Chapter 1: Genesis

Dedicated to my brothers and sisters in crypto. To everyone who didn't give up and endured through the hard times, who hodl tight every day and tirelessly built a better future. To all those who wrote code, perfected technologies, generously shared and multiplied. Your efforts were not in vain.

Gold, ah gold...

How many human desires, passions, and sufferings has this metal absorbed? Countless lives have been sacrificed and vile deeds committed for the mere possession of this stardust. If metal could sing, its song would hardly tell of human progress, but rather of all-pervasive greed and the relentless pursuit of profit.

But metal is cold and silent, and so we, humans, are free to make up stories to our liking. We have rewritten the old, shameful pages, hiding them in the farthest dusty tomes where lovers of light content will never look. And in their place, we have composed modern and convenient tales about gold as a financial instrument for banks and its valuable applications in electronics and space technology.

And while the technical use of gold truly represents modernity, where the metal is valued precisely for its physical qualities, its main function — preserving value — has come to us from ancient times and remains relevant to this day. Five millennia ago, ancient civilizations of Egypt, Mesopotamia, India, and China used gold as a standard of value. And in the 600s CE, the Lydian kingdom, located in what is now Turkey, made a true revolution by minting gold coins for the first time and officially establishing the metal as a universal means of payment.

It's remarkable how, independently of each other, completely different cultures and civilizations of the past converged on one thing: they chose this particular metal as a symbol of wealth and a measure of accumulation. Many alternatives existed throughout history — silver, seashells, or massive stone blocks extracted through hard labor from distant islands. Yet it was the shining yellowness of gold that held universal appeal for most peoples across the globe.

In those times, people composed myths about the divine origin of gold, endowing it with a mystical nature and telling stories about gods accepting golden offerings. These ancient legends concealed unexpected wisdom — without telescopes and spectrometers, our ancestors intuitively sensed that the noble metal was rare not only on earth but also in the celestial spheres. Today, modern astrophysics has confirmed this ancient intuition.

I think you, my dear reader, already know that gold as a chemical element was born in the fiery explosion of supernovas. It is the result of the rarest and most extreme process, when a star, having exhausted all its thermonuclear fuel, transitions to the final, explosive stage of evolution. The temperature and pressure in its depths soar to such colossal values that they trigger real cosmic alchemy. Iron, silver, gold, and other heavy elements from Mendeleev's periodic table are ejected into space. The very building blocks, the essence of what will later form planets and, ultimately, ourselves.

But here's a little-known fact: the gold produced in supernovas is clearly insufficient to explain its quantity in cosmic space. Even the most powerful supernova explosion synthesizes gold in minuscule amounts. And this won't change even considering that during the 10 billion years that passed from the Big Bang to the formation of our Solar System, such stellar cataclysms were relatively frequent. It's a different story with iron: stellar forges stamp it out in colossal quantities, which is why the Earth's depths are overflowing with this metal. That's precisely why no one would store their savings in iron ingots.

For significant gold production, the Universe needs to launch an entirely different process, so rare that even by cosmic standards, it is considered an exceptional event. It all begins with the formation of a system of two stars of a strictly defined size. Over colossal periods of time, millions or billions of years, these stars burn through all their allotted fuel and transform into neutron stars. These stellar objects consist of superdense matter, compressed by gravity to such a state that even a tiny particle of such substance on Earth would weigh millions of tons. But that's not all: hundreds of millions or even billions of years will pass before these two neutron stars, in their majestic orbital dance, come close enough to fall into the mutual trap of tidal forces. And the culmination will be their complete merger, a cosmic cataclysm of unimaginable power, which fires into space a sufficient quantity of heavy elements, including such rare and valuable gold.

If all the gold material born from one such cosmic merger were collected and formed into a solid sphere, it would be comparable in size to Earth. This is millions of times more than all the gold ever mined by humanity throughout its history. But in reality, these precious particles scatter across space in different directions. And the movement of stellar systems and galaxies mixes them across the vast expanses. Eons of years will pass before the gold dust becomes part of new planetary systems forming around young stars. Cosmic wanderers — comets and asteroids — which intensively bombarded newborn planets in the primordial epoch, also join the process of matter transfer. And this grandiose cosmic cycle explains why gold is found in the Earth's depths, as well as in the world ocean, dissolved in its immense waters.

