Looking Back at the Bitcoin Million Market Cap

The Bitcoin market cap today sits in the hundreds of billions of dollars, putting it on par with some of the biggest corporations in the world. However, there was a time, only witnessed by a few hundred people, when the Bitcoin market cap was under $1 million – a time when the moon was still just a round thing in the sky, when the amount of Bitcoin transactions could be counted on a single hand, and when Mt. Gox was the name of a promising new exchange.

So what happened in the days before the Bitcoin million market cap was reached? This quick flick through the Bitcoin market cap history will shed some light on the interesting and impactful events that took place as Bitcoin surpassed this milestone market cap.

Bitcoin’s Launch

Bitcoin first reached a $1 million market cap around early November 2010. The precise date is hard to pinpoint given the paucity of the information from that time, but available data suggests it did so around the first week of November when Bitcoin doubled in price from $0.19 to $0.39 in the space of three days.

Two years before this, almost to the day, Satoshi Nakamoto had alerted the cypherpunks mailing list of the Bitcoin whitepaper for the first time, which he had uploaded to www.bitcoin.org. This whitepaper alerted a few other cypherpunks to the project, and work had begun on turning the vision into reality.

The first Bitcoin wallet, which allowed anyone to receive, send and store BTC, was released by Satoshi Nakamoto on January 9, 2009, six days after the Bitcoin blockchain had been fired into life. Called Bitcoin-Qt (since changed to Bitcoin Core), it also allowed Bitcoin mining with a simple click of a button, but not everyone knew this function existed – the first individual known to have downloaded the software, Dustin Trammell, wasn’t aware of this feature, which meant that Satoshi-confidant Hal Finney was able to beat him to the punch and become the first person to mine bitcoin through the Bitcoin-Qt, despite being the second to download it.

Finney was also the first person ever to receive some bitcoin, with Satoshi sending him 10 BTC on January 12, 2009, from 50 BTC the founder had received as a mining reward.

Satoshi Launches Bitcoin Talk

Bitcoin’s early existence was only known to enthusiasts and those who helped develop it, with no one outside of the small group even knowing about it, let alone understanding what it represented. 2009 was a time of development, bug fixing and generally shoring up the protocol, with no thought given to price. This was because the only people who had any bitcoin were those who were mining it, which anybody was able to do with a laptop, so there was no need to buy or sell it, and certainly no market for it.

Early Bitcoin development attracted a variety of figures, some of whom are still in the blockchain world and some who have left it behind, such as Erik Voorhees, Martti Malmi, Ray Dillinger and Peter Todd. One thing they all have in common is that they are no longer involved in Bitcoin in a direct way.

Bitcoin’s status grew to the point where communications between developers on Sourceforge, which had been the forum until that point, was becoming cumbersome. This led to Satoshi launching the Bitcoin Talk forum in November 2009, which acted as the first portal for the general public to also chip in and discuss Bitcoin.

The Famous Bitcoin Pizza Purchase

Bitcoin’s first anniversary, on January 9, 2010, passed with its veil of secrecy still largely intact, although it was beginning to slip. More and more people were joining the community, as evidenced by growing numbers of people on Bitcoin Talk, and in February 2010 Bitcoin finally got a universal valuation as the first Bitcoin exchange, Bitcoin Market, opened for business. Bitcoin’s initial price on this listing was $0.003, putting the Bitcoin market cap at just $6,500, although with mining still far easier than buying there were few takers.

Three months later Bitcoin surpassed another milestone when the first public transaction using the digital currency took place. This event, celebrated every May 22 as ‘Pizza Day’, saw Florida resident Laszlo Hanyecz post on Bitcoin Talk that he would pay 10,000 BTC for two pizzas. Through discussions, Hanyecz was able to secure the deal through a local Papa John’s outlet, and the first ever Bitcoin transaction was complete. The 10th anniversary of Pizza Day saw those two pizzas worth a combined $96 million.

With the two pizzas actually costing a combined $40, the price of Bitcoin at this time could be pegged to $0.004, in line with the price on Bitcoin Market. With Bitcoin’s circulating supply at 2.93 million, this put the Bitcoin market cap at just $11,720, showing just how much growth it would experience in the latter part of 2010.

