The History of Bitcoin
Even though Bitcoin was created less than 20 years ago, it has already gone through a turbulent history. It has been declared “dead” 477 times (at the time of writing this book – the current number can be found here: https://99bitcoins.com/bitcoin-obituaries/).
In a very short period of time, Bitcoin has experienced major turning points, attempts to improve it, and the rise of many alternative cryptocurrencies that claimed to be faster or more scalable. It has come a long way – from the mining of the very first block, through the first-ever transaction, to massive price booms and crashes. Yet Bitcoin is still here – stronger than ever. Its market dominance continues to grow, it is being adopted by countries like El Salvador and the Central African Republic, by major US financial institutions such as BlackRock and Fidelity, and it continues to gain the trust of people worldwide.
It all began on October 31, 2008, when Satoshi Nakamoto published a document titled “Bitcoin: A Peer-to-Peer Electronic Cash System”. In it, he described in detail how the blockchain works, how miners are rewarded, how transactions are processed – essentially, the entire Bitcoin network.
Around two months later, he mined the first ever block – the Genesis Block. Inside it, he embedded the now-famous message: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
At first, Satoshi mined Bitcoin alone. Gradually, more people joined the network – mostly IT enthusiasts. A few days later, he carried out the first Bitcoin transaction in history, sending 10 BTC – at that time still completely worthless – to cryptographer Hal Finney. In those days, people simply experimented with Bitcoin. They tested it, but did not use it as real money.
Everything changed on May 22, 2010 – a day now known worldwide as Bitcoin Pizza Day.
Bitcoin Pizza Day
On May 18, 2010, Laszlo Hanyecz – a programmer and Bitcoin enthusiast – published a post on the Bitcointalk forum saying he wanted to buy pizza using Bitcoin. He offered 10,000 BTC to anyone who would order two pizzas and have them delivered to his address.
At that time, Bitcoin had almost zero value. It was still just an experimental project known only to a small group of cryptographers, programmers and tech enthusiasts. There were no exchanges where Bitcoin could easily be converted into dollars or euros.
Despite this, Hanyecz believed Bitcoin could become real money – something that could be used to pay for everyday goods and services. His goal was not just to get pizza, but to show the world that Bitcoin had real-world utility.
At that time, the block reward was 50 BTC. This meant that collecting 10,000 BTC required only 200 mined blocks. Mining difficulty was extremely low back then – even an ordinary desktop computer or laptop was enough to mine Bitcoin. Compared to today’s industrial-scale mining using powerful ASICs, mining in 2010 was simple and cheap.
Many people read his forum post, but most reacted skeptically. There was no stable Bitcoin market and almost no way to convert BTC into fiat money. For many, Bitcoin still seemed like a worthless digital token.
Hanyecz waited until May 22, 2010, when a user named “Jercos” finally agreed. He ordered two large Papa John’s pizzas and had them delivered to Laszlo’s home. Once they arrived, Laszlo photographed them and transferred 10,000 BTC to Jercos’ Bitcoin address.
This became the first known Bitcoin purchase in history – proof that Bitcoin could function as real money.
Today, these pizzas are known as the most expensive pizzas ever bought. If Hanyecz had kept those Bitcoins, they would now be worth hundreds of millions of dollars.
There is even a website called bitcoinpizzaindex.net which continually tracks the current estimated “pizza value”.
Laszlo has publicly said that he does not regret the purchase. He became part of Bitcoin history and helped demonstrate its real-world value. Bitcoin Pizza Day has since become an iconic celebration within the crypto community. Every year on May 22, Bitcoiners remember this historic event – many by buying pizza with Bitcoin.
This day symbolises the beginning of real-world Bitcoin use – not just as an investment, but as a currency. The transaction is still viewable online thanks to the public blockchain and is recorded in block ID 57043.
Mt. Gox — The First Bitcoin Crisis
In the early years, Bitcoin was used almost exclusively by technology enthusiasts. But as it became more popular, the need for an easy way to exchange Bitcoin for fiat currency grew rapidly. Initially, transactions were handled mainly through online forums, where people manually agreed to exchange Bitcoin with each other.
A major breakthrough came in 2010 with the creation of the first major Bitcoin exchange: Mt. Gox.
Interestingly, Mt. Gox was not originally designed for Bitcoin trading. The name stands for “Magic: The Gathering Online Exchange”, because the website originally served as a digital trading platform for collectible game cards. Its founder, Jed McCaleb, later realised that Bitcoin needed a central marketplace and converted the website into a cryptocurrency exchange.
Mt. Gox soon became the world’s dominant Bitcoin platform. Between 2011 and 2013, it processed up to 70% of all Bitcoin trades worldwide. However, the exchange suffered from weak security and poor management.
In June 2011, Mt. Gox was hacked for the first time. Attackers manipulated the price of Bitcoin on the exchange down to $0.01 and bought available coins instantly. Although the exchange later resumed normal operations, trust had already been shaken.
The real disaster began in late 2013 and early 2014. Bitcoin had just experienced its first major price surge, reaching as high as $1,000. But users started reporting delayed withdrawals, technical failures and increasingly worse customer support.
In February 2014, Mt. Gox suddenly halted all withdrawals – and shortly afterwards declared bankruptcy.
It was later revealed that the exchange had lost 850,000 BTC – around 7% of all Bitcoin then in circulation.
Investigations later showed that hackers had likely been draining Bitcoin since 2011. The management ignored security problems for years, and the losses quietly accumulated until the exchange collapsed completely.
Bitcoin’s price crashed from around $1,000 to under $200. Media outlets called Bitcoin a scam, a Ponzi scheme, or a speculative bubble. Thousands of people lost their savings.
Yet this disaster also brought an important lesson:
Bitcoin was never meant to be trusted to centralised exchanges.
The collapse of Mt. Gox forced the crypto industry to grow up. Hardware wallets began appearing, security standards improved dramatically and users learned the golden rule:
“Not your keys – not your Bitcoin.”
Mt. Gox no longer exists. But its story remains one of the most important warnings for every Bitcoin investor.