Famously, the first time the internet was used to make a purchase was in August 1994 when a Sting CD was sold through Shopify. Just as famous, the first time that a digital currency was used to buy a real-world good was in May 2010, when 10,000 bitcoin were exchanged for two large pizzas. But it was a long road to reach even that point, as we will see.
Creation
The idea of cryptocurrency has been around for nearly forty years. In 1983, American cryptographer David Chaum published a conference paper setting out an early form of anonymous cryptographic electronic money that could be sent untraceable, bypassing banks and established institutions. In 1995, Chaum developed a proto-cryptocurrency called Digicash, but the technology was still not fully formed. Bit Gold came around in 1998 and required a participant to dedicate computer power to solving cryptographic puzzles, and those who solved the puzzle received a reward. These two ideas together coalesced into what came to be Bitcoin, the world’s first, fully-fledged cryptocurrency, in October 2008.
The First Days
On October 31, 2008, Satoshi Nakamoto published a white paper describing how the Bitcoin blockchain network would operate. Satoshi turned theory into practice when they purchased Bitcoin.org. Satoshi then mined the first block of the Bitcoin network on January 3, 2009, which resulted in 50 bitcoins being mined. This was the Genesis Block, and although Bitcoin had essentially no value then, by April 2010, the value of one BTC was about 14 cents. Five months later, the price leaped up to 36 cents before settling at 29 cents at the end of the year. Cryptocurrency was now a thing.
Development
In October 2011, Litecoin was created. It developed from one of many forks—meaning updated versions—of Bitcoin. Litecoin quickly became the second largest cryptocurrency and was named an altcoin, essentially used to describe any cryptocurrency besides Bitcoin.
The next year would see a series of dramatic rises and falls as the new technology was subject to speculation and criminal activity. Hacks and scams led to improvements in the way that crypto is dealt with and held, and the fall of large exchanges led to the development of hardware and software wallets to safely store cryptocurrency. In 2013 Dogecoin was introduced, initially as a satirical comment on the industry as a whole, but has since grown to be a full cryptocurrency of its own.
Making Headlines
Bitcoin grew in 2016 and 2017 after attention was drawn to it by mainstream media. During this time, a new blockchain project called Ethereum was coming to the fore, rising to be the number two cryptocurrency by market cap since launching in July 2015. Its innovation was bringing smart contracts to cryptocurrency, allowing a wide array of potential use cases, generating over 200,000 different projects and still counting. Ethereum enables additional platforms to launch and operate on its own chain, each with its own cryptocurrencies and its own use cases. Cardano, Tezos, and Neo also launched during this period.
Tumultuous Present
Value dipped at the end of the 2010s, but from late 2020, Bitcoin and altcoins gained a resurgence, as seen on OKX. MicroStrategy bought Bitcoin for $250 million, kicking off a bull market in the industry, further boosted by Tesla’s purchase of $1.5 billion in bitcoin in early 2021. By that November, Bitcoin had reached its record high of $69,000.
The market has since fallen from that high, but then so have global stock markets. This is probably not a coincidence but evidence that the crypto sector is becoming increasingly tied to traditional financial markets, which is a sign of its continued health and viability.
Summary
Despite its tendency to sudden crashes, it is now clear that it is not going anywhere, and, as the market becomes more stable, and with the introduction of new forms such as stablecoins and decentralized finance (DeFi), there is a future for the sector, and most likely a bright one.