On January 3rd, 2009, the very first block of the Bitcoin blockchain was mined and the Bitcoin success story started.
It’s been 14 years since Bitcoin became a reality. Its whitepaper was published on October 31, 2008, so the theory was known among some people in the cryptoanarchist community. On January 3, 2009, Bitcoin started working in practice. Satoshi Nakamoto mined the first block of the Bitcoin blockchain and received 50 Bitcoins as a reward.
That sounds like a lot of money today, but back then Bitcoin had no value. It was merely an experiment that very few people took notice of. It was discussed in the Bitcoin.org forum founded by Satoshi and on mailing lists of cryptography experts and cypherpunks.
The first block of the Bitcoin blockchain contains a sentence from that day’s headline of the English newspaper The Times: “Chancellor on brink of second for banks”. On the one hand, this was proof that the “Genesis block” really was mined on January 3rd and not earlier. It reminds of the custom to place a newspaper of the day in the fundament of a building.
On the other hand, it shows that Satoshi was well aware of the financial crisis of 2007 / 2008. It started with the collapse of adventurous financial products called Credit Default Swaps, which were based on loans for houses for people who could not actually afford them.
It culminated in the bankruptcy of the investment bank Lehman Brothers in September 2008, and led to several bailouts of banks by taxpayers’ money. This crisis clearly demonstrated that the existing financial system, based on monopolies and debt, does not work well and that a better system is needed.
The first Bitcoin transaction took place on January 12 between Satoshi and Hal Finney, a software developer involved in the Pretty Good Privacy project. Hal helped Satoshi Nakamoto fix some bugs in the software and was one of the first people to run the Bitcoin software on his server. No one knows if he was just interested in the project or if he was a member of a team working under that Japanese pseudonym.
I don’t think anyone could have imagined Bitcoin’s incredible success story in 2009. The 50 Bitcoins that miners received as a reward for each block in the early days are now worth more than $800,000. Wealthy individuals, publicly traded companies and big financial institutions are invested in Bitcoin. In El Salvador and the Central African Republic Bitcoin is legal tender, other countries are considering to follow their lead.
Considering its humble beginnings, this is quite impressive. However, we are still in the very early stages of Bitcoin’s development. Satoshi himself said, “I’m sure that in 20 years there will either be a very large volume of transactions or no volume at all.”
Let’s see where we will be in six years. My bet: with a VERY LARGE volume.
By Aaron Koenig