Bitcoin is one of the most extraordinary developments of the last decade: a grassroots experiment in monetary policy played out on a global scale. As anonymous Bitcoin creator(s) Satoshi Nakamoto wrote it in the Bitcoin whitepaper:

Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments… What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.

As a digital peer-to-peer currency, Bitcoin was created to allow the free flow of value without the intervention of centralized banking systems or trusted third-parties. Like many new technologies, Bitcoin is many things to many people. For an ideologist, the primary innovation of Bitcoin might be as a censorship-resistant currency that no one can take away from you. For an institutional investor, the value of Bitcoin might be as a store of value and a useful hedge against traditional equity markets, similar to gold.

Wherever you fall on the spectrum, Bitcoin has come a long way in the past ten years. Bitcoin was the first cryptocurrency and it remains the most valuable, with a market cap north of $70 billion. In this article, we’ll walk you through a brief history of Bitcoin, explain how it works, and dig into the key factors that may impact BTC’s price.

A brief history of Bitcoin

Bitcoin is the brainchild of the elusive Satoshi Nakamoto, an alias for the unknown person, persons, or organization who wrote the Bitcoin white paper and the initial version of its software. Satoshi mined the first block of bitcoins in early January 2009. By that October, the New Liberty Standard set the Bitcoin exchange rate at 1,309.03 BTC per USD.

In May 2010, the first-ever bitcoin-financed purchase took place when Laszlo Hanyecz paid 10,000 BTC for two pizzas. Later that same year, the first Bitcoin exchanges (Bitcoin Market and Mt. Gox) and the first Bitcoin mining pool (Slush Pool) surfaced.

As interest in the cryptocurrency grew, bitcoin’s price began to improve until, in early 2011, it finally passed the one-dollar mark. In December 2013, it passed the $1,000 price point — a 1,000x gain in three years.

Over the next few years, Bitcoin gradually began to gain public attention and, despite the growing number of altcoins, it remained firmly entrenched as the preeminent cryptocurrency. However, as its network grew, so did disagreements about the direction the coin should take. Finally, in August 2017, those disagreements came to a head, and the Bitcoin blockchain hard-forked into two blockchains: Bitcoin and Bitcoin Cash.

A 10-year Bitcoin timeline

Since Bitcoin launched ten years ago in January 2009, a lot has happened. Let’s look at how far Bitcoin’s come:

2008

August: Bitcoin.org was registered as a domain name.

Bitcoin.org was registered as a domain name. October: Satoshi Nakamoto published the Bitcoin white paper.

2009

January: Initial version of Bitcoin software was released; Nakamoto mined the Genesis Block; the first Bitcoin transaction occurred between Nakamoto and programmer Hal Finney.

Initial version of Bitcoin software was released; Nakamoto mined the Genesis Block; the first Bitcoin transaction occurred between Nakamoto and programmer Hal Finney. October: The first BTC/USD exchange rate was established.

The first BTC/USD exchange rate was established. December: The second version of the Bitcoin software was released; mining difficulty was increased for the first time.

2010

February: The first Bitcoin exchange, Bitcoin Market, started operations.

The first Bitcoin exchange, Bitcoin Market, started operations. May: First-ever use of bitcoins as currency.

First-ever use of bitcoins as currency. July: The third version of Bitcoin software was released; Mt. Gox exchange started operations.

The third version of Bitcoin software was released; Mt. Gox exchange started operations. September: Slush Pool, the first BTC mining pool, started mining operations.

Slush Pool, the first BTC mining pool, started mining operations. October: First major Bitcoin exploit resulted in the fraudulent generation of 184 billion BTC; developers quickly reversed the transaction and patched the code.

First major Bitcoin exploit resulted in the fraudulent generation of 184 billion BTC; developers quickly reversed the transaction and patched the code. November: Bitcoin’s market capitalization exceeded $1 million USD.

2011

January: The total number of generated bitcoins reached 5.25 million, exceeding 25% of the 21 million bitcoin cap enforced by the software.

