This is how I think the Sharingan was first developed. This is completely debatable.

100 years before Madara's birth, there existed the first Uchiha. His name was Sakurhi [combination of Sabourou (three) Kuro (dark) and Hikaru (light)], which means Three Dark Lights( the dark lights represents the fully mature Sharingan's Tomoes), but his birth name was Koji (light). Sakurhi was born to Hyuga parents, and like most, he was born with a Byakugan, but unlike most he was born in the main branch. He had no talent for the Gentle Fist, instead he used Suiton and Raiton (Itachi and Sasuke's secondary elements), this brought him continuous teasing and bullying from the other members of the clan. Because of this he grew very bitter and hateful.

At a sparring match between him and his cousin, his destiny changed forever.

His Cousin said: "You're going to lose, you know you cant use the Byakugan right. Hahahahaha"

Sakurhi said: "Don't underestimate me, I wont have to use the Byakugan to beat you."

Cousin said: "You mean you cant, right? Hahahaha."

That statement drove him into a blind rage, and while his cousin was laughing he ran directly at him to use powerful Raiton at close range, which could kill them both. Sakurhi's father, Senran (guiding light), sensed that his anger got the best of him again. In an instant, his father reached behind him and stopped him from using the Jutsu.

Senran said: "Koji! No matter how angry you get, you cannot go at a comrade with the intent to kill, especially in a sparring match!"

Cousin: "He couldn't kill me if he tried, he doesn't even have a Byakugan!"

Senran: "You idiot. At close range you would never survive his Raiton: False

Darkness, even if you could do the rotation. Now, Koji go to the shrine, your punishment will be to clean it from top to bottom. And as for your opponent, he will be barred from using his Byakugan for a week!"

Later that day at the shrine. "Why should I continue to live in this clan if I cant even use the Byakugan at an average level? I'm only bringing disgrace to my father's name." Boom! "What was that, it came from my house"

He ran at full speed, but what he saw at his house crushed him. He fell to his knees when he saw his father laying motionless in the rubble of his house. " Father! Are you Ok!" He walks over to his father's body and picks up his hand only to realize he is barely alive. With tears running down Sakurhi's face, Senran begins to speak.

Senran: " Your cousin's father, Hideyoshi, developed a new Jutsu, it put this pattern on my forehead, it is a curse mark, they used it to weaken me and then he attacked. Flee my son, the think you are at the shrine. He intends to become the new Main Branch, he will come after you if you don't flee."

With those final words Senran slips into death.

Sakurhi: "This clan killed my father, I no longer belong to this it. As of this moment, my name is no longer Koji Hyuga, it is now Sakurhi Uchiha! Hahahaha! I will create my own clan! Hahaha!" With that he leaves, forever.

Seven years passed since that day. Sakurhi, now 20 years old, is the leader of a band of thieves, known as Kuroi Kasai (Black Fire). It consisted of many rogues, only one however was a Shinobi, Sakurhi himself. They were feared in the Land of Earth (Sakurhi left the Land of Fire, honoring his father's last wishes), because when they robbed a village, they usually burned it down as well.

Member: "Sakurhi, why are we robbing this village, it has five shinobi, and you're the only shinobi in our clan."

Sakurhi: "Leave the thinking to me."

Member: "That's fine with me, as long as I get to kill and get money, heheheheh."

Sakurhi: "You're bloodlust and greed never ceases to amaze me."

In the silent moonlight Sakurhi's clan invade the village. He sends them in alone and stands on a hill and watches. The five shinobi prove to be too much for them. They are completely wiped out in ten minutes. Sakurhi rushes into the village and easily kills the five shinobi.

Member: "Sakurhi, you came too late. I'm the only survivor. All forty-four men are dead"

Sakurhi: "Well I will have to do some thing about that, now wont I? Hahahaha." Sakurhi pushes his sword into his fallen comrade.

Member: "Why? Why are you doing this?"

Sakurhi: "I chose this village because three hundred people live here, there are forty-five members in Kuroi Kasai, plus the five ninjas. It adds up to three hundred and fifty deaths. Anywhere enough hatred gathers the Kyuubi will go, the most powerful hatred is someone being killed by another."

As he speaks a huge and foul chakra appears, the chakra of the Kyuubi.

Kyuubi: "You're the only survivor? I will kill you for not leaving anyone for me to kill."

Sakurhi: "I did not call you here to kill me, I brought you here to help me claim revenge."

Kyuubi: "Why should I help you?"

Sakurhi: "I will kill many in your name. I will kill my former clan, every last one of them." He and the demon mad an agreement. The Kyuubi used its massive hands to pick him up.

Kyuubi: "I will give you power. You have killed over two thousand people, you're hatred is almost equal to mine. Your chakra will bond completely with mine." Sakurhi's Byakugan begins to crack, as three tomes appear in his eyes.

His white eyes become black.

Sakurhi: "Now my true clan will be born, the Uchiha Clan!"

Kyuubi: "This was amusing, but my chakra will consume you and you will die in three months."

Sakurhi: "That is enough time." The Kyuubi disappears.

Sakurhi journeys back to the land of fire, where he meets his wife, Harumi (distant beauty) {Aimi (beauty) Haruka (far off)}. He gathers the most powerful shinobi and passes on the evil chakra he received (combination of the Kyuubi's and his chakra) unto them. Before he died he created a scroll with the most powerful moves the Sharingan could use, however he forbade anyone from learning those techniques, so no one except the leader was able to see the scroll. The leader, after he died, was his wife and then his son and it continued in that order. His revenge on the Hyuga clan was not by battle, instead his clan took revenge by becoming the most powerful clan in the Fire Country, with the most powerful Kekkai Genkai.