Of course, our ancestors had no idea about these cosmic processes, but they assessed the rarity of gold unerringly. Humanity has spent millions of years of collective labor digging the yellow metal from the earth, washing it out of rivers, or extracting it at the risk of life from narrow, winding mine labyrinths. Gradually, gold penetrated deeper into human culture and life, becoming the main measure of preserving and transferring wealth over millennia. Even today, in the era of digital technologies, the central banks of major powers continue to increase their gold reserves, carefully concealing them in impregnable vaults. And it's so amusing to listen to public exhortations from bankers about how the gold standard has outlived itself. Truly, judge a tree by its fruits.

Gold would have continued to dominate as the best means of preserving value. But the world changed in an instant thanks to the revolutionary invention of a mysterious genius. His creation gave humanity a new repository of value, much more convenient and fast. "Gold 2.0" perfectly fit into the modern digital world, marking the beginning of a new era — the era of Bitcoin.

In 2008, the genius Satoshi Nakamoto presented the world with a fateful document — "Bitcoin: A Peer-to-Peer Electronic Cash System"¹. I strongly recommend reading this manifesto not only to connect with history but also to truly appreciate the scale of evolution that the entire crypto industry has undergone. It's amazing to see how Bitcoin has made an incredible journey from abstract ideas to global recognition — a path so prophetically predicted by its creator.

The emergence of Bitcoin precisely in 2008 was not coincidental. The world was then shaken by the most severe financial crisis, and the traditional financial architecture, built on blind trust in central institutions, revealed its fundamental fragility and susceptibility to manipulation. Satoshi offered a revolutionary alternative. His creation represented a system relying not on trust in people or institutions of power, but on the immutable laws of mathematics and the reliability of cryptographic algorithms. Symbolic confirmation of this mission was the message that Satoshi permanently preserved in the very first, so-called genesis block of Bitcoin: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." This quote from a newspaper headline about the Chancellor's second attempt to save banks unambiguously pointed to the insolvency of the existing financial system and proclaimed the beginning of a new era.

The first transaction between real Bitcoin users occurred in 2009, when the legendary programmer Hal Finney² became the first recipient of 10 BTC from Satoshi himself. Ironically, at that time these coins were worth practically nothing, while today they represent solid capital, worthy of inclusion in a family inheritance. This case perfectly illustrates the unique feature of the cryptocurrency world: yesterday's experiments by enthusiasts are turning into the most valuable assets today.

This historic exchange of coins marked the beginning of a new era of financial relations. And the main mystery of the new epoch became: who is Satoshi Nakamoto? The list of possible creators of Bitcoin is extensive and diverse: Gavin Andresen, Hal Finney, a group of like-minded individuals. But I will deliberately bypass all these endless debates. Today, this question no longer has fundamental importance. Bitcoin has evolved far beyond the original concept. And it is precisely this anonymity of Satoshi that has become one of the key elements of Bitcoin's success, its strategic advantage. Revealing the identity could have significantly affected the cryptocurrency ecosystem or, at the very least, given a specific person disproportionately large power over the project. The absence of a sole leader has endowed Bitcoin with unique resilience. It evolves through collective consensus, where the community takes an active part in choosing the direction.

However, any talk about the first Bitcoin transaction would be incomplete without telling the story of Hal Finney. He earned his place in Bitcoin history not only through participation in the first transaction. His revolutionary understanding of Bitcoin's potential was truly prophetic. After receiving the first transaction from Satoshi in 2009, he wrote words that have become legendary: "Imagine that Bitcoin succeeds and becomes the dominant payment system in use throughout the world. Then the total value of the currency should be equal to the total value of all the wealth in the world." Such foresight, especially in an era when Bitcoin had virtually no value, vividly illustrates Finney's exceptional intellect and prognostic abilities. He could discern the outlines of the future where most saw only a failed experiment by eccentric geeks.

