These Are The Top Ten Events Of Bitcoin’s First Decade
ByJustin O'Connell, Former Contributor. I interview Bitcoiners, etc.
Dec 18, 2019, 04:08am EST
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Bitcoin creator Satoshi Nakamoto reportedly began working on Bitcoin in 2007, and then published the white paper on Halloween, October 31, 2008. In just eight-pages, Nakamoto describes how Byzantine General’s Theory could be solved.
In the earliest days of Bitcoin, once the genesis block had been mined on Jan 3, 2009, Nakamoto sent messages back and forth with people such as Hal Finney, Mike Hearn, and Gavin Andresen discussing the network. A lot of this discussion took place on BitcoinTalk.org, a forum created by Nakamoto.
Check out below the top ten events (in one man’s opinion) of the first full decade of Bitcoin.
The First Ever Bitcoin Transaction
Nine days after the genesis block was mined, the first ever Bitcoin transaction was sent from Nakamoto to Hal Finney, a cryptographer who had created a proof of work system before Bitcoin existed.
PROMOTED
Finney lived in the Los Angeles area, not too far from Dorian Nakamoto, the man who Newsweek doxxed in 2014 as the inventor of Bitcoin, though this theory has largely been debunked. Finney was later diagnosed with ALS and died almost five years later at the age of 58. He is survived by his wife, Fran, and their two children.
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Wikileaks Accepts Bitcoin
WikiLeaks announced in 2011 on Twitter that it would begin accepting Bitcoin donations. In one of his last posts on BitcoinTalk.org, Bitcoin creator Satoshi Nakamoto mentioned WikiLeaks.
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"The project needs to grow gradually so the software can be strengthened along the way,” he wrote in 2010. “I make this appeal to WikiLeaks not to try to use Bitcoin. Bitcoin is a small beta community in its infancy. You would not stand to get more than pocket change, and the heat you would bring would likely destroy us at this stage.”
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When WikiLeaks greenlit Bitcoin, Nakamoto shared his thoughts: "It would have been nice to get this attention in any other context. WikiLeaks has kicked the hornet’s nest, and the swarm is headed towards us."
Gavin Andresen Inherits Role as Chief Developer from Nakamoto
When Nakamoto handed the network alert key and control of the Bitcoin code repository to Gavin Andresen in 2011, analysts estimated the creator had by then mined approximately one million bitcoins.
Andresen was now chief developer of the open source code. In 2012, Andresen, who established the Bitcoin Foundation in 2012 in order to educate regulators about the nascent digital currency, received invites from the likes of the CIA. The Bitcoin community vehemently debated his decision to speak with the agency about Bitcoin, as dug up by Bitcoin investor Tuur Demeester.
"Last email I sent him I told him I was going to talk at the CIA,” wrote Andresen of Nakamoto in a 2012 thread.
The First ASIC Miner Ships
Then Bitcoin developer Jeff Garzik, who now runs Bloq, received the first ASIC Bitcoin miner. ASIC stands for “application-specific integrated chips.” These chips are designed specifically for mining GPU coins. A Bitcoin ASIC miner specializes in hashing the SHA-256, Bitcoin’s cryptographic hash algorithm.
Garzik tweeted: “My wife informs me that a package from China arrived. Will investigate when I return home. #Bitcoin.”
Garzik reported his Avalon A3256 had paid for itself by February 9, 2013. “Including electricity costs, the Avalon ASIC #bitcoin miner has now paid for itself,” he tweeted.
Bitcoin Pizza
Laszlo Hanyecz (laszlo), who had made contributions to bitcoin’s source code, made the first documented purchase of a good with bitcoin when he bought two Domino’s pizzas from jercos, who reportedly was 18 at the time of the transaction, for 10,000 BTC.
Laszlo posted on May 17, 2010 his request to purchase bitcoin. He reported the transaction to the Bitcoin community on May 22. Bitcoins were quoted at $41 at the time of the offer.
“I just want to report that I successfully traded 10,000 bitcoins for pizza. Thanks jercos!”
The Pizza Index refers to the value of the bitcoins spent on the pizzas were they sold for US dollars, not Pizza. That amount topped $15.5 million in April 2017.
May 22 is known as Bitcoin Pizza Day.
Rise and Fall of Silk Road
Silk Road, which was named after the trade route connecting Europe to East Asia, was created by developer and administrator Ross Ulbricht. The website operated as a Tor hidden service. While Ulbricht has admitted to creating the site, he has not admitted to running it the whole time it was online.
