The Rise and Rise of Bitcoin
Rise of Bitcoin – Bitcoin has come a long way since its inception in 2009. Satoshi Nakamoto mined the genesis block of Bitcoin and initial blocks on the network – this is how we know how many Bitcoins he owns in the wallet that collected the mining rewards from those initial blocks. It is estimated that he owns about 1 million Bitcoins, worth over $7.4 billion USD today, however no one knows if he intends to spend those billions or if he is still alive with access to his private keys.
The very first known Bitcoin exchange rate was 1 309BTC for 1USD – If you had bought 1USD worth of Bitcoins then – they would be worth over $9million today.
The first authenticated Bitcoin transaction is said to be the purchase of two Pizzas for 10 000 BTC, values at $25 at the time of the transaction – today those Pizzas would be worth $74 million. Of course at the time no one expected Bitcoin to become what it is today, it was relatively unknown and exchange rates were decided in online chat forums. The software used to mine and store the coins was not user friendly to the average person – you had to know your way around computers to even understand how it worked, early adopters were typically gamers, developers, cryptographers and people with IT backgrounds.
Despite all of this, there were indications and signs that Bitcoin was going to be great. The most significant reason was the limited supply of Bitcoins. As demand increased for this coin, the price would have to rise because the supply was limited.
MtGox was the first Bitcoin exchange that opened in July of 2010 with a value of $0.07 per Bitcoin. Other exchanges followed but MtGox remained the biggest exchange for three years until they suddenly shut-down and reported that they had been hacked and 850 000 Bitcoins were stolen (another reason why one should never store their Bitcoins in an exchange – get a hardware wallet). Many other Bitcoins exchanges were hacked in the early days, including Bitstamp.
But Bitcoin continued to increase in popularity – various Chinese and European exchanges opened doors and the mainstream media and banking industry started to speculate about Bitcoin. Bitcoin was mocked, it was not taken seriously – how could a digital coin that exists only on the internet take over global finance to become the preferred method of exchange?
Bitcoin was called a bubble and governments warned its citizens against Bitcoin, it became the preferred currency for criminals and individuals that wanted to hide their wealth. The infamous Silk Road website traded anything and everything for Bitcoins.
China rose to became the biggest Bitcoin market – Bitcoin mining became harder and new hardware was produced in China specifically designed to mine Bitcoin. The Chinese government issued a ban (or a couple of bans) for Bitcoin which saw prices plummet and stay down for months.
But Bitcoin remained resilient – It offers convenience, simplification of transactions and usability to its users. People want to use Bitcoins, it is the people that give Bitcoin value. I can transfer Bitcoins to anyone, anywhere in the world in 10minutes, try sending cash through the bank to someone in China, Europe or North Korea – it is like comparing email to traditional post. So of course, Bitcoin kept rising and rising. Every time the price of Bitcoin hit a new All Time High (ATH) – the headlines would be a mixed message of “Bitcoin is a fraud” and “Bitcoin the new digital Gold”.
There is excitement and there is suspicion. One of the biggest Bitcoin critic – “you know who” called Bitcoin a Fraud and his main reasoning was that governments would shut-it-down before it became too big. I think he totally missed the point – it is not the governments that will decide, ultimately it will be the people. The people will decide, because people make governments and governments are made of people. People might resist change at first, but logic and reason always prevail and Bitcoin is here to stay for a long time – brushing off all the negativity and hiking on. This month alone we have heard announcement after announcement of mainstream investment companies applying for and starting Bitcoin trading products.
Predictions are that Bitcoins will rise to $100 000 per coin in a couple of years, maybe even $500 000 in 2020 – who knows?