But what truly amazes and inspires is Finney's dedication to his work even in the face of terminal illness. Despite suffering from progressive Amyotrophic Lateral Sclerosis, which gradually robbed him of mobility, Finney did not stop working on Bitcoin until his final days. When the disease completely paralyzed his body, he wrote a touching confession: "I'm happy I can still say, I did this." These words were typed using a special device that responded to eye movements — the only thing that remained under his control. Hal Finney's status as the second person after Satoshi in the Bitcoin ecosystem is undisputed, and his authority is unquestioned. But even more important is that his unyielding spirit and absolute faith in a revolutionary idea became an inspiring example for the entire cryptocurrency community.

I wish I could tell you, my dear reader, that I was among those pioneers who recognized Bitcoin's potential at the dawn of the crypto era and joined the movement. But the truth is far more prosaic, and my story differs little from millions of others. Of course, I had heard about the new technology, but for a long time didn't give it much significance. Now, looking back, like many others, I sometimes dream of a non-existent time machine that would help me go back and "reprogram" my past self. Instill the right worldview, nudge toward the right decisions. Unfortunately, we are forced to accept the past as it was, with all its missed opportunities.

I was someone who looked down on Bitcoin with skepticism and great doubt. Coming across news about Bitcoin online, I would pass it by. Moreover, I genuinely didn't understand what compelled seemingly rational and talented people to participate in what appeared to me to be nothing but a scam. "Bitcoin is a Ponzi" – I thought dismissively.

But time passed, and by 2013, the first complete four-year cycle of Bitcoin had concluded. This period became a kind of template, a prototype for all subsequent cycles, in which the same scenario would repeat, but with increasing scale and drama. First — rapid growth, universal euphoria, and blind faith in limitless possibilities; then — a sharp fall and deep, painful disappointment. The final chord would be the numerous obituaries proclaiming the death of the "bold but untenable experiment."

However, as thousands of times thereafter, rumors of Bitcoin's death proved to be greatly exaggerated. The first cryptocurrency not only survived but emerged from the trials stronger, convincingly confirming its antifragility in the face of crises. Only those who understood and shared Bitcoin's global mission weathered this storm. And it was these true believers who managed to carry their coins through all the ups and downs of both the first and subsequent cycles.

As Erik Voorhees — a prominent crypto activist and founder of the ShapeShift platform — once noted: "I hope the early adopters of a revolutionary new monetary system make astronomical profits. I can't think of anything more fair." History has proven him right. And what's especially impressive — Eric spoke these words in 2011, when Bitcoin was trading at a price below $8.

By general consensus, the official start of Bitcoin trading was considered to be May 22, 2010. On this day, a programmer from Florida named Laszlo Hanyecz made the most famous purchase in cryptocurrency history — two Papa John's pizzas. The transaction was organized through the Bitcointalk.org forum, where on May 18, Laszlo had posted an announcement offering 10,000 BTC to anyone who would order and deliver pizza to him. Surprisingly, for several days, no one responded to his offer. Only after 4 days did a British programmer, Jeremy Sturdivant, agree to this historic deal. Since then, May 22 has been celebrated annually in the crypto community as "Bitcoin Pizza Day." Laszlo forever inscribed his name in the cryptocurrency chronicles as the person who started the flywheel of a real economy based on a new form of digital money. And pizza became the perfect symbol of Bitcoin's first cycle.

Like many others, I've wondered if Laszlo had any regrets about parting with such a colossal amount of coins. This question is perhaps one of the most popular that Hanyecz has been asked over the years. In his interviews, he has repeatedly stated that he feels absolutely no regret. On the contrary, he sincerely prides himself on his historic role in Bitcoin's establishment and how vividly he demonstrated to the world the practical value of BTC as a means of payment. It's worth noting that at the time of the deal, 10,000 BTC were worth approximately $41, while today that's hundreds of millions.

Remarkably, in 2018, celebrating the anniversary of "Bitcoin Pizza Day," Laszlo symbolically repeated his famous order, again purchasing pizza with BTC, but this time at a drastically different exchange rate. Today, there isn't a person in the crypto industry who hasn't heard this legendary story. And blockchain veterans still express deep gratitude to Laszlo Hanyecz for his bold experiment, which became the first significant step in Bitcoin's global adoption.

The participants in the first Bitcoin transaction perfectly reflect the type of people who stood at the origins of the cryptocurrency revolution. Both Laszlo Hanyecz and Jeremy Sturdivant were talented programmers fascinated by technological innovations. In its early stage, the cryptocurrency industry was formed almost exclusively by software engineers, cryptography experts, and ideological cypherpunks. These pioneers devoted their time to optimizing Bitcoin's code, developing wallets, and creating other critical infrastructure elements for the first digital currency.

