History
Now famously known as “Bitcoin Pizza Day,” May 22, 2010 witnessed the first time bitcoin — which reached a peak of $69,000 per piece in November 2021 — was used to purchase something tangible.
In order to get those two pizzas, the bitcoins were sent to a volunteer in England, who made a transatlantic phone call and paid for the $30 delivery of pizza to Florida-based programmer Laszlo Hanyecz.
Thirty dollars may not seem like much now, but it was an important step in the history of cryptocurrency, which has since become arguably the most exciting technological innovation of the 21st Century. We trace this history below, explaining how Bitcoin and cryptocurrency first developed, and where they may be going.
The Idea for Cryptocurrency
The idea for cryptocurrency first emerged in 1983, when American cryptographer David Chaum published a conference paper outlining an early form of anonymous cryptographic electronic money. The concept was for a currency that could be sent untraceably and in a manner that did not require centralized entities (i.e. banks). In 1995, Chaum built on his early ideas and developed a proto-cryptocurrency called Digicash. It required user software to withdraw funds from a bank and required specific encrypted keys before said funds could be sent to a recipient.
Bit Gold, often deemed a direct precursor to Bitcoin, was designed in 1998 by Nick Szabo. It required a participant to dedicate computer power to solving cryptographic puzzles, and those who solved the puzzle received a reward. Combined with Chaum’s work, it results in something that comes very close to resembling Bitcoin.
But Szabo could not solve the infamous double-spending problem (digital data can be copied and pasted) without the use of a central authority. As such, it was not until a decade later when a mysterious person or group, using the pseudonym Satoshi Nakamoto, set the history of Bitcoin and later cryptocurrencies in motion, by publishing a white paper called “Bitcoin – A Peer to Peer Electronic Cash System.”
The Beginning (2008-2010)
On October 31, 2008, Satoshi Nakamoto published the Bitcoin white paper, describing the functionality of the Bitcoin blockchain network. Satoshi formally began work on the bitcoin project on August 18th, 2008, when they purchased Bitcoin.org. While it’s not the subject of this article, it’s worth noting that Bitcoin (and all other cryptocurrencies) wouldn’t be possible without blockchain technology, which at its simplest involves creating unalterable data structures.
The history of Bitcoin was underway. Satoshi Nakamoto mined the first block of the Bitcoin network on January 3, 2009. They embedded a headline from The Times newspaper in this initial block, making a permanent reference to the economic conditions — involving bank bailouts and a centralized financial system — that Bitcoin was partly a reaction against.
This first block — which resulted in 50 bitcoins being mined — is now referred to as the Genesis Block. Bitcoin had virtually no value at this time, as well as for the first few months of its existence. Six months after bitcoin became tradeable, in April 2010, the value of one BTC was just under 14 cents. By early November, the price ‘surged’ to 36 cents before settling at around 29 cents.
The Market Begins to Form (2010-2014)
While it wasn’t yet worth much, Bitcoin was showing it had real world value. In February 2011 it rose to $1.06 before coming back down to roughly 87 cents. In the spring, in part due to a Forbes story on the new “crypto currency,” the price took off. From early April to the end of May, the value of bitcoin rose from 86 cents to $8.89.
On June 1, after Gawker published a story about the currency’s appeal in the online drug dealing community, the price more than tripled in a week, to about $27. The market value of bitcoins in circulation approached nearly $130 million. However, by September 2011, the value had dropped back down to around $4.77.
In October of that same year, Litecoin appeared, one of many forks (i.e. updated versions) of Bitcoin. Litecoin soon became the second-biggest cryptocurrency by market cap, with the earliest archive of CoinMarketCap (from May 2013) showing PPCoin, Namecoin and 10 others trailing in the distance. Such cryptocurrencies were quickly dubbed ‘altcoins’, with some forked from Bitcoin and others based on new code. In 2012, Bitcoin prices grew steadily, and in September of that year the Bitcoin Foundation was established to promote Bitcoin’s development and uptake. Then known as OpenCoin, Ripple was also launched that year, with the project attracting venture capital the next year.
In 2013, amid federal, criminal, regulatory, and software related issues, bitcoin’s price constantly rose and crashed. On November 19 its price reached $755, only to crash down to $378 the same day. By November 30 it was all the way up to $1,163 again. This was, however, the beginning of another long-term crash that ended with Bitcoin dropping back down to $152 by January 2015.
Scams Dominate Headlines (2014-2016)
Though intentional, anonymity and lack of centralized control make digital currency highly attractive to criminals. In January 2014, Mt.Gox — then the world’s largest bitcoin exchange — collapsed and declared bankruptcy, having lost 850,000 bitcoin. While it’s not known what exactly happened, it’s likely that the missing BTC was stolen gradually over time, beginning in 2011, and resold on various exchanges for cash (including Mt.Gox), until one day Mt.Gox checked their wallets and found they were empty. CEO Mark Karpeles was charged with embezzlement in 2017, but acquitted in 2019, so the destination of the missing BTC remains a mystery.
