Hal Finney and the first transaction

Wonder

1. Why would the first recipient of bitcoin be someone who had built a digital cash system himself?
2. What did it take to run bitcoin in its first week?
3. What happens to a million unspent bitcoins if the private key is lost forever?

Explore

1. Harold T. Finney II was an engineer at PGP Corporation and a core figure in the cypherpunk movement. In 2004, he developed Reusable Proofs of Work (RPOW), a system that combined Adam Back’s Hashcash puzzles with public-key cryptography to create transferable digital coins. RPOW demonstrated that computational work could be delegated and reused, but it still relied on trusted computing backends for verification. It is often described as one of the closest working precursors to bitcoin.
2. When Satoshi Nakamoto posted the whitepaper in October 2008, Finney was among the first to reply positively on the cryptography mailing list. He engaged directly with Satoshi, and after the January 2009 release reported bugs and suggested improvements. This early collaboration established a technical rapport that would define Bitcoin’s first weeks. Finney understood the cryptographic primitives deeply enough to recognize both the potential and the fragility of the new system.
3. Satoshi announced the release of Bitcoin v0.1 on 8 January 2009. Hal Finney downloaded the software immediately and tweeted ‘Running bitcoin’ on 10 January 2009, marking the transition from theoretical code to an active network. For the first days the network consisted of only a handful of machines, Satoshi’s and Finney’s among them, each independently checking the same short history.
4. On 12 January 2009, in block 170, Satoshi transferred ten BTC to Finney. This was the first non-coinbase transaction in Bitcoin’s history, demonstrating that ownership could transfer between distinct public keys without central authority verification. It remains on-chain forever, a permanent record of the network’s first external act.
5. Early mining was done on ordinary CPUs by a handful of participants. Analysis by Sergio Lerner in 2013 suggests a single early miner, widely assumed to be Satoshi, accumulated roughly one million bitcoins, almost none of which have ever moved. These coins are distributed across numerous addresses but remain dormant. Their stillness remains one of bitcoin’s enduring mysteries; the keys that control them have not been used in more than fifteen years.
6. Finney was diagnosed with amyotrophic lateral sclerosis (ALS) in 2009. As the disease progressed he kept programming with eye-tracking tools. He died on 28 August 2014 and was cryopreserved. In March 2013, he wrote ‘Bitcoin and me’ on the BitcoinTalk forum, reflecting on his role in the network’s inception. His legacy includes foundational cryptographic concepts and the first external transaction, anchoring Bitcoin’s history to a specific human relationship before it became a global phenomenon.

Key facts

Exercise nine, six, three, one

Fact check

Dates, figures and claims checked against the published sources listed below.

• H. Finney, 'Bitcoin and me (Hal Finney)', BitcoinTalk (March 2013)
• Block 170 transaction data, Bitcoin blockchain
• S. Lerner, 'The Well Deserved Fortune of Satoshi Nakamoto' (2013)
• Nakamoto Institute, Reusable Proofs of Work documentation