The story of the pencil began with a lightning strike. Graphite, the main material used to produce pencils, was discovered in 1564 in Borrowdale, England, when lightning struck a local tree during a thunderstorm. Local people found that the black substance at the roots of the damaged tree was different from the ash of burnt wood. It was soft and therefore left marks everywhere. Chemistry was barely out of its infancy at the time, so people mistook it for lead, which was equally black but much heavier. It was soon put to use by local people to mark their sheep for ownership and calculation.

Britain proved to be a major country where graphite mines could be found and developed. Even so, the first pencil was invented elsewhere. As graphite is soft, it requires some form of encasement. In Italy, graphite sticks were initially wrapped in string or sheepskin for stability, becoming perhaps the very first pencil in the world. Later in the sixteenth century, an Italian couple made what were probably the first blueprints for the modern wood-encased carpentry pencil. Their version was a flat, oval and more compact type of pencil. Their concept involved hollowing out a stick of juniper wood. Shortly afterwards, in 1662, a superior technique was developed in Germany: two wooden halves were carved, a graphite stick was inserted, and the halves were then glued together—essentially the same method that is used to this day. News of the usefulness of these early pencils spread far and wide, attracting the attention of artists throughout the known world.

Although the graphite core in pencils is still referred to as lead, modern pencils do not contain lead, because the ‘lead’ of a pencil is actually a mixture of finely ground graphite and clay powders. This mixture is important because the amount of clay added to the graphite determines the intended hardness of the pencil, while the amount of time spent grinding the mixture determines the quality of the lead. The more clay that is added, the harder the pencil core becomes. Many pencils across the world, and almost all those in Europe, are graded according to the European system. This system uses B for black and H for hard. A pencil's grade is described by a sequence of successive Hs or Bs, such as BB and BBB for increasingly softer leads, and HH and HHH for increasingly harder ones. The standard writing pencil is graded HB.

In England, pencils continue to be made from whole sawn graphite. With the mass production of pencils, however, they became increasingly popular in many countries with each passing decade. As demand rose, the demand for graphite also soared.

According to the United States Geological Survey, world production of natural graphite in 2012 was 1,100,000 tonnes, with the major producers including China, India, Brazil, North Korea and Canada. In marked contrast to its use in pencils, graphite was also widely used for military purposes. During the reign of Elizabeth I, Borrowdale graphite was used as a refractory material to line moulds for cannonballs, resulting in rounder and smoother balls that could be fired farther and thereby contributing to the strength of the English navy. This particular deposit of graphite was extremely pure and soft and could easily be broken into sticks. Because of its military importance, this unique mine and its production were strictly controlled by the Crown.

The claim that the United States avoided pencils in space until it had spent $1,000 developing a zero-gravity writing instrument is fictional. Russian cosmonauts initially used grease pencils, which did not suffer from broken graphite tips. American astronauts also used pencils in space before a reliable pressurised space pen became available. They preferred mechanical pencils because these produced finer and clearer lines than the smudgy lines left by grease pencils. However, the graphite tips of mechanical pencils frequently broke. A broken piece of graphite floating inside a spacecraft could enter someone's eye or find its way into machinery or electronic equipment, causing an electrical short or other problems. Although a pressurised space pen was eventually developed, American astronauts continued to use mechanical pencils for many years.

Against the backdrop of an increasingly digital world, the future of pencils may seem bleak. In reality, however, pencils remain widely used in classrooms, meeting rooms and art studios. Many different users are likely to continue using them: students for mathematical work, artists for sketching, restaurant staff for recording orders, make-up professionals for applying cosmetics, and architects for producing blueprints. The possibilities seem limitless.