In 2008, a man named Satoshi Nakamoto published a paper on the Internet which describes bitcoin software. In 2009, he released the first software to initiate the bitcoin network as well as the first units of bitcoin currency.
Nakamoto has effectively been careful to maintain anonymity – so much so that some have called into question whether the very name Nakamoto represents an individual or a group of individuals.
According to The New York Times, Nakamoto might have been motivated to initiate bitcoin in reaction to the 2008 financial crisis. He posted a note in the bitcoin network’s transaction database which reads “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
Soon afterward, a comment on bitcointalk forums remarked about a purchase of two pizzas from Papa John’s. A bitcoin miner from Florida – Laszlo Hanyecz paid 10,000 bitcoins – the equivalent of $25 – for the pies.
The first bitcoin transaction and the first mobile transaction took place in 2010. On November 10 of that same year, bitcoin’s transactions exceeded $1 million. At this point the value of a bitcoin was $0.50.
In the spring of 2011, BitPay, a large merchant services provider, introduced a smartphone wallet. They also created large Bitcoin partnerships, embracing, for instance, WordPress, Newegg and The St. Petersburg College Football Bowl in “The Bitcoin Bowl.”
BitPay declared in October 2012 that over 1,000 merchants were now accepting bitcoin through its payment processing system. In February 2013, Coinbase, a bitcoin payment processor, announced it sold $1 million worth of bitcoins in one month at more than $22 per bitcoin. The Internet Archive declared it would now accept bitcoin donations and it would offer employees the option to receive a portion of their compensation in bitcoin.
On the heels of new China exchanges and bitcoin miners, the value of bitcoin jumped from US$125 in September, 2013 to over US$1,100 by the end of November in the same year. Subsequently, the market capitalization value of bitcoin went from US$1.5 Billion to US$13.5 Billion in about sixty days.
In October, 2013 Bitcoiniacs and Robocoin initiated the world’s first bitcoin ATM in Vancouver, British Columbia in Canada. The following month, the University of Nicosia began accepting bitcoin for the payment of tuition. In the latter half of 2014, Overstock.com announced it would accept bitcoin. Also in 2014, the D Las Vegas Casino Hotel and Golden Gate Hotel & Casino Properties in downtown Las Vegas began accepting bitcoin.
As a dramatic development in the history of currency, bitcoin has had its share of legal challenges. On August 6, 2013, in Federal Court, the Eastern District of Texas of the Fifth Circuit ruled that bitcoins are a “currency or a form of money”, as defined by Federal Securities Laws, and were therefore subject to the court’s jurisdiction. Also, Germany’s Finance Ministry defined bitcoins as a “unit of account,” a financial instrument (though not a currency) with legal and tax ramifications.
The company TeraExchange, LLC, received approval from the U.S. Commodity Futures Trading Commission (CFTC) in September, 2014, to list an over-the-counter swap product priced in bitcoin. This was the first time a regulatory agency in the United States approved a financial product in bitcoin.
With increasing privacy concerns and the desire for a faster clearing process than what banks now offer, the public will increasingly choose merchants who accept bitcoin for products and services. The Nakamoto legacy – the creation of a digital and decentralized currency not linked to a promise or government fiat – has clearly taken hold.