Although Potosí was founded in 1545 A.D., Andean natives are thought to have arrived in the region about 20,000 years ago. Centuries later, in 1544, Diego Huallà, an Indian native, accidentally discovered an ore of silver on the mountain known as Sumaj Orcko (a Quechua phrase that means Beautiful Mountain). The mountain was soon renamed Cerro Rico (Rich Point). The discovery of the precious metal led to the establishment of Potosí as a mining town the following April, at the foot of the silver-rich mountain. Since 1547 the city also has been known as Villa Imperial, after the then King of Spain.

Initially the silver mining industry experienced a boom. Much of the refined silver was shipped to Europe, and many native Indians sought work in the mines due. The city soon became one of the greatest silver producers in the world. Potosí’s coat of arms was developed in the late 16th Century and read:
“I am rich Potosí,
Treasure of the World,
The King of all Mountains,
And the envy of all Kings.”
The new-found wealth led to a substantial population increase. In 1547 the number of inhabitants was said to be 14,000. By 1600, the number had risen to 120,000 and increased even more throughout the following two centuries, when the population of Potosí is agreed to have been around 160,000.

After the initial boom, however, productivity began to fall. Viceroy Franscisco de Toleado arrived in Potosí in 1572 and introduced a coercive form of labor to increase productivity in the mines that became known as the mita. Indian men over the age of 18 from surrounding areas were called upon to spend three weeks a year and every sixth year of their lives working in the mines. Ley de la Mita,  which required the men to work in shifts of 12 hours and these miners, who were known as mitayos, would often remain underground without seeing daylight for months at a time. The Viceroy envisaged that once productivity had reached its former levels, the mita would no longer be necessary and Indian laborers would come to the mines voluntarily seeking work. But instead, though silver production did increase, this forced labor system continued for a further two centuries until its abandonment by Simón Bolívar in 1825. During this period, hundreds of thousands of workers died, mainly from disease or fatal mine accidents. Working conditions were so appalling that many miners survived little more than six months on the job. Although figures vary according to the exact number of deaths, it is agreed that the native population of the Andes decreased by 80 percent.
In 1575 the first mint was established to turn the silver into coins. Water reservoirs and churches were built, including the Lagunas del Kari Kari, in order to provide a consistent flow of water to the city.
Potosí became one of the largest and wealthiest cities, not only in Latin America, but in the world. Much of the silver was transported to Spain and used to pay for wars. In spite of economic decline, Spanish authorities ordered that a new mint be built to re-launch silver and avert further economic disasters, like the ones that followed the numerous Spanish wars. In 1773, the building of the second Casa de Moneda was completed.
By the time of independence in 1825, the mines of Cerro Rico were almost exhausted and economic decline was imminent. The population subsequently dropped to below 10,000 and in a struggle for independence, many churches were looted. Since the silver had gone, the 20th Century led to the exploitation of another metal that had recently been discovered in the mines, tin. By 1945, Bolivia produced 48 percent of the world’s tin.
In 1987, Potosí was declared a UNESCO World Heritage Site due to its rich colonial history and interesting architecture. Now, the population is dwindling and the mines are emptier than ever, but the city is a major tourist attraction. Visitors flock to admire the buildings and learn about life in the mines.