Bitcoin History: Crypto Background Information
Looking for a basic crypto background, with information such as when Bitcoin was invented and what has happened since then? This guide will help you get to know cryptocurrency from its origins to present day. There have been some significant changes over this relatively short history, but the one constant is that cryptocurrency has made an important contribution to the modernization of finance.
Learning about the history of cryptocurrencies, specifically Bitcoin’s history, can make you a smarter and more informed investor. While nowadays cryptocurrency has become relatively commonplace, originally it was a radical new form of decentralized digital money. This blog post aims to provide an overview of some key events in the development of cryptocurrency from an idea to a commonplace reality, including the technical and philosophical foundations underlying modern cryptocurrencies like Bitcoin. From a pivotal whitepaper, to mining pools, to the ability to buy goods and services with cryptocurrency, or hold it as an investment, let’s take a closer look at the history of this transformative financial innovation.
Cryptocurrency Attempts Before Bitcoin
While Bitcoin history is not very long, some form of cryptocurrency existed before Bitcoin hit the market. Prior to 2008, there were references and attempts to start an online currency, such as eCash in 1990 and B-Money in 1998. However, these attempts did not attract the attention and use that Bitcoin ultimately did. Although computer scientists were conceptualizing cryptocurrency for some time, the first to gain traction, Bitcoin, began in 2009 by an anonymous founder, using the pseudonym, Satoshi Nakamoto. Let’s take a closer look at the transformative impact of Bitcoin.
Bitcoin History: From 2008 to Present
The White Paper That Led To The Launch of Bitcoin
In 2008, a paper titled Bitcoin: A Peer-to-Peer Electronic Cash System began circulating in a cryptography mailing list. It was written by somebody who identified themself as Satoshi Nakamoto, but as this is widely described as a pseudonym, the real identity of Mr. Nakamoto is still unknown. In the paper, Nakamoto introduced the concept of Bitcoin, a currency that eliminates any third-parties, like a credit card company or a bank, from interfering with a transaction. He explains how there is a timestamped digital transaction list, introducing the cryptocurrency application of blockchain technology. In the paper, Nakamoto claims, “We have proposed a system for electronic transactions without relying on trust.” This white paper laid the groundwork for Bitcoin to succeed where other attempts at online currency had failed.
Bitcoin’s Launch
In 2009, Bitcoin was made available to the public for the first time. Bitcoin mining, as in the creation of new bitcoins, also started at this time. In fact, Bitcoin was exclusively mined and not traded until 2010.
An important event to discuss in a historical crypto background is that Bitcoin history started evolving to how we view it today when the first bitcoins were sold. The first transaction was for 2 pizzas at Papa John’s on May 22, 2010, for which Laszlo Hanyecz paid 10,000 bitcoin (worth approximately $67,000,000 when this article was originally written). May 22 is now known as Bitcoin Pizza Day. Nowadays, there are definitely a considerable number of merchants who accept cryptocurrency of some kind as a payment method, but crypto is also sometimes treated as an investment rather than a currency.
A Detailed Crypto Background Should Include The History of Bitcoin’s Competition, Where Litecoin Takes “Silver”
Many other cryptocurrencies besides Bitcoin now exist, and one of the most significant is Litecoin. Released in 2011, Litecoin has been called “the silver to Bitcoin’s gold.” Coexisting and competing with Bitcoin for a long time, Litecoin has shown its staying power. It has always had some benefits over Bitcoin, depending on what the user prioritizes. However, Bitcoin remains the most prevalent cryptocurrency in the world.
In 2023, Litecoin retains advantages over Bitcoin in transaction speed and cost. Litecoin’s faster processing speed is well-known, with the ability to process transactions four times faster than Bitcoin. Litecoin has a higher limit of coins in circulation 84 million versus Bitcoin's 21 million limit, potentially improving liquidity. While Bitcoin has greater name recognition and a slightly longer history, Litecoin’s longevity since 2011 makes it an important alternative to Bitcoin in 2023.