Of course, they were also the first miners, those who maintained the network's functionality during its most vulnerable period. And although their work was rewarded with hundreds of Bitcoins daily, their true satisfaction came from observing Bitcoin's "living pulse" — every 10 minutes, the network would release a new block, confirming its viability. In retrospect, that era appears as a time of technological romance and selfless belief in revolutionary ideas, a period not yet tainted by greed, fraud, and hacks, which, unfortunately, became the hallmark of all subsequent cycles.

These people genuinely believed in their cause and dreamed of fundamentally transforming the financial system, making it better and fairer. They were true creators and idealists, little interested in personal enrichment. Their enthusiasm and energy, invested in the first cycle, set in motion the grand mechanism called the "crypto industry." And although many of those first enthusiasts continue their work today, they are still insufficient. Unfortunately, in today's industry, deceit and pure greed prevail, pushing the original ideals to the background.

And this is one of the reasons why I undertook writing this book: to tell newcomers, as well as remind all veterans, about the great mission that Satoshi Nakamoto, Hal Finney, and all those who worked alongside them instilled in Bitcoin and the entire crypto industry. The mission of creating a fair, decentralized, limited-emission digital currency capable of changing our society for the better. A system that can defeat inflation, which daily robs each of us, and create a stable economic environment in which science, development, and trade will flourish. I want to believe that we can still move in the right direction.

But let's return to Bitcoin's first commercial transaction and its revolutionary significance. It was at this moment that Bitcoin acquired real monetary value or, in simple terms, a price expressed in traditional fiat currency. From this point began the longest continuous trading session in financial history. Bitcoin became the first asset in history to be traded continuously: without breaks for holidays and weekends, 24 hours a day, 7 days a week, 365 days a year. And this trading marathon has been going on for over 15 years, which in itself is a phenomenal achievement.

Immediately after trading began, the price started to rise, pausing only for short accumulation stages. As they would say on Wall Street, the asset showed simply phenomenal growth. And surprisingly, the growth wasn't hindered even by the fact that in those years, there were no major centralized exchanges for Bitcoin trading. The Mt.Gox exchange was formed in 2010, but its rise in popularity came in 2013, when the exchange began processing more than 70% of all Bitcoin transactions worldwide. And in May of that same 2013, the Kraken exchange began operating in beta mode, which today is considered one of the oldest crypto exchanges in the world.

However, before centralized exchanges monopolized the market, Bitcoin trading was conducted almost in analog mode. Participants arranged deals through message boards and on the Bitcointalk.org forum mentioned earlier. This system was incredibly inconvenient and impractical, making mass adoption of cryptocurrencies virtually impossible. But even serious risks didn't stop enthusiasts from making deals. A typical transaction looked like this: the buyer first sent a money transfer through one of the popular payment systems, not forgetting to pray to the goddess of luck and split the payment into several parts. After that, they could only hope for the decency of the seller, who was supposed to send bitcoins to the specified address.

This moment of waiting was perhaps the most exciting and anxious in the life of any crypto veteran of those "primitive" times. And few things can compare to that feeling of relief and pure joy that the buyer experienced upon seeing an incoming transaction and realizing that on the other end of the digital bridge was a decent and honest person. Although the industry was microscopic compared to today's scale, the community consisted almost exclusively of people dedicated to the idea, ready to help each other and work together to improve this new digital space.

Offline trading was also active, with improvised exchange points flourishing in crowded city places. In shopping malls, cafes, and gas stations, people would meet with cash and laptops, ready for a long, sometimes half-hour wait while the transaction was finally confirmed in a block.

Starting in 2012, the platform LocalBitcoins became the center of all transactions — the first large-scale P2P service that virtually connected buyers and sellers from different cities and countries. By the golden era of the crypto market in 2017, the platform reached the peak of its popularity. Bitcoin owners gained the ability to travel the world, converting their coins into cash at any point on the planet.

