Welcome to the History of Crypto, a series presented by Cointelegraph and powered by Phemex that takes readers on a journey through the most significant events in the crypto space. In this installment, we will explore the years from 2009 to 2012, focusing on the global context and challenges that arose when the mysterious and pseudonymous Satoshi Nakamoto made their entrance. These years set the stage for the innovation and diversification that would shape the cryptocurrency ecosystem in the future.
Satoshi Nakamoto and the Global Financial Crisis
The emergence of cryptocurrency as we know it today can be traced back to October 31, 2008, when Satoshi Nakamoto, the anonymous creator of Bitcoin (BTC), sent an email to a cypherpunk mailing list. Attached to the email was a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” This mailing list was a space where members discussed cryptography and technologies that enhance privacy, with the aim of bringing about social and political change.
This period coincided with the 2007-2008 global financial crisis, one of the most severe economic crises the world had experienced in recent decades. The crisis was attributed to the excessive risk-taking of international financial institutions, the accumulation of toxic assets within banks, and the collapse of the United States housing market.
Bitcoin’s Advent
On October 31, 2008, Nakamoto introduced the concept of an electronic cash system in their email to the cypherpunk mailing list. They envisioned a system that would be fully peer-to-peer, without the need for a trusted third party. This email also included the Bitcoin white paper, which merged existing cryptographic concepts with distributed ledger technology, thus introducing a decentralized system that operated independently of central authorities. Little did the recipients know that this project would lay the foundation for an entire cryptocurrency industry that would reach a peak market capitalization of $3 trillion in 2021.
On January 3, 2009, Nakamoto mined the genesis block of the Bitcoin blockchain and embedded a message that referenced a headline from The Times newspaper in the United Kingdom. The message read, “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” Many interpreted this message as a commentary on the instability of traditional finance.
A few days later, Nakamoto sent an email announcing the release of the first version of Bitcoin. In this email, sent on January 9, 2009, Nakamoto explained the basics of Bitcoin, including mining and sending coins. They also touched on the concept of Bitcoin halving and the total supply of Bitcoin.
On January 12, 2009, the first-ever Bitcoin transaction occurred when Nakamoto sent 10 BTC to Hal Finney, an American programmer and early adopter of Bitcoin. Finney was a regular contributor to the cypherpunk mailing list.
Bitcoin Hits $1 on Mt. Gox
In 2010, two noteworthy events took place: Bitcoin Pizza Day and the launch of the now-defunct Mt. Gox exchange. On May 22, 2010, programmer Laszlo Hanyecz offered 10,000 Bitcoin in exchange for two large pizzas on the BitcoinTalk online forum. Jeremy Sturdivant accepted the offer and delivered the pizzas, marking the first real-world transaction involving Bitcoin.
On July 17, 2010, the Mt. Gox exchange was established. Programmer Jed McCaleb announced its creation on the BitcoinTalk forum. Mt. Gox provided a platform for users to trade Bitcoin and paved the way for future cryptocurrency exchanges.
In 2011, Bitcoin experienced both a significant milestone and a setback. On February 9, 2011, the price of Bitcoin reached $1 for the first time on Mt. Gox, establishing its value as a new financial asset. However, a few months later, Nakamoto ceased all verified communication, leaving the Bitcoin community in uncertainty.
Nakamoto Steps Away, Altcoins Emerge
On April 26, 2011, Nakamoto had an email exchange with Gavin Andresen, a prominent figure in the early Bitcoin community who took over the development of Bitcoin in December 2010. In this email, Nakamoto expressed their desire to move on to other projects, signaling their disengagement from the direct development of Bitcoin. This marked the end of Nakamoto’s known interactions with the Bitcoin community.
Following Nakamoto’s departure, the emergence of altcoins became a significant development in the cryptocurrency space. On October 7, 2011, Charlie Lee released Litecoin, an alternative cryptocurrency, through an open-source client on GitHub. The Litecoin network went live on October 13, 2011.
2012 witnessed two critical moments in crypto history. First, the cryptocurrency exchange Coinbase launched, providing a platform for users to buy and sell cryptocurrencies. Second, the XRP cryptocurrency was created, with all tokens in existence since its launch and no new tokens being minted.
The Impact of the Early Years
Although the significance of these early events may not have been immediately apparent to the crypto community, they laid the groundwork for the broader adoption of cryptocurrency technology. From the creation of Bitcoin to Nakamoto’s departure, these events will be remembered as pivotal moments that paved the way for a new asset class.
Stay tuned for the next article in the History of Crypto series, where we will delve into Bitcoin’s expansion and the early development of Ethereum. Follow Cointelegraph to learn more about the fascinating history of crypto!