The first Bitcoin exchange site and how the value of Bitcoin was determined - New Liberty Standard - 5050 Bitcoins sold for 5 Dollars

November 10, 2017 - 6:56 pm  
by Nandi Bear

New Liberty Standard - first Bitcoin exchange site?

We have a long running book review of Nathaniel Popper's book Digital Gold: Bitcoin and the Inside Story of the Misfits and the Millionaires Trying to Reinvent Money over at Roger Ver's forum which you may check in on as more is added: Bitcoin book review episode 3: DIGITAL GOLD (BTC) - Hal Finney - illegal encryption export - cryogenics - Erik Voorhees.

According to pages 37 thru 39 of Nathaniel Popper's book it was October, 2009 when the first Bitcoin exchange site, New Liberty Standard, went online.

October (2009): 5050 bitcoins sold for $5 dollars

Pages 37, 38:

The Bitcoin forum went online in the fall of 2009 and soon attracted a few regulars. One of them, who called himself NewLibertyStandard, talked about the need for a website where people could buy and sell Bitcoins for real money. Martti [Malmi] had been talking to Satoshi [Nakamoto] about something similar, but he was all too glad to help NewLibertyStandard. In the very first recorded transaction of Bitcoin for United States dollars, Martti sent NewLiberty Standard 5050 Bitcoins to use for seeding the new exchange. In return Martti got $5.02 by Paypal.

How was the value of Bitcoin determined?

Page 38:

This trade raised the obvious question of how much a Bitcoin should be worth. Given that no one had ever bought or sold one, NewLibertyStandard came up with his own method for determining it's value - the rough cost of electricity needed to generate the coin, calculated using NewLibertyStandard's own electricity bill. By this measure, one dollar was worth around one thousand Bitcoins for most of October and November 2009."

If anyone reading this has any information to the contrary of any of that which is found in the foregoing please let us know!

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