This article originally appeared on Forbes.com.
Bitcoin is an invention that uses cryptography to create a new form of money called a digital commodity. It challenges the notion that a central authority must govern money and payments. Launched in the late 2000s, the Bitcoin Network operates as a decentralized payment system used by hundreds of millions of people to exchange bitcoin for goods and services.
In the sections below, we’ll explore who created bitcoin, its formative years, and the turning points in its journey to becoming a trillion dollar asset. By the end, you’ll understand how bitcoin stands apart from so-called “crypto” and why it is likely to play a leading role in the 21st century economy.
Who Invented Bitcoin?
The invention of bitcoin is famously attributed to “Satoshi Nakamoto,” a pseudonym used by the author of the bitcoin white paper published in 2008. Despite extensive research and speculation, no one has unmasked the person or group behind Satoshi Nakamoto. This mystery remains one of the most captivating aspects of bitcoin’s history. Some people believe that Satoshi’s pseudonymity is a reason to be suspicious of bitcoin’s origins. However, a deeper examination leads many to the conclusion that bitcoin would probably not have succeeded if its inventor’s identity had been known; the reasons why will be explored below.
Bitcoin’s Early Days
Long before bitcoin arrived, researchers and activists wrestled with how to create “digital cash” that replicated the physical scarcity of gold. David Chaum’s eCash, Wei Dai’s b-money, and Nick Szabo’s Bit Gold each introduced cryptographic tokens, timestamped record-keeping, and the concept of decentralized money. Yet they could not solve the problem of eliminating the need for a central coordinator and did not fully solve the “double spending” problem (spending the same money twice).
Meanwhile, other breakthroughs, like Stuart Haber and Scott Stornetta’s linked timestamping for document notarization, Ralph Merkle’s trees for efficient hashing, and Adam Back’s invention of proof-of-work provided more building blocks. These ideas, developed throughout the 1980s and ’90s, would prove crucial in bitcoin’s design.
Satoshi’s insight was how to combine these threads of cryptography research to create a monetary network free from bank-like servers and a single point of control.
Bitcoin’s Mysterious Creator, Satoshi Nakamoto
Satoshi was active in the online forums of the cypherpunk movement, a group of privacy activists who believed in using cryptography to protect personal freedom. After he published the famous bitcoin white paper, called “Bitcoin: A Peer to Peer Electronic Cash System,” Satoshi coded the first implementation. Over the next few years, he participated in online discussions about his work. Once the Bitcoin Network became self-sustaining, he vanished.
Satoshi’s anonymity is likely part of the reason bitcoin succeeded. If a known individual had claimed ownership of bitcoin, governments could have applied pressure and shut down the project in its infancy. Instead, it quickly grew beyond any single point of failure. Today, Satoshi’s bitcoin wallets are still visible on the blockchain. If Satoshi reemerged and claimed his coins, he would be one of the wealthiest people in the world. He hasn’t done so, and likely never will. By walking away from billions of dollars, Satoshi demonstrated that he understands bitcoin’s profound effect on history is more valuable than worldly wealth.
The First Transactions And Early Adoption
In the very first days of the Bitcoin Network’s existence, only a handful of enthusiasts participated in testing the technology. In January 2009, the first bitcoin transaction took place between Satoshi and cryptographer Hal Finney. These pioneers began mining bitcoin using their home computers, but the mining rewards they received were worthless at the time because bitcoin had not yet been exchanged for anything in the real world.
Before long, the idea of using bitcoin in real-world scenarios gained traction. The first known commercial transaction happened on May 22, 2010 when someone famously exchanged 10,000 bitcoins for two pizzas from Papa John’s worth $41. This moment, remembered annually as “Bitcoin Pizza Day,” gave bitcoin an exchange rate of 1 BTC = $0.0041.
Key Milestones In Bitcoin’s Evolution
Bitcoin’s evolution is marked by significant events that helped it transform from a niche research project into a global phenomenon. Below are some milestones that changed how people all across the planet use this unique digital asset.
Bitcoin Exchanges Merge
At first, peer-to-peer trades and small online forums were the only ways to buy or sell bitcoin. Soon, dedicated exchanges were built that offered a more familiar trading environment. These early platforms often struggled with security, liquidity, and regulatory uncertainty.
Over time, many small exchanges either closed down or merged with better-capitalized rivals. Consolidation led to a handful of reputable trading platforms that made it simpler for newcomers to buy bitcoin with their local currency. The shift toward more professional operations helped legitimize bitcoin as a tradable asset.
Bitcoin Forks And Updates
Bitcoin’s underlying software is open source, meaning anyone in the world can look at the code and propose changes. Occasional disagreements over technical direction trigger “forks” in which new versions of the software begin operating on entirely separate networks.
One famous example is the 2017 “Blocksize War” that produced Bitcoin Cash. Despite the similarity in its name, Bitcoin Cash is a new coin is entirely distinct from, and incompatible with, the Bitcoin Network. Though critics argue forks could weaken bitcoin’s brand and cause confusion, supporters see them as evidence of healthy debate and decentralized decision-making. Meanwhile, major protocol updates, like SegWit in 2017 and Taproot in 2021, improved scalability and pave the way for additional features. Each change aims to strengthen bitcoin’s core functionality without introducing unintended consequences that could alter bitcoin’s usefulness as money.