The Silk Road was considered by users to be almost entirely anonymous. On the Silk Road, users enjoyed enhanced privacy, sometimes to the point of anonymity, where they shopped for mostly cannabis, but, also, mushrooms, acid, and more.
Ulbricht, a first-time offender, was sentenced to 2 life sentences plus 40 years without parole. The Silk Road prohibited the sale of weapons, pedophilia, and stolen info. The rules of using Silk Road stated you were not supposed to do harm to others.
Mt. Gox Collapse
Before it shuttered, Mt. Gox handled 70% of all Bitcoin transactions. The Tokyo-based exchange filed for bankruptcy protection under Japanese law in early 2014
With an approximate value of $460 million at the time, 850,000 bitcoins had gone missing, though 200,000 were found. $27 million in bank deposits could not be accounted for.
Site owner Mark Karpeles blamed hackers. The Tokyo Metropolitan Police Department believes 643,000 bitcoins went missing as a result of fraud. Bankruptcy proceedings took place in April 2014 and continue until today.
The Bitcoin symbol behind the stage at Bitcoin Conference 2019.
The Bitcoin symbol behind the stage at Bitcoin Conference 2019. Author
2013 Unintentional Bitcoin Fork
In March 2013, the blockchain temporarily split into two independent chains with different rules due to a bug in version 0.8 of the bitcoin software.
Miners, merchants, and users ran a new, divergent version of bitcoin. The old version of bitcoin and the new version were not compatible. Mining pools running the new version 0.8.0 were asked to rollback to version 0.7 to create a single blockchain compatible with all bitcoin software. Merchants did not have to do anything.
The core developers released a 0.8.1 version that avoids creating blocks that are incompatible with older versions.
Mike Hearn Leaves
Bitcoin lead developer Mike Hearn blogged in 2016 that his time in Bitcoin was over. He had sold his remaining holdings and had taken a job at R3 CEV, an enterprise consortium working on blockchain for enterprise.
Hearn, who had spent more than five years working on the web-based currency, had left the development team.
“Despite knowing that bitcoin could fail all along, the now inescapable conclusion that it has failed still saddens me greatly,” Hearn wrote on Medium. Before leaving, Hearn and Andresen had disagreed with other developers over whether the “blocks” in which bitcoin transactions are processed should be enlarged.
Hearn called the block capacity at the time of one megabyte “an entirely artificial capacity cap.” Hearn and Andresen had proposed an alternative, Bitcoin XT.
“If an IT system runs out of capacity like that then all kinds of things go wrong – all hell breaks loose,” he said in an interview with Reuters.
Hearn said at the time that the bitcoin community had “failed” at governance of Bitcoin’s code.
Pirateat40
On the Bitcointalk.org forum in November 2011, Pirateat40 promised investors a 7 percent weekly return on deposits of more than 25,000 BTC, a sum worth more than $275,000 at the time.
Pirateat40 shut down the fund in August of 2012. He said it had gotten too big for him to manage. The Securities and Exchange Commission charged Trendon Shavers, the man behind Pirateat40, with operating an illegal Ponzi scheme worth about $4.5 million at the time. Shavers was ordered to pay more than $40 million in disgorgement or illegal profits, including $150,000 civil penalty.
His lawyer, Jason Seibert, has defended Shavers, noting that it wasn’t a Ponzi scheme, like so many assumed. "He paid as many people back as he could in the most fair way he could do it, but not everyone got paid back," the securities lawyer said. "So people assumed it must be a Ponzi scheme."
Notable Mention: Block Size Debate
More an ongoing debate than an event, the Bitcoin block size takes the cake as the most hotly contested blockchain issue in the history of Bitcoin. Satoshi limited Bitcoin’s block size to 1MB in 2010, which didn’t become a public issue until March 2013.
Since the Bitcoin network batches transactions into blockchains, they are released to the network approximately every ten minutes. The Bitcoin max block size parameters limits “on-chain” transactions, which leads to network congestion and higher transaction fees, especially when in times of feverish demand.
Garzik posted about the block size in 2010, suggesting the network support more than 3-10 transactions per second. It was rejected. Nakamoto had bequeathed BitcoinTalk.org to a moderator under the moniker ‘Theymos’, who noted this would represent a consensus parameter change and would need to be coordinated across the network.