The domain name "bitcoin.org" was registered on 18 August 2008.[20] In November 2008, a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System[4] was posted to a cryptography mailing list. Nakamoto implemented the bitcoin software as open source code and released it in January 2009.[21][22][12] The identity of Nakamoto remains unknown.[11]
In January 2009, the bitcoin network was created when Nakamoto mined the first block of the chain, known as the genesis block.[23][24] Embedded in the coinbase of this block was the following text:
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.[12]
This note has been interpreted as both a timestamp and a comment on the instability caused by fractional-reserve banking.[25]:18
The receiver of the first bitcoin transaction was cypherpunk Hal Finney, who created the first reusable proof-of-work system (RPOW) in 2004.[26] Finney downloaded the bitcoin software on its release date, and received 10 bitcoins from Nakamoto.[27][28] Other early cypherpunk supporters were creators of bitcoin predecessors: Wei Dai, creator of b-money, and Nick Szabo, creator of bit gold.[29]
Nakamoto is estimated to have mined 1 million bitcoins.[30] before disappearing in 2010, when he handed the network alert key and control of the Bitcoin Core code repository over to Gavin Andresen. Andresen later became lead developer at the Bitcoin Foundation.[31][32] Andresen then sought to decentralize control. This left opportunity for controversy to develop over the future development path of bitcoin.[33][32]
2011 - 2012
Prices were extremely volatile in 2011, starting at $0.30 per bitcoin, growing 1,656% for the year to $5.27. Prices rose to $31.50 on June 8, a 10,500% increase from January 1. Within a month the price had crashed to $11.00, a 65% decline. The next month if fell to $7.80, and in another month to $4.77, for an overall 85% decline in the ninety days from the June 8 high.[34][35]
Litecoin was an early bitcoin spinoff or altcoin, starting in October 2011. Many altcoins have been created since.
In 2012 bitcoin prices started at $5.27 growing 153% to $13.30 for the year.[35] By January 9 the price had risen to $7.38, but then crashed by 49% over the next 16 days. The price then rose to $16.41 on August 17, but fell by 57% over the next three days.[36]
The Bitcoin Foundation was founded in September 2012 to "accelerate the global growth of bitcoin through standardization, protection, and promotion of the open source protocol". The founders included Gavin Andresen and Charlie Shrem.[37]
2013 - 2016
In 2013 prices started at $13.30 rising 5,691% to $770 by January 1, 2014.[35]
In March 2013 the blockchain temporarily split into two independent chains with different rules. The two blockchains operated simultaneously for six hours, each with its own version of the transaction history. Normal operation was restored when the majority of the network downgraded to version 0.7 of the bitcoin software.[38] The Mt. Gox exchange briefly halted bitcoin deposits and the price dropped by 23% to $37[39][40] before recovering to previous level of approximately $48 in the following hours.[41]
The US Financial Crimes Enforcement Network (FinCEN) established regulatory guidelines for "decentralized virtual currencies" such as bitcoin, classifying American bitcoin miners who sell their generated bitcoins as Money Service Businesses (MSBs), that are subject to registration or other legal obligations.[42][43][44]
In April, payment processors BitInstant and Mt. Gox experienced processing delays due to insufficient capacity[45] resulting in the bitcoin price dropping from $266 to $76 before returning to $160 within six hours.[46]
The bitcoin price rose to $259 on April 10, but then crashed by 83% over the next 3 days.[36]
On 15 May 2013, the US authorities seized accounts associated with Mt. Gox after discovering that it had not registered as a money transmitter with FinCEN in the US.[47][48]
On 23 June 2013, the US Drug Enforcement Administration listed 11.02 bitcoins as a seized asset in a United States Department of Justice seizure notice pursuant to 21 U.S.C. § 881.[49] This marked the first time a government agency seized bitcoin.[50][51]
The FBI seized about 26,000 bitcoins in October 2013 from darknet website Silk Road during the arrest of Ross William Ulbricht.[52][53][54]
Bitcoin's price rose to $755 on 19 November and crashed by 50% to $378 the same day. On 30 November 2013 the price reached $1,163 before starting a long-term crash, declining by 87% to $152 in January 2015.[36]
On 5 December 2013, the People's Bank of China prohibited Chinese financial institutions from using bitcoins.[55] After the announcement, the value of bitcoins dropped,[56] and Baidu no longer accepted bitcoins for certain services.[57] Buying real-world goods with any virtual currency had been illegal in China since at least 2009.[58]
In 2014 prices started at $770 and fell 59% to $314 for the year.[35]
In February 2014 the Mt. Gox exchange, the largest bitcoin exchange at the time, said that 850,000 bitcoins had been stolen from its customers, amounting to almost $500 million. Bitcoin's price fell by almost half, from $867 to $439 (a 49% drop). Prices remained low until late 2016.
In 2015 prices started at $314 and rose 38% to $434 for the year. In 2016 prices rose 130% to $998 on January 1, 2017.[35]
2017 - 2018
Bitcoin prices in 2017 were exceptionally volatile, starting at $998 and rising 1,245% to $13,412.44 on January 1, 2018.[35] On December 17 bitcoin's price reached an all time high of $19,666 and then fell 70% to $5,920 on February 6, 2018.[36]
Throughout the rest of the first half of 2018, bitcoin's price fluctuated between $11,480 and $5,848. On July 1, 2018 bitcoin's price was $6,469.[59]
Forks
On 1 August 2017, a hard fork of bitcoin was created, known as Bitcoin Cash.[60] Bitcoin Cash has a larger block size limit and had an identical blockchain at the time of fork. On 24 October 2017 another hard fork, Bitcoin Gold, was created. Bitcoin Gold changes the proof-of-work algorithm used in mining.[61]
Scaling Debates
As disagreements around scaling bitcoin heated up, several hard forks were proposed. Bitcoin XT was one proposal that aimed for 24 transactions per second. In order to accomplish this, it proposed increasing the block size from 1 megabyte to 8 megabytes. When Bitcoin XT was declined, some community members still wanted block sizes to increase. In response, a group of developers launched Bitcoin Classic, which intended to increase the block size to only 2 megabytes. Bitcoin Unlimited set itself apart by allowing miners to decide on the size of their blocks, with nodes and miners limiting the size of blocks they accept, up to 16 megabytes.
Segwit Soft-fork
Bitcoin Core developer Peter Wuille presented the idea of Segregated Witness (SegWit) in late 2015. Put simply, SegWit is a backward-compatible soft-fork that aims to reduce the size of each bitcoin transaction, thereby allowing more transactions to take place at once. Segwit activated on 1 August 2017.[citation needed]
In response to SegWit, some developers and users decided to initiate a hard fork in order to avoid the protocol updates it brought about. Bitcoin Cash was the result, which increased the block size to 8 megabytes.[62] There was another proposed hard fork called Segwit2x, which would have increased the block size to 2 megabytes. After a number of companies and individuals in the community decided to back out of the hard fork, the team behind SegWit2x cancelled their planned hard fork in November 2017.
New Features
Bitcoin Gold was a hard fork that followed several months later in October 2017 that changed the proof-of-work algorithm with the aim of restoring mining functionality to basic graphics processing units (GPU), as the developers felt that mining had become too specialized.[63] Bitcoin Private, launched in March 2018, added the ability to keep certain details private in a transaction, in contrast to bitcoin which has a transparent transaction history.[citation needed]