From Pizza to Billions: The Story of Bitcoin

From Pizza to Billions: The Story of Bitcoin

Nowadays, everyone has heard the term bitcoin, whether you heard it when someone said they were paying to bitcoin or someone said theory invested in bitcoin. The term Bitcoin is used quite regularly now. But this article will explain where bitcoin truly came from and how it has become so ubiquitous today.

From 1970-2000 people created a movement called cypherpunks who advocated privacy through cryptography. Cryptography is the communication through a secured network. People wanted a network that was controlled by the people, not just banks or the governments. People wanted to run a currency.

So, in 2008 bitcoin began. A man by the name of Satoshi Nakamoto introduced bitcoin. It was a blockchain, meaning people see all of the transactions so there was no cheating going on. This allowed for proof of work, which is trust earned through math. This is where miners race to solve hard math puzzles; and the winner receives bitcoin as a reward, and in return adds a new block of transactions. This matters because it’s extremely hard to cheat. Which is also important since instead of trusting a bank, they are trusting math and energy costs.

Bitcoin was also made as a peer to peer network meaning there was no middleman. No one controls it and anyone could join. When you send a bitcoin then it broadcasts it to the whole network of people. Then, everyone verifies it independently and makes sure it is a valid transaction. This removes bank and government influence.

Lastly, bitcoin is an economic incentive. Which keeps everyone honest. Satoshi made this rule so that if you follow the rules then you will earn bitcoin. And if you cheat then you will lose money. For people who mine honestly, they will be rewarded with bitcoin, and with people who cheat they will waste electricity and have no reward.

In the early networks, only a handful of users mined and it was basically a worthless coin. Fun fact, the first translation was 10 bitcoin sent to hal finney. But it was worth less since the market price was 0.0008 per bitcoin.

Famously, Laszlo Hanyecz paid 10,000 bitcoin for a pizza, today that would be worth $699,409,700 wow that’s a lot of money he lost out on.

Bitcoin was first exchanged on Mt. Gox, a bitcoin exchange based in Tokyo, Japan. It was launched in 2010 and became the largest and most influential exchange before collapsing in 2014. But more on that later.

Between the years 2011 and 2013 bitcoin went completely global. This unfortunately led it to be used on the dark web and especially the silk road. The silk road was an anonymous marketplace that was a hub for illegal goods and services. This illegal activity led the FBI to shut down the silk road. Which, in turn, led to regulatory discussions.

Then, in 2014, the worst happened. Mt. Gox collapsed and lost 850,00 Bitcoin;this was at a time that Bitcoin was starting to rise so it shook the trust in exchanges. With this, a debate formed over how Bitcoin could scale. Would it be bigger blocks? A layer 2 solution? People wondered if there needs to be technological progress. Which there was: secure wallets, and growth of the mining pool.

Following this, in 2017, a civil war started between 2 groups. The first group wanted a small block to decentralize first, and the 2nd group wanted big blocks to allow for faster transactions.The result became a bigger block, with a SegWit upgrade meaning improved efficiency. This then led to a price explosion with Bitcoin reaching 20,000 per coin.

Moreover, in 2018 and 2019 Bitcoins price dropped by 80% and many projects died. But they were progressing as they had instinctual custody solutions, regulatory framework and lightning network development.

This is where things really started to change with their instinctual era. At this point, big players started to enter: companies like MicroStrategy, Tesla, And PayPal all started acquiring or using Bitcoin in some way. And with covid, inflation fears started to rise resulting in people viewing Bitcoin as a digital gold. Thus, the price flew, reaching an all time high of 69,000.

But all good things slow down at some point and this is what exactly happened to BitCoin. There were major failures between FTX (a digital currency exchange) and other bankruptcies. This pushed the price down, which made trust decline and a push for government regulation.

Furthermore, from 2023 to date, Bitcoin ETFs were approved throughout the U.S. and traditional finance integrated Bitcoin. Likewise, the technology improved with their lightning network scaling and NFT like data on Bitcoin.

With this, the narrative shifted and bitcoin became a store of value, a way to hedge your assets and a strategic reserve candidate.

So how has this made a global impact? Well, it serves as an alternative to fiat currency and is used in unstable economies like El Salvador. Politically, it challenges the central banks and raises many questions about monetary control. It also has inspired an entire crypto industry with Ethereum, DeFi and NFTs.

But, the criticism and controversies haven't stopped. For one thing, mining consumes large amounts of electricity. Also, it is extremely volatile Regarding regulation, some governments have banned it while others have embraced it.

With all this happening, people still don’t even know who Satoshi is. His estimated holdings is believed to be 1 million Bitcoin which is $69,990,000,000 dollars. Theories include he’s a genius or maybe it’s a group of developers and not just one person.

Whoever Satoshi is, the future for Bitcoin can be wild. Many think that it can become a global reserved asset, or a digital gold standard. Conversely, it can become heavily regulated or have a technological disruption. Personally, I don’t think it’s going to be the backbone behind any major currencies, and if it is, then it's going to be a while before it happens.

Ultimately, Bitcoin isn’t only money, it is a technological revelation and a financial experiment still unfolding. It may be relatively new, but it’s safe to say that it has changed our lives.