When Bitcoin launched in January 2009, it had no price. It wasn’t listed anywhere. Nobody was buying or selling it. It was an experiment running on a handful of computers.
Sixteen months later, one Bitcoin was worth one US dollar.
This is the story of how that happened.
The First Number
On October 5, 2009, a website called New Liberty Standard published the first Bitcoin exchange rate. The number: $1 could buy 1,309 Bitcoin. That works out to about $0.000764 per coin.
The founder calculated this using electricity costs. He divided the average US electricity bill for running a CPU by the number of Bitcoin that CPU could mine. It wasn’t a market price. It was a cost-floor: the minimum price justified by the electricity used to produce a coin.
Around the same time, a developer named Martti Malmi made the first known dollar trade. He sold 5,050 BTC for $5.02 via PayPal. That implied a price of about $0.001 per coin. No exchange, no listing. Just two people and a forum post.
The First Markets
New Liberty Standard set prices manually. Bitcoin needed a place where buyers and sellers could set prices themselves.
That arrived on March 17, 2010, when a developer using the handle “dwdollar” launched BitcoinMarket.com. Guinness World Records recognizes it as the first cryptocurrency exchange. Prices were set by supply and demand. Bitcoin started trading around $0.003 per coin.
Two months later, Laszlo Hanyecz paid 10,000 BTC for two pizzas. The total value was about $41, or roughly $0.004 per coin. A buyer and seller had independently agreed on what Bitcoin was worth. That is a real market, even when it involves pizza. The full story is in our Bitcoin Pizza Day article.
By September 14, 2010, Bitcoin first crossed $0.10. The price had risen more than 100 times in twelve months.
One Dollar
Mt. Gox launched in July 2010 and quickly became the dominant exchange. Volume grew through late 2010 and into 2011. New buyers arrived from outside the original cryptography community.
On February 9, 2011, Bitcoin hit $1.00 on Mt. Gox. One bitcoin equaled one US dollar. The journey from $0.000764 to $1.00 had taken sixteen months.
What Came Next
The $1 milestone answered the question that had haunted Bitcoin from the start. How does something go from no price to any price? Bitcoin solved it the same way it built everything else. One transaction at a time.
To understand why Bitcoin continues to hold value, read Why Does Bitcoin Have Value?. For the supply rules behind Bitcoin’s long-term economics, see Bitcoin’s Monetary Policy Explained. For the exchange that dominated this early period, read about Mt. Gox. And for the event that started it all, see The Genesis Block.