MARCH 19
The First Price
When the World First Measured Bitcoin
The Signal
Bitcoin existed before it had a dollar price. Then one number gave the world its first way to measure it.
The Reading
For months, Bitcoin ran without an established market price. Blocks were added and Hal Finney had received the first transfer. The system worked. But the question remained: what was one bitcoin worth?
On October 5, 2009, a pseudonymous participant called New Liberty Standard published the first known Bitcoin-to-dollar exchange rate. One US dollar would buy 1,309.03 bitcoins. That valued one bitcoin at approximately $0.000764, less than one-tenth of one cent. The number was not chosen by a bank, government or committee. New Liberty Standard estimated the electricity cost of running a computer at high power, then divided that cost by the bitcoin their computer had generated. It was a rough calculation, but it placed the first measuring line beside something never priced.
Seven days later, measurement became exchange. On October 12, Finnish developer Martti Malmi sold 5,050 bitcoins to New Liberty Standard for $5.02 through PayPal. A seller released bitcoin. A buyer released dollars. Both considered the exchange worth making.
This was not yet a deep or stable market. It did not prove Bitcoin’s price would rise. It proved something more fundamental: scarce digital units, produced and transferred without a central issuer, could acquire exchange value. The old monetary system could change the quantity of its units. Bitcoin offered units issued under public rules that no participant could change alone. For the first time, people could ask whether their value might find a home inside a different system. Bitcoin had already moved. Now it had a price.
First Principles
A price appears when people begin measuring one thing against another.
Bitcoin’s first published dollar rate was an estimate based on electricity and production.
The first known dollar exchange showed that another person would voluntarily pay for bitcoin.
Today’s Challenge
Open the calculator on your phone.
Type: 1 ÷ 1,309.03 then press equals.
Look at the tiny number: approximately 0.000764.
Now imagine it is October 5, 2009. You have just watched one bitcoin receive its first published dollar measure. Leave the number on your screen for one minute. You are looking at the birth of a price.
Tomorrow’s Signal
The First Believers