corresponding request to buy Bitcoin on May 17, 2010. After another five days, he confirmed the transaction. At that time, the BTC had an equivalent of $ 41.

“I just want to say that I successfully exchanged 10,000 bitcoins for pizza. Thanks jercos! ”- Laszlo Hanyecz after the first payment in BTC

The pizza index shows the value of the bitcoins that changed hands during this transaction. As of April 2017, the value of the BTC was $ 15.5 million. Today, May 22nd is known as “Bitcoin Pizza Day”.
The rise and fall of the Silk Road

Another asset in the history of the popular cryptocurrency is the Silk Road, which was developed by Ross Ulbricht. This particular website was a hidden service. At a negotiation, Ulbricht admitted that he was developing the website. However, the developer never confirmed that he also ran this illegal website online.

Silk Road was seen by users as an anonymous platform on which users enjoyed a special level of privacy. Accordingly, illegal drug deals could be carried out via the platform. As a result of the trial, Ulbricht received two life sentences and another 40 years.
The Mt.Gox case

Until the closure, the Mt.Gox crypto exchange processed around 70 percent of all Bitcoin transactions. After the Tokyo Stock Exchange applied for bankruptcy protection in early 2014, the platform had to stop operating.

At the time, around 850,000 bitcoins with a total value of $ 460 million disappeared. Subsequently, only 200,000 bitcoins could be found.

As the platform operator Mark Karpeles said in the negotiations, hackers are to blame for the disappearance of the tokens. The Tokyo Police Department also believes that 643,000 BTC disappeared due to fraudulent acts by an insider. The bankruptcy negotiation started in April 2014 and continues to this day.
Mike Hearn leaves the Bitcoin Foundation

In 2016, Mike Hearn announced that his time at the Bitcoin Foundation had come to an end – Hearn was a Bitcoin developer from the very beginning. In a blog post, Hearn announced that he had sold all of his holdings and that he would be working for the R3 CEV consortium in the future.

“Although I know that Bitcoin can fail all the time, the inevitable conclusion that it has failed still hurts me a lot.” – Mike Hearn

The reason for the “failure” of the blockchain was the artificial capacity limitation in the block capacity. To get around this artificially created problem, Hearn and Andresen proposed Bitcoin XT. In an interview with Reuters, the developer confirmed that insufficient capacity posed a critical problem for a network.

At the time, Hearn believed that the Bitcoin community had failed to manage the Bitcoin code.
Pirateat40 with the first Ponzi scheme

A Ponzi scheme is inevitably part of the history of BTC. Behind this scheme is Trendon Shavers, who set up his own Bitcoin fund under the pseudonym Pirateat40. At Bitcointalk.org, Shavers promised investors a weekly return of seven percent in November 2011. Shavers closed the fund in August 2012 because the administration was too complex.

In return, the SEC filed charges against Shavers for running an illegal $ 4.5 million Ponzi program.

A lawsuit found that Pirateat40 had to pay the victim $ 40 million for disfigurement gains. Pirateat40 also received a civil penalty of $ 150,000.
The unwanted bitcoin fork in 2013

A bug in Bitcoin version 0.8 caused the network to temporarily split into two chains with different rules. In the meantime, miners, traders and users used a different version of the blockchain, which was not compatible with the old version.

Accordingly, the mining pools of version 0.8.0 had to roll back to version 0.7. With version 0.8.1, the core developers finally released a version that had the necessary compatibility. The entire network then had to use this new version.