The total number of generated bitcoins reached 5.25 million, exceeding 25% of the 21 million bitcoin cap enforced by the software. February: Silk Road, a dark web marketplace using bitcoins, debuted and quickly turned into a trading hub for drugs and other illegal products.

Silk Road, a dark web marketplace using bitcoins, debuted and quickly turned into a trading hub for drugs and other illegal products. April: Namecoin, the first altcoin, was introduced as an alternative domain name registry service; TIME Magazine published an article about Bitcoin.

Namecoin, the first altcoin, was introduced as an alternative domain name registry service; TIME Magazine published an article about Bitcoin. June: A security breach at Mt. Gox compromised thousands of accounts.

2012

February: Bitcoin Magazine released its first issue.

Bitcoin Magazine released its first issue. September: The Bitcoin Foundation was formed.

The Bitcoin Foundation was formed. November: The Bitcoin blockchain reached 210,000 total blocks and mining rewards were halved to 25 BTC.

2013

February: Mt. Gox suspended trading and files for bankruptcy, revealing that it had lost 744,408 bitcoins due to a suspected hack.

Mt. Gox suspended trading and files for bankruptcy, revealing that it had lost 744,408 bitcoins due to a suspected hack. March: The first Bitcoin hard fork occurred due to an unexpected effect from a new protocol rule; BTC’s market cap passed $1 billion USD.

The first Bitcoin hard fork occurred due to an unexpected effect from a new protocol rule; BTC’s market cap passed $1 billion USD. August: A Texas judge ruled that BTC qualifies as a currency.

A Texas judge ruled that BTC qualifies as a currency. October: Silk Road was shut down by the FBI and its BTC assets were seized by the government.

Silk Road was shut down by the FBI and its BTC assets were seized by the government. December: China’s central bank banned bitcoin transactions.

2014

January: The CEO of BitInstant, Charlie Shrem, was arrested and charged with money laundering.

The CEO of BitInstant, Charlie Shrem, was arrested and charged with money laundering. March: Newsweek published an article claiming it had identified one Dorian Nakamoto, a computer engineer in California, as the creator of Bitcoin. Nakamoto denied that he was Satoshi Nakamoto and said he had never been involved in Bitcoin.

Newsweek published an article claiming it had identified one Dorian Nakamoto, a computer engineer in California, as the creator of Bitcoin. Nakamoto denied that he was Satoshi Nakamoto and said he had never been involved in Bitcoin. December: Microsoft started accepting BTC as a payment method for its marketplaces.

2015

January: Bitcoin exchange Bitstamp was hacked to the tune of 18,866 bitcoins.

Bitcoin exchange Bitstamp was hacked to the tune of 18,866 bitcoins. June: New York City requires Bitcoin and digital currency companies to apply for a BitLicense.

New York City requires Bitcoin and digital currency companies to apply for a BitLicense. August: The CEO of Mt. Gox, Mark Karpeles, was arrested and charged with embezzlement.

2016

April: Steam accepts Bitcoin as payment for video games along with other media.

Steam accepts Bitcoin as payment for video games along with other media. July: Uber switches to Bitcoin in Argentina as the government blocks Uber from accepting credit card payments in the country.

Uber switches to Bitcoin in Argentina as the government blocks Uber from accepting credit card payments in the country. August: Bitcoin exchange Bitfinex was hacked and around 120,000 BTC were stolen by the culprits.

2017

March: The SEC rejects two applications proposing to establish Bitcoin ETFs — one from the Winklevoss twins, and another from the Intercontinental Exchange.

The SEC rejects two applications proposing to establish Bitcoin ETFs — one from the Winklevoss twins, and another from the Intercontinental Exchange. April: Japan recognizes Bitcoin as a legal method of payment.

Japan recognizes Bitcoin as a legal method of payment. August: The Bitcoin Cash fork occurred, splitting Bitcoin into Bitcoin and Bitcoin Cash.