In 2023, after years of continuous regulatory attacks and declining popularity, LocalBitcoins permanently closed its digital doors. However, face-to-face exchange proved to be indestructible and continues to thrive in many countries across the globe. Only now, instead of Bitcoin, stablecoins on Tron networks and sometimes Ethereum dominate the circulation. Bitcoin, meanwhile, has firmly taken its place as the main asset for capital preservation.

Today, the earliest period for which Bitcoin exchange rates are available is the beginning of 2010. Everything that happened before this date has already dissolved in the mist of history. If you're curious to see for yourself the laughable value of the first cryptocurrency in those days, ordinary exchange charts won't help. To access the full chronicle, you'll need the TradingView application and the BLX ticker (Bitcoin Liquid Index), which stores the most complete information about price dynamics.

In July 2010, one bitcoin cost just 5 cents, and less than a year later, by June 2011, its price reached its first annual maximum of $32. This represents a mind-boggling growth of 64,000%. Figuratively speaking, the rocket with bitcoins flew past the Moon and immediately headed to Mars. And such astronomical surges would subsequently become the calling card of the entire crypto world.

It's impossible to overestimate the size of the fortune that unexpectedly fell to the early Bitcoin pioneers. During that period, cryptocurrency mining didn't require special equipment — an ordinary home computer was enough. Initially, all hashing operations were performed on standard processors, then video-cards took over.

Every 10 minutes, another enthusiast, without leaving their computer, became the owner of 50 freshly mined bitcoins. In these moments, 'free money' wasn't just an expression – it was reality. Money might not grow on trees, but in the digital world, it certainly materialized from code.

But there were other ways to get your first coins for free. A perfect example come from Gavin Andresen, who took over Bitcoin Core leadership after Satoshi Nakamoto's departure. From his personal reserves, he invested 1,100 coins in creating a "Bitcoin Faucet"³. The mechanism was extremely simple: visit a special website, solve a captcha, and receive 5 BTC. At that time, the value of one Bitcoin was about a dollar, and Andresen considered this an acceptable price for expanding the Bitcoin user base.

Notably, there were no technical restrictions for receiving coins repeatedly. Anyone could create a new wallet address and repeat the procedure. But despite this, the faucet functioned for a full seven months until it exhausted its entire allocated reserve. This episode vividly illustrates how far the reality of that time was from today's problems with multi-accounting and wallet farms. At that time, if you mentioned 'Sybil,' people would think of Greek mythology, and not about multiple fake identities in network systems.

The community of early miners, programmers, geeks, and cypherpunks had absolutely no idea how to react to such dizzying market growth. However, they can be understood; everything was happening for the first time, without the possibility of learning from others' mistakes. The industry was at the very bleeding edge of technological progress, and it would have been strange to expect a mature approach from its first participants.

The income that fell on the pioneers out of thin air led to the first euphoria in crypto history. Not realizing the long-term value hidden behind Bitcoin, they carelessly spent it on clothes and new laptops. The culture of risk management, capital management, and, most importantly, diamond holding of Bitcoin would form in the community much later. And this would be the result of collective experience gained through the most painful defeats.

But at the same time, as Bitcoin reached its peak, holders experienced deep cognitive dissonance. The astronomical figures on their screens seemed more like video game scores than actual wealth they possessed.

And in the case of Bitcoin, such paralysis was positive and even desirable, as it stopped early holders from selling. Of course, as long as the coins weren't sold during the panic drop that came after the general euphoria. Those who survived all the horror of market falls were rewarded in the next cycle, which showed even more impressive price growth records. The most steadfast believers received truly unprecedented returns.

In the crypto world, there's a common saying: the best investor is a dead investor. But this wisdom should be used with caution. The rule won't work for the altcoin market, which, even if they reach record values, rarely repeat them in the next cycle. As for those who calculate their wealth in Bitcoin terms, they've long discovered a simple truth: over several cycles, almost all other assets decline in value relative to Bitcoin. Simply holding bitcoins for years is simultaneously the most profitable, but also the most difficult path in the entire crypto industry.

And if you, my dear reader, belong to the cohort of those who stood at the origins of the crypto movement, survived, and managed to preserve even a small portion of your sats until today, then allow me to express my sincere respect to you. Such unwavering loyalty to the original mission and diamond-hard determination deserve the highest reward, which, however, you have already received from Bitcoin.

