History-Of-Bitcoin
History of Bitcoin — Research Note
A block-space-economics reading of Bitcoin's history. Every episode below is
selected for what it teaches about the pricing of block space, congestion, and
permanence — the axes BSAHI studies.
Origins: the cypherpunk prehistory
- David Chaum, DigiCash/ecash (1989) — issuer-based blind-signature cash; anonymous but centralized. Failed commercially ("no banks wanted to sign on"). Lesson: centralized issuance killed ecash; Bitcoin's permissionless replicated state is what created the storage commons.
- Dwork & Naor, "Pricing via Processing" (1992) — computational puzzles as a price on resource use; the seed of proof-of-work.
- Adam Back, Hashcash (1997) — practical PoW for anti-spam; Satoshi cites it directly in §4.
- Wei Dai, b-money (1998) — first distributed digital cash; anonymous, PoW-issued.
- Nick Szabo, bit gold (1998/2005) — chained PoW as collectible scarcity; closest direct ancestor.
- Hal Finney, RPOW (2004) — reusable PoW tokens.
Launch (2008-2009)
- Oct 31 2008 — whitepaper posted to the cryptography mailing list.
- Jan 3 2009 — genesis block (50 BTC) embeds the Times headline: "Chancellor on brink of second bailout for banks."
- Jan 12 2009 — Hal Finney receives the first transaction (10 BTC).
Early market (2010-2012)
- May 22 2010 — Pizza Day: 10,000 BTC ≈ $41 for two pizzas; first price ~$0.004.
- Nov 28 2012 — Halving #1 (block 210,000): subsidy 50 → 25.
The scaling debate → the forks (2015-2017) — the battle over block space
The single most important episode for BSAHI: the 1 MB block-size cap (a 2010
anti-DoS guardrail) became the first political economy of block space.
- Big-block camp (XT 8MB, Classic 2MB, Unlimited no-limit): block space isn't scarce; raise the cap and the fee market vanishes.
- Small-block camp (Core): block space stays scarce; the fee market funds security; scale on layer 2 (Lightning) and via SegWit.
- Feb 2017 Hong Kong Agreement (SegWit + 2MB) collapses within months.
- May 2017 New York Agreement (SegWit2x) — ~80% hash power signs; the 2MB half canceled Nov 8 2017 — consensus, not hash power, decides.
- SegWit (BIP 141) activates Aug 24 2017 (block 481,824) — witness data at 1/4 weight → effective capacity 1→~4 MB without a hard fork. Designed for malleability (enabling Lightning); capacity was the real purpose; state pricing was explicitly not (BSAHI's bip141_analysis.md).
- Aug 1 2017 — Bitcoin Cash splits (8 MB blocks, later 32 MB) at block 478,558.
- Nov 15 2018 — Bitcoin SV splits BCH (128 MB blocks) — the fork of a fork.
Three chains, three answers to "how big should a block be."
The halvings (subsidy → fee transition)
| Halving | Block | Date | Subsidy |
|---|
| #1 | 210,000 | Nov 28 2012 | 50 → 25 |
| #2 | 420,000 | Jul 9 2016 | 25 → 12.5 |
| #3 | 630,000 | May 11 2020 | 12.5 → 6.25 |
| #4 | 840,000 | Apr 20 2024 | 6.25 → 3.125 |
| #5 (est) | 1,050,000 | ~2028 | 3.125 → 1.5625 |
#4 is the first halving where fees (inscriptions/Runes-driven) are a material
share of miner revenue — the subsidy→fee transition becomes visible in real time.
2021: Taproot, El Salvador, the $69K bull run
- Taproot activates Nov 14 2021 (block 709,632) — BIP 340 Schnorr, BIP 341 Taproot (MAST), BIP 342 Tapscript. Lowered per-input cost; enabled complex contracts; made future data-bearing outputs cheaper — which mattered once Ordinals arrived.
- El Salvador: BTC legal tender Sept 7 2021 — the first national test.
- Cycle ATH ~$69K (Nov 2021); 2022 crash via Terra/3AC/FTX.
2023-2025: Ordinals, ETFs, Halving #4, six figures
- Jan 2023 — Ordinals go live (Casey Rodarmor): inscriptions embed data via
OP_FALSE OP_IF ... OP_ENDIF in witness data, exploiting the 4× SegWit weight discount. BRC-20 (Mar 2023), Runes at the halving (Apr 2024). The storage externality becomes measurable in the fee market.
- Jan 10 2024 — SEC approves 11 spot ETFs. Demand-side institutional gateway that does not touch on-chain fees.
- Apr 20 2024 — Halving #4 at block 840,000.
- Dec 5 2024 — price crosses $100,000.
New research angles for BSAHI
- SegWit discount as history (F2) — a dated narrative: 2017 malleability decision → 2023 inscriptions. The history IS the argument.
- Block-size limits as political economy — a "who said what" timeline (XT/Classic/Unlimited/NYA/UASF) framed as competing claims about whether block space is priced resource or free utility.
- Subsidy vs fee share per halving era — chart from block_stats (subsidy_btc, avg_fee_sats) across 2012/2016/2020/2024 windows. Testable prediction: inscriptions pushed fee share to a historical high post-2024.
- Permanence vs congestion historically — Mt. Gox-era blocks (~1.5 KB, nearly empty) vs today's inscription-heavy blocks. Block composition over time (payments vs data vs settlement).
- Lightning's effect on the externality — refuted naïvely — L2 increases per-payment on-chain cost ratio (channel opens/closes) while decreasing fee revenue; channel churn can worsen the externality.
- Fork economics as controlled experiment — run the storage-ratio model against BCH (8-32 MB) and BSV (128 MB) data: their per-byte cost falls on fewer nodes, fee-per-byte collapses. Three-way comparison.
- The causal chain — malleability fix → 4× weight discount → witness-as-data → Ordinals → fee pressure → storage externality materializes. The history explains why BSAHI's storage cost coverage ratio finding exists (corrected to v2.0.0 — see research/verification_appendix.md).
_Research note — compiled from the History of Bitcoin (Wikipedia) and linked sub-articles, read in full._
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