Increasing Institutional Interest
For most of its first decade, bitcoin was viewed by mainstream investors as a fringe experiment. Over time, financial institutions became intrigued by bitcoin’s finite supply and decentralized structure. Hedge funds, asset managers and even commercial companies now allocate portions of their portfolios to bitcoin.
Bitcoin-based financial products like exchange-traded funds (ETFs) are now commonplace in countries with a robust financial industry. Institutional-grade custodians have made a business out of helping companies and governments hold bitcoin in their treasuries.
Bitcoin Halvings
Bitcoin’s supply is limited to 21 million coins that are gradually released into the economy by bitcoin miners. Approximately every four years, the amount of money that miners earn is cut in half. This is called the “halving” and it happens automatically because the bitcoin protocol itself has this condition embedded its code. Halvings make bitcoin’s supply disinflationary and perfectly predictable. Historically, halvings tend to precede periods of heightened prices, because a change to the number of bitcoins entering circulation can affect market dynamics.
Challenges Bitcoin Has Faced
Bitcoin’s ascent wasn’t perfectly smooth. High-profile exchange hacks damaged trust and led critics to question the network’s security. However, in all cases, the breaches stemmed from weak exchange safeguards rather than flaws in bitcoin’s own protocol.
Regulatory pressure has also held bitcoin back. Governments grapple with how to classify and oversee bitcoin because it severely reduces the ability of centralized authorities to use the monetary system to control economic outcomes. Questions about tax, trade, and money laundering have stymied bitcoin adoption in many countries, including in the U.S.
The volatility of bitcoin’s price can also prevent new market entrants from feeling confident enough to get involved. Bitcoin’s price can swing wildly over short time periods, spooking newcomers who are used to more stable assets.
Bitcoin And The Rise Of Cryptocurrencies
Bitcoin’s breakthrough prompted developers to take pieces of it and tweak them or innovate on top of them. There are now millions of digital tokens and DeFi protocols. Many of these projects, often labeled “altcoins,” focus on specialized use cases.
Although they share certain traits with bitcoin, altcoins are better characterized as business ventures than forms of money. With apologies to J.P. Morgan, his famous saying about gold might be rephrased for the modern era this way: “Bitcoin is money, everything else is credit.”
Institutional Adoption Of Bitcoin
Institutions increasingly view bitcoin as a long-term investment and a hedge against currency risk. As of this writing there are 169 institutional entities holding a total of 3.09 million bitcoins.
Companies such as Strategy (formerly MicroStrategy) have found creative ways of using their bitcoin treasuries to make money. Financial giants offer bitcoin ETFs that make the asset more accessible through traditional brokerage accounts and retirement plans. These funds open the door for pension funds, hedge funds, and everyday investors to expose their portfolios to bitcoin’s price without directly owning it. Some sovereign governments have initiated strategic accumulation of bitcoin. El Salvador has an explicit goal of integrating it deeply into its economy, and the United States will soon establish a Strategic Bitcoin Reserve (SBR).
Bitcoin’s Role In The Global Economy
If current trends continue, bitcoin will be used by a billion people before the decade is out. Every time central banks expand the supply of the currencies they issue, some of it is converted to bitcoin, and some significant portion will never exit the bitcoin blockchain. This makes bitcoin like a sponge that absorbs excess liquidity. Bitcoin is the only asset in existence whose supply cannot respond to changes in demand, and this means that its price (and by proxy, its purchasing power) is the only parameter that can change when more people join the network.
Many people who study bitcoin believe that the global economy is inching toward a Bitcoin Standard, a situation in which bitcoin provides the settlement layer that underpins all economic activity. Because it is politically neutral and decentralized, it is de-risked from hegemonic influence and can thus be safely held in reserve by sovereign nations and central banks. With El Salvador and now the United States holding bitcoin in reserve, we may be observing the early stages of the game theory of bitcoin accumulation playing out—a phenomenon that has been anticipated by bitcoin researchers for many years.
The Future Of Bitcoin
As bitcoin matures, its future could bring broader adoption across businesses, financial institutions, and the treasuries of sovereign nations. Innovations like the Lightning Network aim to speed up transactions and cut fees. So called “layer two” solutions like these will help bitcoin become a medium of exchange and day-to-day payment network for commercial activity.
Bottom Line
Bitcoin changed how people think about money and property rights. Its place in history is already cemented as the embodiment of digital scarcity. Like flying machines and artificial intelligence, the concept of digital scarcity was long considered impossible until it was achieved.
Bitcoin’s history is remarkable. It began as a passion project by a small group of researchers, and price rose from $0 to $100,000 in less than 20 years. What started out as “magic internet money” has become a reserve asset held by the most powerful government in human history. It’s a story of how technology can empower individuals in the face of seemingly insurmountable odds.