Bitcoin History Part 6: The First Bitcoin Exchange

Aside from mining, the only way to obtain bitcoin in the very early days was by trading it on forums or IRC. This arrangement relied on the other party fulfilling their side of the deal, since there were few escrow services back then. Bitcoin didn’t have to wait long for a dedicated exchange to spring up, thankfully, with the first cryptocurrency exchange going live in March 2010.

Also read: Bitcoin History Part 5: A Wild Altcoin Appears

Bitcoin Gets Its First Market

The first cryptocurrency exchange wasn’t Bitstamp, Vircurex, or Btc-e. It was in fact a now defunct platform called Bitcoinmarket.com. The site was proposed on the Bitcointalk forum (where else?) by “dwdollar” on Jan. 15, 2010. “Hi everyone. I’m in the process of building an exchange,” he wrote. “I have big plans for it, but I still have a lot of work to do. It will be a real market where people will be able to buy and sell Bitcoins with each other.” He elaborated:

I am trying to create a market where Bitcoins are treated as a commodity. People will be able to trade Bitcoins for dollars and speculate on the value. In theory, this will establish a real-time exchange rate so we will all have a clue what the current value of a Bitcoin is, compared to a dollar.

Dwdollar’s quest was a much-needed one, for at the time there was little common consensus on how much a bitcoin was worth. Most price charts only go back as far as summer 2010, at which point 1 BTC was trading for around $0.05, though when Bitcoinmarket.com launched in March of that year, a single bitcoin was priced at around $0.003 – that’s 333 BTC to the dollar.

Bitcoinmarket.com Goes Live

On March 17, 2010, Bitcoinmarket.com went live. Like all platforms that sprung up in those early days, the exchange was rickety, and holes were often patched following feedback from Bitcointalk forum members. The site accepted Paypal initially as its means of exchanging BTC for fiat. This system worked for a while, but as Bitcoin grew, so did the number of scammers. Following a string of fraudulent trades, Paypal was removed from the exchange on June 4, 2011.

On the same day, a forum user captured the giddiness that was starting to encircle the Bitcoin community, writing: “That market is going nuts. Yesterday, I saw a guy selling BTC on ebay for $20. Thought he wouldn’t sell any right away. Sold all 30 to 4 diff bidders in 12 hours. Now this morning I see bitcoinmarket.com at $23.99! I’m usually a buy and hold kinda guy, but this rapid growth is freaking me out. I only own 75 BTC, but feel like the rich guy.”

By this point, Bitcoinmarket.com’s days were numbered. There was a new exchange poised to open its virtual doors to a tsunami of bitcoiners, many of whom had been wooed after learning of a deep web marketplace known as Silk Road which launched in February of that year. Bitcoinmarket.com’s successor launched in July 2011 and by 2014 was handling 70% of all global bitcoin trades. Its name, of course, was Mt. Gox.

Bitcoin History is a multipart series from news.Bitcoin.com charting pivotal moments in the evolution of the world’s first and finest cryptocurrency. Read part five here.

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