But Bitcoin wouldn't be itself if, after such a dizzying rise, it didn't demonstrate an equally dramatic fall, resembling the catastrophe and agony of a mortally wounded beast. From its absolute maximum, Bitcoin plummeted by a staggering 92%, ultimately finding a bottom at the $2 level. In classic markets, such an asset would simply be delisted and the company liquidation procedure would be launched. But in crypto, this surprises few. Bitcoin cleansed itself of all those who came here for quick money. And after a year of waiting, it continued its growth in a new cycle.

And here lies an interesting pattern. A 92% drop is Bitcoin's strongest fall in its entire history. With each new cycle, this magnitude decreased. From this, we have the right to expect that the correction of the current fourth cycle will not exceed -76%. That's exactly how much Bitcoin fell during the crypto winter of 2022.

The first Bitcoin cycle became the analog of a genetic code, which laid the entire foundation for the future evolution of the cryptocurrency world. It became the prototype not only for price movements of future cycles but showed the true source of the crypto world's resilience — the unprecedented power of a community of like-minded individuals united by a revolutionary idea.

From gold to Bitcoin — humanity has traveled a grand path in search of the perfect store of value. The universe needed billions of years of cosmic evolution, dramatic collisions of neutron stars, and long formation of planetary systems to create gold. Bitcoin, on the other hand, required the achievements of human progress: cryptography, a developed digital industry, as well as the bitter lessons of financial crises and decades of inflation.

As a result, human creation surpassed even the cosmic masterpiece of nature in its properties. For the first time in the history of civilization, we witnessed the birth of a monetary system that doesn't require trust in a central issuer, is not subject to inflationary devaluation, and needs neither physical repositories nor armies for its protection.

The first users of Bitcoin were not bankers or financiers, but programmers, cryptographers, and ideological cypherpunks. Many of them, following the example of Satoshi Nakamoto, preferred to remain in the shadows, driven not by the desire for personal enrichment, but by a sincere belief in the possibility of creating a fairer financial system. What they created went far beyond an ordinary digital asset — it was a new financial paradigm, in which the source of value is not the directives of central banks, but the flawless mathematics of cryptographic algorithms and the decentralized consensus of a distributed network.

The first Bitcoin cycle convincingly proved the viability of the very idea of digital money. Bitcoin survived and strengthened not thanks to large-scale marketing campaigns or support from power structures, but despite their active opposition and widespread skepticism. It was the internal, fundamental properties of the first cryptocurrency that allowed it not only to withstand this David-versus-Goliath struggle but also to continue development, winning the minds of an increasing number of people.

However, the first cycle also holds differences from subsequent ones. And this is not only the smaller scale but also the special atmosphere of enthusiasm and unwavering idealism. In that pioneering era, most participants joined the movement out of genuine interest in revolutionary technology, not in pursuit of quick financial gain. At the dawn of Bitcoin, there were no institutional investors, venture capital, and professional speculators, there weren't hundreds of alternative coins, there was no aggressive advertising and mass hysteria over missed opportunities. It was a time of true pioneers who, often without even realizing the historical significance of their actions, laid a solid foundation for the entire future crypto industry.

More than fifteen years have passed since the first transaction between Satoshi Nakamoto and Hal Finney. During this period, Bitcoin has made an impressive evolution from experimental technology to a global financial phenomenon of world scale. But the most significant achievement was that throughout its development, it remained true to its main promise — to be an open, transparent, and uncontrolled by any centralized authority system. The idealism of the pioneers embodied in a reality that is changing the financial world. Their vision was not a utopia — it became the foundation of a new economic reality.

And today, when centralized financial structures are still vulnerable to crises, hacker attacks, and censorship, Bitcoin continues to function tirelessly. Block by block, transaction by transaction, Bitcoin grants true financial freedom to all who desire it, invulnerable to the corrosion of inflation. Bitcoin elegantly solved all the problems that were inherent to gold, while simultaneously preserving and even strengthening its main advantages — strictly limited emission and reliable protection against devaluation.

From rare cosmic matter, forged in the hearts of dying stars, human ingenuity crafted a digital equivalent, that surpasses its predecessor in rarity, value, and utility. Indeed, Bitcoin has become better than gold.