How you could buy bitcoin in 2009

Bitcoin is the first successful cryptocurrency. In November 2021, the coin set a historic price high of $68,600. However, at the dawn of its development, it literally had no value. It was used only by fans of cryptocurrency and IT geeks. Digital coin exchanges did not exist back then. Because of this, you could only buy bitcoin in 2009 directly from users. It is useful for BTC fans to know how such transactions were conducted.

The emergence of the Bitcoin network

The first mention of Bitcoin dates back to 2008, when the developer of the cryptocurrency network published a white paper (technical documentation) of the system. In it, the creator described the principles of Bitcoin and the technologies used. The white paper also describes the idea of cryptocurrencies and blockchain. The Bitcoin network was launched on January 3, 2009. However, the first transaction was not made until 9 days after the system was launched. The recipient of 10 BTC was Hal Finney, a well-known crypto-punk (a person who is passionate about technologies to increase data privacy and anonymity) in the crypto world. Many Bitcoin users even consider him the creator of the currency. However, during his lifetime, Hal denied his involvement in the development of the network. After the first cryptocurrency system appeared, BTC was not taken seriously by the public. Until the end of 2009, the coin had no price.

How the first BTC was mined

Many participants in the cryptocurrency community believe that the developer of the Bitcoin system was engaged in the preliminary mining of coins. However, this statement is incorrect. After the announcement of the imminent launch of Bitcoin, the developer gave trusted individuals 2 months to prepare, but there was no pre-mining stage. “Trial” batch of BTC was generated as a reward for forming the first block in the cryptocurrency chain. It was this event that marked the launch of the Bitcoin network on January 3, 2009. “Pre-mine stage” refers to the issuance of a certain amount of assets before the first block was created. When the cryptocurrency became popular, many altcoin developers started doing so. Mining BTC in 2009 was an easy task for an ordinary computer at that time. Even a PC processor was capable of generating an average of 2 thousand coins per day with a reward of 50 BTC per block created. Bitcoin uses the SHA-256 hashing algorithm from the very beginning. The main task of miners is to process information in the network and search for an abbreviated identifier of the data set. In the world of cryptography, it is called ahash. Identifiers are needed by the blocks of the chain so that users can manage the network in a decentralized and cooperative manner. The computing power of computer hardware is used to find the hash. In 2009, PC processors could handle this task. However, as the number of miners increases, it becomes more difficult to mine cryptocurrency. Therefore, already in 2010, processors were ineffective, and they were replaced by video cards. But this is not the only computer equipment that was used for bitcoin mining.

As the complexity of coin mining increased, miners started joining pools. This allowed them to pool resources and thus increase the chances of finding a block.

For their work, nodes receive remuneration. However, every 4 years, the amount of payment for creating a block is halved at the program level. This process is called chalving.

How Bitcoin’s value was determined in 2009

Initially, Bitcoin had no real value. In 2009, cypherpunks and IT geeks were mostly just “playing” with BTC. They were unaware of the prospects of the new technology and the coin itself. Only on October 5, 2009, thanks to the exchange platform New Liberty Standard semi-official value of the digital asset was established. The service evaluated the main cryptocurrency by the total cost of electricity, which is required to mine 1 coin. As a result, users bought bitcoin in 2009 at a rate of $0.00076. The official price of the main cryptocurrency was set 9 months later on the first digital asset exchange Mt.Gox. Since July 17, 2010, the coin has been worth $0.05. Mt.Gox trading platform was developed by Jed McCaleb (creator of digital projects Ripple and Stellar). However, before cryptocurrency assets, Magic: the Gathering game cards were sold on the platform.

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How you could buy bitcoins in 2009-2010

The situation with the purchase of cryptocurrency was bad at the time. Before the launch of trading on Mt.Gox, the purchase of BTC was made directly. It was possible to purchase the digital asset only from cryptocurrency exchanges and IT geeks. The process itself for the average internet user looked as follows:

1. Registering on a bitcoin forum like bitcoin.org (the first platform for discussing and working with BTC).
2. Finding a thread about selling or creating a topic about buying coins.
3. Discussing the terms of the transaction with the found seller.
4. Carrying out a transfer in bitcoin network.
5. Sending fiat to the seller.

Similarly, the purchase of Bitcoin was conducted through IRC chats – application programs for online exchange of text messages and files. They were popular in 2009 among cypherpunks. The IRC chats were where sellers or buyers of coins were located.

Where bitcoin was stored in 2009-2010

Basically, BTC was stored in software wallets on users’ computers. Here are a few ways that were popular back then:

• Bitcoin-Qt. This was the first official bitcoin client. The software was installed on the computer and the wallet stored private keys locally on the hard disk.
• Printing paper wallets. Some users created and printed their private keys and bitcoin addresses on paper to keep them in a safe place.
• Wallets on USB drives. Some users stored their wallets on external devices such as USB drives to avoid the risks associated with putting the information on a computer connected to the internet.
• Wallet.dat files. Previously, a wallet was often a wallet.dat file that could be backed up and stored in various locations for security.

Storing bitcoin before was more complicated and required more attention to security, as there were not the convenient and secure hardware wallets or mobile apps that are available now.

Who got rich buying bitcoins in 2009

History knows of at least 2 such cases. The first one happened to a user from Wales named James Howells. He bought bitcoins in 2009 and stored them on his personal computer. However, 48 months later, James Howells disassembled the old PC and threw the parts into a landfill along with the hard disk drive (HDD) that had 7,500 BTC on it. As of December 3, 2021, the savings would be over $400 million. Since then, James Howells has been working on a plan to find the HDD and recover the data on it. In 2021, he stated that he was going to go through 300 to 400 thousand tons of garbage in a 200×200 meter landfill. According to James’ plan, the search for a lost HDD will be carried out using conveyor belts and scanning X-ray devices.

The second similar case happened to a Norwegian student named Christopher Koch. In 2009, he was writing his dissertation on the topic of data encryption. In order to confirm the facts presented in the research paper, Christopher bought 5,000 BTC for 150 Norwegian kroner ($27) to create an illustration. However, in 2013, Christopher saw a headline in the media that the BTC exchange rate was breaking previous records. The guy quickly remembered about 5 thousand Bitcoins that were lying on his old wallet. At the exchange rate of the time, Christopher’s savings were valued at almost $1 million. A daily brainstorming session helped the guy remember the password to the wallet. After becoming a millionaire, the first thing Christopher did was to buy a luxurious apartment in a wealthy neighborhood in Oslo (the capital of Norway).

Frequently Asked Questions

❓ Why was Bitcoin created?

Bitcoin was developed as a payment system. The creator wanted to solve the main drawbacks of the traditional economy: centralization, inflation, lack of anonymity.

📝 Why was Hal Finney a key personality in the development of Bitcoin?

He helped the creator of Bitcoin – looking for bugs in the program code and bugs in the system. During the development phase of Bitcoin, Hal Finney was the only person who became interested and started to believe in the project.

🔍 What is an FPGA?

It is a powerful mining hardware that, unlike ASICs, could be reprogrammed. With high hash computation speeds, FPGAs proved to be more energy efficient than CPUs and GPUs.

📚 Why weren’t cryptocurrency exchanges created back in 2009?

This was influenced by the lack of demand for Bitcoin at the time. The new technology was poorly developed and was only of interest to cypherpunks and IT geeks.

⌚ How is the value of BTC determined 12 years later?

The Bitcoin exchange rate depends on many factors. The main ones are considered to be: the cost of mining 1 BTC, the general state of the Bitcoin market, the degree of confidence in digital assets.

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