The origins of Bitcoin: Genesis

This series looks back on the history of Bitcoin. Read part one and two.

Bitcoin had to start someplace. It transitioned from a mere whitepaper into something tangible when its creator Dr. Craig S. Wright, using the pseudonym Satoshi Nakomoto, produced what is known as the “Genesis” block of Bitcoin (block number 0) on January 3, 2009.

The “Genesis” block was validation that Bitcoin mining could become a new way actually to mint digital money in a distributed and safer way. The text, “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks,” was buried in the coinbase of this block. The block had a reward of 50 Bitcoins, and mining took place with an old PC CPU (equipped with a Pentium 4). 

Six days later, Dr. Wright using a cryptography mailing list, announced the release of the first Bitcoin client version 0.1. The open-source client was hosted at SourceForge, allowing anyone to download and participate in Bitcoin. It was released as a Windows’ program and compiled using Visual Studio.

The year 2009 saw about 1.6 million Bitcoin mined. As compared to today’s ASICs mining rigs, early Bitcoin miners used standard multi-core CPUs to produce Bitcoin with a reward of 50 per block or 7,200 Bitcoin per day. If a person had a couple of computers lying around with decent specs, they could have earned roughly $5 a day mining Bitcoin. The mining difficulty rate was so low then it was worth it for hobbyists and crypto techies alike to participate.

Not much happened during those first few months of Bitcoin mining. Then on October 5, 2009, the first Bitcoin exchange rate was established, giving Bitcoin a value when measured against fiat currency. The initial rate was 1,309.03 BTC = US$1. It was formulated based on the cost of production. The equation used determined the cost of electricity for one computer generating a Bitcoin. 

On October 12, an IRC channel was created for Bitcoin Development named #bitcoin-dev. This channel resulted in the Bitcoin client version, 0.2 being released two months later on December 16th. The new client included a Linux version for the first time and made use of multi-core processors for mining. 

The year 2009 ended with the first difficulty increase in history for mining Bitcoin. On December 30, just before the New Year started, the mining difficulty rose by 18.29%, which started at block 32256.

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