Bitcoin is the digital currency that operates outside the control of any person, entity, governments or banking systems. It is secured by a decentralized ledger system called blockchain. Bitcoin and its ledger are secured by proof-of-work (PoW) consensus which is also the "mining" process that introduces new bitcoins into the system.
When you mention about Bitcoin these days, chances are people have heard about it. And whilst some believe in the technology, understand how it works or its purpose, others are still clueless and even think it is a scam.
Bitcoin can be purchased via various cryptocurrency exchanges. Bitcoin has changed the way some people think about financial transactions and global markets and is believed to have the potential to disrupt existing payment systems and maybe even monetary systems.
Bitcoin was introduced in 2008 by the a person (or a group of people) with the pseudonym Satoshi Nakamoto (whose identity is yet to be discovered up until now) as a decentralized currency that do not require any intermediaries or a central bank for that matter. Users can sendor receive Bitcoin through the bitcoin network, a peer-to-peer network in which transactions are recorded on a blockchain and authenticated by nodes. The 9-page long Whitepaper was released on 31st October 2008 entitled, "Bitcoin: A Peer-to-Peer Electronic Cash System."
The Whitepaper described the functionality of the Bitcoin blockchain network and proposed a completely decentralized, trustless system of electronic transactions without the need of a third party to act as an intermediary when making payments.
The Whitepaper indicated the total supply of Bitcoin to be only 21 million and is impossible to manipulate or inflate. It is expected to be completely reached in the year 2140.
Prior to the establishment of Bitcoin network, there were projects that attempted to create online currencies with ledgers secured by encryption but didn't work. Such were eCash by David Chaum and BitGold by Nick Szabo.
The first Genesis Block was mined on 3rd January 2009 by 'Satoshi Nakamoto.' This marked the beginning of the Bitcoin network. The first open source client was released on 9th January 2009 via SourceForge. It was followed by the very first Bitcoin transaction on 12th January 2009 when 'Satoshi Nakamoto.' sent 10 Bitcoins to Hal Finney, the first recipient of BTC and also the first person who downloaded and ran the Bitcoin client after Satoshi published the Whitepaper. Source
The first transaction using Bitcoin to buy physical goods. Two boxes of pizza from Papa John were paid with 10k Bitcoins on 22nd May 2010 by computer programmer, Laszlo Hanyecz and had become part of Bitcoin's history known as the "Bitcoin Pizza Day" in the cryptoverse.
Bitcoin gained popularity among technology enthusiasts and early adopters over the next few years.
Bitcoin payment processor, BitPay was founded in May 2011 to facilitate mobile checkout services for companies wanting to accept bitcoins as a form of payment. Also, WikiLeaks and other organizations began to accept bitcoins for donations in June 2011. (Wikipedia)
The Bitcoin Foundation was launched in September 2012 to "accelerate the global growth of bitcoin through standardization, protection, and promotion of the open source protocol." - (Source)
According to Wiki, Bitpay reported that merchants accepting Bitcoin using its processing service has gone beyond 1k in October of the same year. WordPress also started accepting bitcoins a month later.
Bitcoin's price soared from USD 13.00 to over USD 1,000 in 2013 which made it gain mainstream attention. It attracted media coverage and so as interest from investors and capitalists increased. Bitcoin's price and value fluctuated but kept gaining popularity over the years.
Price of Bitcoin suffered when Mt. Gox, the largest Bitcoin exchange in Japan which operated between 2010 to 2014 went bankrupt and abruptly ceased its operation amidst hacking issues and revelations of its involvement in the loss/theft of hundreds of thousands of Bitcoins, then worth hundreds of millions of US dollars. It was said to be responsible for more than 70% to 80% of Bitcoin transactions at its peak.
The company was started by US programmer Jed McCaleb in 2010 and sold to French developer Mark Karpelés in 2011. Hackers accessed and stole 740,000 Bitcoins from Mt. Gox customers and 100,000 from the company itself.
Number of businesses accepting BTC as payments continued to increase.
On the same year, Bitcoin reached an all-time high of nearly USD 20,000 creating more buzz and continued to gain popularity from investors, speculators, economists and even governments.
Bitcoin led the creation of other cryptocurrencies and has sparked greater interest in blockchaintechnology.
