The Bitcoin Breakthrough - WFM #194
Bitcoin has laid the foundation for the modern crypto industry developments.
If you like what you read, please forward this email to whomever you’d like. Our goal is to make blockchain technology more accessible for the masses.
Bitcoin History 101: The Abridged Version
By Harrison Smith, Head of Research @ Future Mints
Over the past few years, I’ve witnessed firsthand the never-ending battle between Bitcoin and Ethereum “maxis” (the people who think one blockchain is THE best). As someone who’s spent countless hours using ETH, I thought the debate was simply a fight between the old and the new. I thought a changing of the guard would one day come, Ethereum would outclass Bitcoin and leave it in the dust. We’ve seen this happen time and time again in technology, so why would this be any different? We all know that first isn’t always best. Ethereum has limitless use-cases, unbound by the potential of smart contracts. And Bitcoin is just digital gold. Right. Right?
Of course, similar to many of you reading this, Bitcoin was my introduction to cryptocurrency. It was the first crypto I had ever heard of, and it was certainly the largest. Since its inception in 2009, this digital gold has proven to be an increasingly resilient and reliable technology.
In order to understand the value Bitcoin has today, it is important to understand the role Bitcoin has played in the broader crypto ecosystem. So let’s begin by taking a look at where it all started.
The first transaction on Bitcoin was on January 12th, 2009 between the pseudonymous creator Satoshi Nakamoto and Hal Finney, a well-regarded cryptographer and computer scientist.
Far before even the transaction heard round the world, on January 17th, 1993, Hal Finney wrote an email with the subject “Crypto trading cards” where he mentioned a more interesting way of exchanging digital money through cryptographic trading cards.
The group of people to whom he sent that email? The Cypherpunks, a mailing list and forum consisting of many notable computer industry figures known for technical discussions ranging over mathematics, cryptography, computer science, politics and philosophical issues.
Exactly 30 years ago (down to the day, per time of writing), Hal Finney theorized tradable cryptographic assets, both predicting the modern concept of NFTs and inspiring Larva Labs’ paradigm shifting NFT collection, Cryptopunks.
Back to 2004. Hal notably built the first reusable proof-of-work system. And in 2008, a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System, was shared to a mailing list and published on bitcoin.org.
The combination of these two preceding events made the duo perfect to complete the first Bitcoin transaction in early 2009.
In 2010, the first known “commercial” transaction using Bitcoin occurred when programmer Laszlo Hanyecz bought two Papa John's pizzas from Jeremy Sturdivant for 10,000 Bitcoins. At the time, the price of one Bitcoin was less than half a cent. Today, that’s $200 MILLION for two pies (~$20,000/BTC).
After early proof-of-concept transactions like these, the first major users of Bitcoin were black markets. The Silk Road, which began in 2011, saw roughly 10 million Bitcoin transacted over 30 months of existence. Today, this would be roughly $200 billion in volume.
By 2013, the leading Bitcoin exchange, Mt. Gox, had grown to handle over 70% of all Bitcoin transactions. However, in 2014, the exchange announced that it had lost 850,000 Bitcoins, valued at around $450 million at the time, to a hacking incident.
It was later revealed that the company had been facing financial difficulties and that many of the lost Bitcoins had been stolen from the company's own wallets over a period of time. The company filed for bankruptcy protection and halted all trading. This was a significant blow to the reputation of Bitcoin and highlighted the need for better security and regulatory oversight in the cryptocurrency industry.
Despite Bitcoin’s early growing pains, Bitcoin’s became ever-increasingly pervasive throughout the past decade. The persistence of the community, eagerness to innovate utility, and the widespread adoption of the currency continued to drive Bitcoin from a niche to the mainstream.
Fast forward to today, Bitcoin still reigns as the largest market cap cryptocurrency. Trust in the token has continued to advance, and real-life use-cases have continued to expand.
Next week we’ll explore what you can do with Bitcoin.
News of the Week
Fran Finney, wife of the late Hal Finney, hosted a half marathon event called ‘Running Bitcoin.’ The goal of the event was to raise funds for ALS research through bitcoin donations, in remembrance of Hal who passed to ALS in 2014.
Genesis and two of its lending subsidiaries filed for bankruptcy protection late Thursday night. According to a report from Bloomberg earlier this week, Genesis had been contemplating the possibility of filing due to an inability to raise additional cash. On Jan. 12th, the U.S. SEC announced charges against Genesis and Gemini for offering unregistered securities.
In his first public interview since taking the reins of CEO, John Ray discussed the possibility of rebooting FTX in an effort to restore funds to customers.
According to a Jan. 19 report from the Wall Street Journal, Ray said everything was “on the table” when it came to the future of FTX.com.