The Beginning of Bitcoin Mining
As mentioned above, Bitcoin mining began when Bitcoin launched in 2009, utilizing proof-of-work. At this early stage, Bitcoin mining was done on personal computers, instead of large data center facilities where crypto miners often operate today. Eventually, GPUs and FPGAs were used to improve mining performance. By 2013, purpose-built Application-Specific Integrated Circuits (ASIC) miners with customized chips delivered improved hashrates, turning mining into a true profession. Miners began to band together in mining pools that allowed them to combine resources, working together and sharing rewards. Bitcoin mining evolved into a large-scale endeavor requiring specialized hardware. While impotant in Bitcoin's early days, individual hobby mining gave way to a competitive industry racing to verify blocks and earn coveted coins. The development of the mining industry has propelled Bitcoin's growth while securing the blockchain.
Mining involves algorithms that verify and add new transactions to the blockchain ledger. Using computing power to solve complex math puzzles, miners confirm blocks of transactions following a specific protocol. The proof-of-work consensus mechanism allows miners to earn Bitcoin rewards for their work. While quite energy-intensive, proof-of-work ensured the integrity and security of the Bitcoin ledger as the first widespread cryptocurrency technology. Through the various events in Bitcoin’s history, proof-of-work remains core to Bitcoin mining operations today.
What about mining Litecoin? Like Bitcoin, Litecoin mining also follows proof-of-work consensus. However, Litecoin was designed to mine blocks 4 times faster than Bitcoin, speeding up transaction times. It also utilizes the Scrypt mining algorithm rather than Bitcoin's SHA-256, making transaction processing speed faster for Litecoin. For the purposes of this history overview, the main point here is that cryptocurrency mining came into existence and developed into a profession that is important for both Bitcoin and Litecoin.
Crypto Background: Crashes and Peaks
In 2013, the price of a single Bitcoin hit $1,000, and quickly crashed to $300 - not reaching $1,000 again until 2017. Shortly after this, more cryptocurrencies were born into the markets. It was also around this time that ICOs, or initial coin offerings, were introduced. If you’d like to learn more about ICO’s, you can check out our blog here. Fortunately, Bitcoin survived this crash and reached a peak of nearly $20,000 in late 2017.
Over time, Bitcoin’s value has continued to fluctuate, with a recent, notable crash in 2022. Bitcoin’s most recent highest peak occurred on November 8, 2021, when it reached a price of $67,566.83.
The Ongoing Development of Regulation of Cryptocurrency
The SEC warned investors that due to a lack of regulation, they could be investing into scams, and they’ve announced more regulation on the cryptocurrency. However, this was nowhere near as extreme as how China banned them entirely in 2017 and expanded this to a ban on cryptocurrency transactions in 2021.
Over the years, the SEC has been continually announcing new regulations and investigations regarding ICOs and cryptocurrencies, including tax regulation. Recently, the SEC has attempted to take legal action against various cryptocurrency industry companies but has experienced some losses in federal court. The question of whether to treat crypto as a security remains somewhat open at present.
Recent Crypto History and Bitcoin Today
Some interesting recent developments in digital currency history include that in 2022, the electric vehicle brand Tesla started accepting the cryptocurrency Dogecoin as a payment method for certain items available in their online shop. In 2023, the software company MicroStrategy has also been buying Bitcoin and its executive chairman is a proponent of cryptocurrency.
In 2023, Bitcoin is still popular and being regularly traded. Over the years it has hit new highs and lows, but maintains an important role to play in the financial ecosystem of the present and future. There are numerous cryptocurrencies available, but Bitcoin boasts the highest market capitalization of them all.
Looking For The Best Way To Buy Bitcoin Today? It’s Pelicoin!
Now that you know more crypto background information, in terms of how Bitcoin was created and helped cryptocurrency gain mainstream awareness, you can feel more confident about the subject. If this newfound confidence inspires you to get started purchasing Bitcoin, a great way to do that is at a Pelicoin Bitcoin ATM. An ATM allows you to conduct your transactions efficiently and in a familiar format. If you have used a traditional ATM, this should be a similar process for you. The machine will also walk you through the steps and you only need to bring your cash and your phone (plus your crypto wallet address or QR code, if you have one).
If you’re ready to get your hands on Bitcoin yourself today, head over to a Pelicoin ATM. Pelicoin ATMs are a convenient and fast way to buy Bitcoin, with locations all over the Gulf South. Contact Pelicoin today with any questions at (504) 507-0879 or support@pelicoin.com.