Bitcoin reached an all-time high price of USD 67,566.83 on the 8th of November 2021. (Source)
Bitcoin's price fell down below USD 26,970 in May after Terra-Luna and its sister stablecoin, UST collapsed. On 18 June, Bitcoin's Market Cap dropped below 1 billion US dollars.
As of June 4, 2023, Bitcoin's price is at USD 26k+.
Bitcoin had no price initially then it went to USD 0.09 in 2010 to USD 1.00 on 13th April 2011 then soared 2,960% to USD 29.60 by 7th June June 2011. Source
My research yielded to differing price ATHs but here are some data from Investopedia and Statista which show some relevant information on the Bitcoin price through the years.
2009: 0
2010: USD0.09
2011: USD1.00 to USD29.60
2012: USD123+
2013: USD1,238
2014: USD800+
2015: USD400+
2016: USD900+
2017: USD20,000
2018: USD10,709.39
2019: USD11,972.56
2020: USD29,000
2021: USD68,991
2022: USD37,983.15
Data from Statista & Investopedia
Here's the graphical chart from (Investopedia|Hugo Lin). No copyright infringement intended.
Bitcoin's popularity have attracted different opinions from people, re:
Bitcoin as a store of value
Some people consider Bitcoin as a store of value and it is probably one of the reasons why people invest into it despite the volatility. People who see it this way purchase BTC and just HODL it for long-term. Most DCA into it and just keep accumulating.
Bitcoin as a medium of exchange
Bitcoin is accepted as a form of payment and the number of businesses that accept it as a form of payment is said to have increased over the years. However, the rising transaction fees limits its use as a real medium of exchange.
Certain countries believe in it however, like El Salvador which adopted Bitcoin as a legal tender in 2021.
Bitcoin as an investment
BTC is highly volatile. In fact, it is considered as the most volatile asset amongst its class. The historical prices have proven that it can change in so short a time. Even so, it is still attracting investors' and speculators' interests.
Investing into Bitcoin comes with some risks and they are as follows:
Volatility - Bitcoin's price is very volatile because it is still a young currency and market. Its value can fluctuate significantly in a short period. Add to this the price manipulation by some huge investors and miners.
No backing - Bitcoin is a tradeable asset but is not backed by anything. The value is based on the people who are trading it. Additionally, it is vulnerable to scams and fraud.
Security/Cybertheft - There have been many reported incidents of hacking on personal wallets and exchanges.
Reliance to Technology - The value of Bitcoin is dependent on technology, and any technological failures or security breaches could lead to significant losses.
Uncertain future - How SEC, governments and regulators treat Bitcoin makes its future quite uncertain.
Cryptocurrency regulations vary country to country. There is no standard global framework for regulating it.
In the United States for example, it is attempting to regulate crypto platforms forcing crypto companies to move out to other countries. The Securities and Exchange Commission (SEC) is trying to extend its claws over cryptocurrency exchanges, filing lawsuits and the most recent were filed against Coinbase and Binance US. SEC considers crypto and crypto trading as a type of security.
The People's Bank of China (PBOC) bans crypto exchanges from operating in the country.
In Germany, cryptocurrencies are considered private money and their use is subject to capital gains tax.
In the UK, cryptocurrency is considered property and crypto exchanges must register with the U.K. Financial Conduct Authority (FCA). Crypto derivatives trading is banned in the country as well.
Other countries simply ban Bitcoin and cryptocurrencies. But some countries however support these digital currencies. In the Philippines, some banks even initiated installations of Bitcoin ATM machines in the capital.
Bitcoin was launched as a digital currency that do not need any intermediaries. The currency has gone through various circumstances and had been tested through different unforeseen events but it still has massive supporters. BTC has an interesting history and the identity of the pseudonym Satoshi Nakamoto is still under dispute to this day.
Bitcoin can be seen differently, either as a store of value, as a medium of exchange, as an investment and such.
There are risks associated to Bitcoin, Price volatility being one and is important for people to consider them when investing.
It might be seen as a threat to the monetary systems that some governments are trying to regulate it. However, there is no standard government regulations for Bitcoin and cyprtocurrency. It varies country to country. Whilst some ban these digital currencies, others do not.
For infotainment only. Image sourced as acknowledge. Sources of information indicated above too. 08062023/09:40ph
