The development of Bitcoin continued apace, and on January 3, 2009, Nakamoto
mined the very first Bitcoins, the so-called “genesis block.” On January 9, he
released the first open-source Bitcoin client (v0.1). Three days later, on January 12,
the first Bitcoin transaction was recorded, from Nakamoto to Hal Finney—a name
you’ve heard before.
Finney was (and is) a developer at PGP Corporation, a company at the forefront
of public-key cryptography—the technology behind Bitcoin’s encryption capabilities. He is also a noted activist in the field of cryptography, responsible for running several anonymous remailer servers and staging a contest to break Netscape’s export-grade encryption.
In 2004, Finney created the first reusable proof-of-work
protocol, dubbed RPOW, which was a system that required some work from the
service requester before a credit of some sort would be applied; a version of this
protocol was incorporated into the Bitcoin mining process. It goes without saying, then, that Finney was integral to the creation of Bitcoin (which is why some
claim that Finney himself is actually Satoshi Nakamoto—which Finney, of course,
denies).
Back to our story, and to that first Bitcoin transaction. This first transaction
created what is known as the genesis block, the initial block in the ever-growing
Bitcoin block chain. Nakamoto’s genesis block was composed of 50 Bitcoins—
50 BTC, in Bitcoin parlance. The value of those first Bitcoin transactions was
negotiated by individuals on the bitcointalk forums, which is where all interested
parties hung out online. (You can access the bitcointalk forums today at
https://bitcointalk.org.)
Throughout the balance of 2009, Nakamoto and others continued to work on the
Bitcoin technology and the associated trading process. During these early days
there were no formal Bitcoin exchanges; all the trading took place between individuals on the bitcointalk forums. For example, in October of 2009, forum member
NewLibertyStandard set the exchange rate of 1 dollar equaling 1,309.03 BTC, or
$0.0007/BTC. (Bitcoins weren’t worth a whole lot back then.)
TO BE CONTINUED........
