How a niche experiment in digital cash became Bitcoin. About Satoshi Nakamoto, the first block and the first users.
In October 2008, Satoshi Nakamoto published a short paper called “Bitcoin: A Peer-to-Peer Electronic Cash System”. It described digital money that could be sent directly between two parties, without a bank.
The timing was no accident. The financial crisis had weakened trust in banks, and Bitcoin was presented as a system where trust rested on mathematics and shared rules.
On 3 January 2009, the first block in the Bitcoin network was created. It contained a headline from The Times saying the British chancellor was on the brink of a second bailout for the banks.
The message served both as a timestamp and as a comment on the financial system Bitcoin was meant to offer an alternative to.
Satoshi Nakamoto is a pseudonym, and no one knows for certain who is behind it. Satoshi developed Bitcoin with a small circle of cryptographers until 2010, and then disappeared.
Since then, Bitcoin has been developed further as an open community project. The bitcoin attributed to Satoshi have never been moved.
In May 2010, programmer Laszlo Hanyecz paid 10,000 bitcoin for two pizzas. It is regarded as the first purchase of a physical good with bitcoin, and the day is still marked as Bitcoin Pizza Day.
In the early years bitcoin was worth very little, and its users were enthusiasts, cryptographers and tech hobbyists. The first crypto exchanges, among them Mt. Gox, made it possible to exchange bitcoin for ordinary currencies.
Bitcoin was used early on the illegal online marketplace Silk Road. That brought negative attention, but also showed that no one could stop transactions on the network.
The original goal was a payment system independent of banks. How bitcoin later came to be seen as a store of value is the subject of the next article.