Eighteen years ago today, pseudonymous cypherpunk Satoshi Nakamoto posted the Bitcoin whitepaper, Bitcoin: A Peer-to-Peer Electronic Cash System, to a cryptography mailing list.
Created to bypass opaque institutions and remove the need for trust in financial transactions, Bitcoin (BTC) has been taking on the traditional financial system since its genesis block was mined on Jan. 3, 2009.
Inscribed in that very first block was a message from Satoshi, quoting a headline from The Times: “Chancellor on brink of second bailout for banks.” It captured the financial crisis backdrop against which Bitcoin was born.
From its early years to adulthood, Bitcoin has had a tumultuous journey, fraught with controversy, intrigue and downright skulduggery.
As challenging as the journey has been, Bitcoin’s future remains on fragile ground, with the fallout from the $6.3 billion Binance hack, the threat of quantum computing, the acceleration of AI-related cyber threats, and questions over its long-term security still looming.
As Bitcoin celebrates its 18th birthday, it’s now old enough to vote in the US midterm elections, but is it ready for adulthood?
Bitcoin’s early years
Undoubtedly, one of Bitcoin’s most memorable moments was on May 22, 2010 when developer Laszlo Hanyecz sent 10,000 BTC to pay for two pizzas in one of the earliest documented Bitcoin transactions.
The Bitcoin Whitepaper. Source: Bitcoin.org
The day would become known as Bitcoin Pizza Day and go down in crypto folklore as the most expensive pizza purchase on record. The coins were worth around $41 at the time, taking the concept of opportunity cost to a whole new high — those pizzas would have cost $780 million at today’s prices.
Related: 10 of the greatest unsolved crypto mysteries
Bitcoin traded for pennies in its earliest days, but Satoshi understood how that would change one day, writing in 2009, “It might make sense just to get some in case it catches on.”
By late 2013, Bitcoin had broken through the $1,000 milestone for the first time, amid growing public interest with the emergence of the Silk Road darknet marketplace.
Yet nowhere do the laws of physics apply more pertinently than crypto; inevitably, what goes up must come down. In February 2014, Bitcoin’s epic run came to an abrupt end when Mt. Gox, the world’s largest Bitcoin exchange at the time, suddenly stopped trading and went offline.
The exchange had lost around 850,000 BTC, including customers’ funds, in a collapse that sent shockwaves through the industry, making Mt. Gox an early poster child for the concept “not your keys, not your coins.”
Craig Wright, Jamie Dimon and China’s first ban
The next dramatic bull run would culminate in Bitcoin’s price climbing from below $1,000 at the beginning of 2017 to almost $20,000 by December.
The rally coincided with a boom in initial coin offerings (ICOs) and a rush of projects promising to use blockchain technology for everything from banking to supply chains, and even Long Island iced tea.
Suddenly, every man, woman and dog wanted a blockchain, even if they had no idea how Bitcoin worked or where it came from.
Everyone, that is, except JPMorgan Chase CEO Jamie Dimon, who called Bitcoin “a fraud” in September 2017 and said he would fire any employee trading it.
Bitcoin genesis block. Source: Mempool.space
At the time, Bitcoin was embroiled in a bitter debate over how the network should scale. The so-called “block size war” peaked in August 2017, culminating in the hard fork that created Bitcoin Cash and highlighting the complications of trying to change a decentralized system.
Related: Private, fast USDT is coming to Bitcoin. Can it compete with Ethereum and Tron?
Meanwhile, China moved against the industry, banning ICOs in September 2017, taking action against cryptocurrency exchanges and fanning the market uncertainty ahead of the eventual downturn in 2018.
Speculation over the identity of Bitcoin’s creator had also become a sideshow, fueled by Australian computer scientist Craig Wright’s repeated claims to be Satoshi Nakamoto. The UK High Court rejected his claim in 2024.
China’s second ban and the collapse of FTX
Bitcoin’s next major bull run came during the COVID-19 pandemic, as governments and central banks unleashed a tsunami of money printing in a bid to cushion economies from lockdowns.
Interest rates fell, liquidity flooded financial markets and Bitcoin, which had plunged during the March 2020 market panic, began a remarkable recovery, reaching almost $69,000 by November 2021.
As if China’s intervention wasn’t enough the first time around, Beijing stepped in again to rain on the parade, announcing a sweeping ban on cryptocurrency transactions and mining in September 2021, and Bitcoin’s price took a hit.
In November 2022, another major cryptocurrency exchange, FTX, collapsed, intensifying the crypto winter and leaving customers facing enormous losses.
The episode led to a loss of trust from the TradFi…
cointelegraph.com