Understanding the Origin of Bitcoin: A Comprehensive Guide to Its Inception and Timeline

Introduction

At the moment, there are about 5,000 different cryptocurrencies.

In terms of market capitalization, the TOP-20 cryptocurrencies now look as follows:

1. Bitcoin (BTC)
2. Ethereum (ETH)
3. Tether (USDT)
4. Ripple (XRP)
5. Bitcoin Cash (BCH)
6. Polkadot (DOT)
7. Binance Coin (BNB)
8. Chainlink (LINK)
9. Crypto.com Coin (CRO)
10. Litecoin (LTC)
11. Bitcoin SV (BSV)
12. Cardano (ADA)
13. USD Coin (USDC)
14. EOS (EOS)
15. TRON (TRX)
16. Monero (XMR)
17. Tezos (XTZ)
18. Stellar (XLM)
19. Neo (NEO)
20. UNUS SED LEO (LEO)

How Bitcoin appeared

If the origins of other cryptocurrencies are relatively clear, as they are all, to some extent, descendants of Bitcoin, then how did Bitcoin itself originate?

Bitcoin is believed to have been invented in 2008 by someone named Satoshi Nakamoto, but it’s unclear whether this refers to an actual person or a group of programmers. The inventor’s nationality is also uncertain, despite the name ‘Satoshi Nakamoto’ literally translating to ‘wisdom, interconnection, foundation’ in Japanese, hinting at the principles underlying the new payment method. Notably, all associated documentation was in English, with no Japanese versions found.

This mystery, however, didn’t hinder the technology’s development. As early as 2009, Nakamoto, building on existing data transfer protocols, created the world’s first Bitcoin wallet and generated the blockchain’s first block. The initial value of one coin was set equal to the electricity cost of mining it.

The project didn’t initially gain widespread popularity, but gradually it began to attract users, particularly from the IT field, programmers, and technology enthusiasts. A few years later, the first services for converting the previously ‘virtual’ Bitcoins into real money appeared. Around the same time, Nakamoto announced online, while remaining anonymous, that he was stepping back from the project, leaving its development to others.

This happened in 2010, but Bitcoin’s true popularity emerged later. It first unofficially entered the stock exchange, trading alongside standard currencies like the dollar and euro, and then gained public attention following a scandal. In the early 2010s, a U.S. criminal gang selling prohibited goods accepted only untraceable Bitcoins for payment.

In 2013, the gang was arrested, and the media coverage of the story significantly boosted Bitcoin’s popularity. This incident marked the beginning of widespread discussion about Bitcoin, leading to its rapid increase in value. Today, one Bitcoin is worth more than ten times the rate of platinum, one of the most valuable metals.

Types of cryptocurrencies

Let’s explore the variety of cryptocurrencies in the global market, excluding Bitcoin, the unique and significant phenomenon. The remaining cryptocurrencies can be broadly classified into three main categories.

Altcoins

This category includes the currencies mentioned earlier, thus named ‘alternative coins’. These aim to address Bitcoin’s limitations:

• Long transactions and high percentage-based commissions for small payments.

• Partial loss of anonymity due to transparent transactions and open-source code.

• High mining costs.

• Halving - the regular reduction of miner rewards.

• Potential compromises in the system’s decentralization by forming pools to increase computing power.

• Functional limitations.

Popular altcoins include:

• Litecoin: Launched in 2011 as the first Bitcoin fork. Its key feature is faster block generation, leading to quicker transactions.

• Ethereum: Introduced in 2015 with a complex technology that incorporates ‘smart contracts’ – algorithms defining and enforcing transaction conditions.

• Ripple: Started in 2012, focusing on minimal fees and rapid global fund transfers. It doesn’t involve mining, thus requiring less computing power.

These are among the top 10 most important cryptocurrencies in the market.

Stablecoins

Stablecoins, named for ‘stability’, deviate from the original cryptocurrency principle of decentralization and independence from tangible assets. Their value mirrors real assets like precious metals, oil, or fiat currencies, reducing and stabilizing rate fluctuations. They also facilitate more efficient exchange withdrawals.

A prominent example is Tether, launched in 2015 by Tether Limited and co-founded by Bitfinex’s CFO. Predominantly based on the Ethereum blockchain and pegged to the US dollar, it ranks third in market capitalization.

Tokens

Tokens differ from traditional cryptocurrencies but are often considered equivalent. Tether, for instance, is technically a token. Key distinctions between tokens and classic cryptocurrencies include:

• Centralized issuance and verification.

• Price manipulation through additional token issuance or expanding asset pegging.

• Utilization of third-party blockchains, whereas cryptocurrencies typically operate on their dedicated blockchains.

In conclusion, blockchain technology is continually evolving. It’s likely that the market will see not only new coins but also more advanced types of cryptocurrencies in the coming years.