Bitcoin is the largest cryptocurrency by market capitalisation. Bitcoin is also the most traded, most talked about, most invested in and the most well-known cryptocurrency in the world. Despite its prominence in the market, its origins are swathed in a mystery that is yet to be solved.
The domain name “bitcoin.org” was first registered in August 1988. This registration was quickly followed by a paper that was published in October 2008 outlining the operation of a digital currency called “Bitcoin”.
The paper “Bitcoin: A Peer-to-Peer Electronic Cash System” was written by Satoshi Nakamoto. To date, the identity of the inventor of Bitcoin is still a mystery and no one knows for sure who, or what, Satoshi Nakamoto is.
Notwithstanding this intriguing mystery, the paper itself outlined and explained a method of using a peer-to-peer (P2P) network for electronic transactions. Prior to this there had been some development of digital cash technologies and proof of work (a key component of many digital currencies). The paper outlined a world of electronic transactions without relying on “trust”.
Traditional (or fiat) currencies rely on “trust” for them to work. In fact, the word fiat is Latin for "let it be done”. In the words of The Bank of England:
“When money is issued by a central bank, people are able to trust the value of the notes as they are all coming from a single, trusted source. The Bank of England – the UK’s central bank – has been issuing banknotes for over 300 years. It’s our job to make sure that when you spend a banknote, the person who receives it can trust in its value – that they too will be able to exchange it for the same value of goods or services.”
In other words, whilst there is nothing intrinsically valuable in bank notes, they are worth something because everyone trusts in their value.
The Bitcoin network came into existence on January 3rd 2009 by Satoshi Nakamoto mining (or creating) the genesis block of Bitcoin. Block number “0” included the text from the UK’s Times newspaper headline that day: “Chancellor on brink of second bailout for banks”. At the time there was a huge crises affecting banks around the world and this was a clear comment on the reliability (or otherwise) of traditional banking and the financial services industry.
The first bitcoin user was programmer Hal Finney who downloaded the bitcoin software the day it was released and received 10 Bitcoins in the world’s first Bitcoin transaction. Other early supporters and adopters of note in the Bitcoin story were Wei Dai (the creator of bitcoin predecessor b-money) and Nick Szabo (the creator of predecessor bit gold).
Nakamoto eventually disappeared and Gavin Andresen became Bitcoin lead developer at the Bitcoin Foundation (a non-profit organisation promoting Bitcoin adoption globally).