The Bitcoin Cash fork occurred, splitting Bitcoin into Bitcoin and Bitcoin Cash. November: The price of 1 BTC exceeds $10,000 USD for the first time.

The price of 1 BTC exceeds $10,000 USD for the first time. September: China shuts down cryptocurrency exchanges.

China shuts down cryptocurrency exchanges. December: Bitcoin futures contracts became available on the Chicago Board Options Exchange (CBOE) and Chicago Mercantile Exchange (CME).

2018

January: Facebook responded to the wave of cryptocurrency ICOs by banning all crypto-related adverts.

Facebook responded to the wave of cryptocurrency ICOs by banning all crypto-related adverts. March: Lightning Labs’ implementation of Lightning network launches in beta.

Lightning Labs’ implementation of Lightning network launches in beta. May: Goldman Sachs launches a Bitcoin trading operation. The U.S. Justice Department launches a probe into potential cryptocurrency price manipulation.

Goldman Sachs launches a Bitcoin trading operation. The U.S. Justice Department launches a probe into potential cryptocurrency price manipulation. August: The owner of the NYSE announces the launch of Bakkt, a federally regulated market for Bitcoin. Square enables buying and selling Bitcoin in its Cash App across the U.S.

The owner of the NYSE announces the launch of Bakkt, a federally regulated market for Bitcoin. Square enables buying and selling Bitcoin in its Cash App across the U.S. October: 10-year anniversary of Bitcoin launch. Fidelity launches an institutional platform for trading cryptocurrencies.

10-year anniversary of Bitcoin launch. Fidelity launches an institutional platform for trading cryptocurrencies. December: Second-largest difficulty drop in Bitcoin mining history.

2019

January: Lightning Network grows to over 5,690 nodes with over 22,000 payment channels.

Lightning Network grows to over 5,690 nodes with over 22,000 payment channels. March: The Chicago Board Options Exchange puts Bitcoin futures on hold, citing a need to assess its approach to digital asset derivatives. A Tokyo court finds Mark Karpelès not guilty of the most serious charges against him, including embezzlement and breach of trust, but finds him guilty of creating false records in the Mt. Gox system.

How Bitcoin works

In this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions. The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes. —Satoshi Nakamoto, Bitcoin Whitepaper

Bitcoin is a cryptographically-secured digital asset built on top of a type of database called a blockchain.

The age-old problem with building an electronic currency is called the double-spend problem, or the risk that digital currency can be spent twice. This isn’t a problem with traditional fiat currencies like the dollar, because it’s relatively difficult to forge a paper currency. But digital assets, at least before Bitcoin, were easily reproducible, which meant there wasn’t a good way to prevent people from making copies of the digital tokens that they owned and spending them like money.

Before Bitcoin, the only way to really solve this problem was to rely on a central administrator — a trusted authority who maintained the books and kept track of everyone’s balance and transaction history. Then, in 2008, the Bitcoin whitepaper by the anonymous Satoshi Nakamoto proposed an elegant solution to double-spending: use cryptography to secure a decentralized, trustless network for a digital currency.

Bitcoin transactions are stored on a blockchain: a shared public ledger of transactions maintained by nodes, or computers on the network. Instead of trusting a centralized administrator to keep a ledger of transactions, on Bitcoin, every single node has a copy of the entire history of transactions on the network. Anyone can join this network and run a node.

Alice can’t send Bob bitcoins that she doesn’t have because that fraudulent transaction wouldn’t sync up with records that everybody else was maintaining on the system.

But if everyone on the network has a copy of all transactions, then there has to be a mechanism for adding new transactions to every node. This is where the key innovation behind Bitcoin kicks in: When you send a Bitcoin transaction, that transaction is broadcast to a node, which adds it to a new batch of unconfirmed transactions on the network, called a block. For a block to be finalized and added to the blockchain, a miner needs to validate the transaction and solve for a proof-of-work for the block.