Bitcoin Faucets Give Away BTC

By the middle of 2010, Bitcoin Talk’s membership numbered in the hundreds, and word was starting to seep out that a new kind of currency was doing the rounds, based on something called the blockchain. Bitcoin was still a year away from its first real mainstream media exposure, so it was very much still under the radar, although computing website InfoWorld did mention Bitcoin as one of its seven open source projects to watch on May 24, 2010.

Around this time, developer Gavin Andresen stumbled across Bitcoin and hit on a great idea to spread the word – give some away for free. The result was The Bitcoin Faucet, a website that literally poured out BTC to those that visited, with 1,100 given away in the initial round. Satoshi Nakamoto reached out to Andresen to say that he was planning on doing something similar to The Bitcoin Faucet, which led to the pair striking up such a strong relationship that it would be Andresen who would take over the keys to Bitcoin when Satoshi stepped aside in 2011.

Mt. Gox Arrives

In July 2010, a new Bitcoin exchange entered the scene, one that would have a long and lasting impression on the Bitcoin space – Mt. Gox. Mt. Gox was created by Jed McCaleb for “a lark”, positioning in the exchange as a better version of Bitcoin Markets, telling one skeptic on Bitcoin Talk that, “it (Mt. Gox) is always online, automated, the site is faster and on dedicated hosting and I think the interface is nicer.”

With banks wanting nothing to do with this Bitcoin thing, McCaleb was forced to conduct all the trades through his own bank and PayPal accounts, leading eventually to permanent bans. However, his actions helped facilitate Bitcoin trading and encourage people to begin to trade as well as mine. Mt. Gox arrived at just the right time – it launched at the peak of a week-long 10x price jump, taking the Bitcoin market cap from $21,300 to over $220,000 by the middle of July, as the Bitcoin deposits flowed.

Satoshi Feels the Pressure

At this time however, cracks were beginning to appear in the design of Bitcoin, while the motives of Satoshi Nakamoto himself were coming in for scrutiny. A ‘value overflow’ exploit led to 184 billion BTC being temporarily added to the books, and although it was resolved it was a sign that people were starting to try and poke holes in the protocol.

Others were questioning Satoshi’s role too, comparing him to a dictator setting arbitrary rules for the so-called decentralized protocol among other issues, and it was clear that the amount of work required to keep Bitcoin growing but also keep it safe from hackers was taking its toll on its creator.

Bitcoin’s Founder “Hands Over the Keys”

The rod that broke Satoshi’s back may have come just days after the Bitcoin market cap crossed $1 million in November 2010. Free software proponent Amir Taaki asked on November 10 if Bitcoin might aid the whistleblowing website Wikileaks, then under siege as PayPal and global banks had blacklisted it from the financial system. This led to many supporters chiming in to support the idea, but Satoshi didn’t agree:

“No, don’t “bring it on”. The project needs to grow gradually so the software can be strengthened along the way. I make this appeal to WikiLeaks not to try to use Bitcoin.  Bitcoin is a small beta community in its infancy.  You would not stand to get more than pocket change, and the heat you would bring would likely destroy us at this stage.”

Satoshi received verbal abuse from many on the forum for this rejection, leading, many believe, to him deciding to step down from the project shortly after. His final code contribution came with Bitcoin-Qt 0.3.19 on December 13, and on December 19 he effectively handed over the development of the protocol to Gavin Andresen, with his last message to the community being posted on April 26, 2011.

The Bitcoin Million Market Cap Came at a Price

This episode in the Bitcoin market cap history, which saw a million dollar market cap surpassed for the first time, seems on the outside to have been one of the quieter periods of Bitcoin’s life. However, as we have seen this is far from the case. In less than two years we saw Bitcoin’s birth, its first transactions, and the launch of Bitcoin Talk and the introduction of Mt. Gox. Perhaps most significantly, it also witnessed Satoshi stepping aside just weeks after the threshold was crossed.

$1 million wouldn’t remain Bitcoin’s highest market cap for long – by June 2011 the price had reached a scarcely believable $30, putting the Bitcoin market at $201 million, a far cry from the days of ten cent Bitcoin.