While the hack was not a singular event, it has served as a cautionary tale, and security on exchanges is much improved. Though smaller exchanges continue to be hacked even today, larger platforms now provide more guarantees on their reserve holdings in case of breaches. This includes the Secure Asset Fund for Users on Binance, for example, which is an emergency insurance fund.
Crypto traders are advised to use a hardware or software wallet to safely store their cryptocurrency rather than storing them on an exchange. Wallets such as these were not as accessible during this early period in cryptocurrency’s history.
Bitcoin Ascends to Worldwide Phenomenon (2016-2018)
Bitcoin prices rose steadily year over year, going from $434 in January 2016, to $998 in January 2017. In July 2017, a software upgrade to Bitcoin was approved, with the aim being to support development of the Lightning Network (a layer-two scaling solution) as well as improve security.
A week after the upgrade was activated in August, Bitcoin was trading at around $2,700. By December 17, 2017, Bitcoin reached an astronomical all-time high of just under $20,000.
During this same time, a new blockchain project called Ethereum was making noise in the cryptocurrency sphere, having quickly become the number two cryptocurrency by market cap since launching in July 2015. It brought smart contracts to cryptocurrency, opening a wide array of potential use cases and generating over 200,000 different projects (and counting). In contrast to Bitcoin, Ethereum enables additional platforms to launch and operate on its own chain, each with their own cryptocurrencies and their own use cases. This was a model widely copied by other new blockchains, with Cardano, Tezos and Neo (to name only three) launched during this period.
Bust and Recovery, and Bust and Recovery… (2018-Present)
Bitcoin was not able to sustain its all-time high of $19,783. Likewise, Ethereum, which reached its own ATH in January 2018 of around $1,400, was also not able to maintain its newfound level for long. Financial regulations and security concerns (due to semi-regular exchange hacks) contributed to the market-wide decline, and by the end of 2018 bitcoin had dropped down to around $3,700.
However, prices didn’t stay down for too long. Starting from late 2020, bitcoin enjoyed something of a renaissance, beginning with (“business intelligence company”) MicroStrategy’s announcement in August that it had bought bitcoin worth $250 million. This kicked off a bull market that was joined by the rest of the market, with prices boosted further by Tesla’s purchase of $1.5 billion in bitcoin in early 2021. It was in November of that year that bitcoin reached its current record high of $69,000.
The market has fallen once again since this high, dragged down by macroeconomic concerns resulting from high inflation, rising interest rates and the specter of war. That said, with global stock markets also falling in late 2021 and 2022, crypto’s parallel fall shows that the sector is becoming increasingly entwined with traditional financial markets.
And while the volatility of cryptocurrencies is both attractive and potentially devastating, the underlying technology behind them all, blockchain, has the power to change many sectors of our society. Whether it’s providing accessible and affordable financial exchange options, securing your own funds so that no one but you can access them, or providing accurate data for your insurance quote, blockchain technology has the potential to be used in almost every area of the economy.
Top 10 Cryptocurrencies to Know-
Bitcoin (BTC)
Ethereum (ETH)
Tether (USDT)
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Binance coin (BNB)
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Cardano (ADA)
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Ripple (XRP)
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Dogecoin (DOGE)
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Solana (SOL)
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Monero (XMR)
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The Sandbox (SAND)
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2021: Announcement of Crypto Bill in india
However, the battle for cryptocurrencies in India was not over yet. On Jan 29, 2021, the Indian government announced that it will introduce a bill to create a sovereign digital currency and subsequently put a blanket ban on private cryptocurrencies. In November 2021, the Standing Committee on Finance, met the Blockchain and Crypto Assets Council (BACC) and other cryptocurrency representatives and concluded that cryptocurrencies should not be banned but regulated. In early December 2021, Prime Minister Narendra Modi also chaired a meeting on cryptocurrencies with senior officials.
Cryptocurrency and Budget 2022-
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The Government of India announced the Union Budget for 2022–23 earlier today, with Finance Minister Nirmala Sitharaman bringing much-needed clarity for millions of crypto investors in India. The government has imposed a 30% fixed tax rate on all income generated through crypto trading while also aiming to introduce the Digital Rupee in 2022–23.
The Digital Rupee, which is supposed to be India’s first Central Bank Digital Currency (CBDC) project, will be a digital form of the rupee – one that will be completely regulated and monitored by the central government. But if you are unsure what CBDCs mean, CoinSwitch Kuber brings the much-needed clarity on it.
Such currencies usually have the full faith and backing of the issuing authority. Hence, the Reserve Bank of India will remain the guarantor of the Digital Rupee, just as it is fo ..
The Finance Ministry, in these regulations, has proposed a 30% tax on the exchange of all virtual assets, including cryptocurrencies and non-fungible tokens. It has also highlighted that losses on these crypto-assets cannot be offset to a later date. This means that any loss encountered during the trading of these assets will not be set off with other income sources and that it will be carried on to subsequent years.