Bitcoin Breakthroughs
Boom To Bust… and Back Again?
Bitcoin is undoubtedly one of the most interesting currencies in the market today. Ever since Satoshi Nakamoto — the alias for the real founder or founders — developed the first blockchain database in 2009, a plethora of opportunities have since emerged in the world of finance. From the creation of Bitcoin to the emergence of the thousands of altcoins, cryptocurrency has built itself around the performance and technology of Bitcoin. Here’s what Bitcoin has gone through over the last ten years from boom to bust and everything in between!
In this article
- Birth of Bitcoin (2007–2010)
a) Dawn of Bitcoin
b) Bitcoin Is Born
c) The First Real World Bitcoin Transaction - The early years (2010–2013)
a) Mt. Gox Currency Exchange Market Established
b) Silk Road Pirates Emerge
c) Bitcoin Passes Major Currencies - Tweens & young adulthood (2013–2014)
a) Bitcoin Market Cap Exceeds $1 Billion
b) Bitcoin Ruled As A Currency
c) Mt. Gox Breach - All grown up (2015–2017)
a) China Bans Bitcoin
b) Barclays Becomes First Major Bank To Accept BTC
c) Faster Than All Supercomputers… Combined!
d) Bitcoin Hits ATH - Midlife crisis? (2018)
a) Bitcoin Regulations Emerge
b) Crypto Winter - Conclusion
Birth of Bitcoin (2007–2010)
Dawn of Bitcoin
Bitcoin wasn’t the first idea for a potential cryptocurrency and was preceded and influenced by several projects like ecash, B-money, and Bit Gold.
To get a good idea of how far Bitcoin has come, you should be familiar with what this space looked like before it even existed. A form of digital currency called ecash was developed in 1982 but was never fully adopted, still serving as a crucial component for future creations such as hashcash. One of the earliest predecessors of today’s most popular cryptocurrency Bitcoin is B-money. This was created in 1998 by computer scientist Wei Dei and aimed to serve as an “anonymous, distributed electronic cash system.” However, B-money never actually launched and remained an equivalent to today’s white paper, but was instrumental in Bitcoin’s development and creation. Bit Gold was another early idea for digital money proposed by Nick Szabo. Although first speaking about Bit Gold in 1998, Szabo fully described the system in 2005 on his blog. Although Bit Gold never completely emerged in the digital money space, Bitcoin’s pseudonymous creator attributed his creation to “Wei Dai’s b-money proposal […] on Cypherpunks […] in 1998 and Nick Szabo’s Bitgold proposal,” back in 2010.
Bitcoin Is Born
Although the concept of Bitcoin dates back to 2007, it wasn’t until 2009 that the first Bitcoin transaction took place. In fact, it all started when the domain name www.bitcoin.org was registered in 2008. Later that year, a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” was published by pseudonymous Satoshi Nakamoto, detailing what would become Bitcoin’s underlying blockchain technology. Finally, in January of 2009, the Bitcoin network was born once the Genesis Block of Bitcoin was mined into existence. Since then, Bitcoin has gone through many evolutions and changes to get to its present stage.
The “birth” of Bitcoin was actually quite long. It started with the inception of the website to eventually executing the mining of the all-important Genesis Block of Bitcoin. Through all of these progressions, the network finally went live in 2009.
The FIrst Real World Bitcoin Transaction
As Bitcoin underwent major changes and progressions in the following years to grow into a usable cryptocurrency, it wasn’t until 2010 that Bitcoin was actually used to make a real-world purchase. In this case, a programmer from Florida named Laszlo Hanyecz offered to purchase one pizza for 10,000 BTC! At the time of the purchase, the 10,000 BTC was worth close to $25, but imagine how much more money he would have made if he’d kept that! That’s a pretty expensive pizza.
If you think you’ve ever overpaid for food, have you ever thought about purchasing a whole pizza for 10,000 BTC? Well, that’s exactly what programmer Laszlo Hanyecz did to record the first ever real-world transaction using Bitcoin, famously known as being the world’s most expensive pizza.
The early years (2010–2013)
Mt. Gox Currency Exchange Market Established
On the 17th of July in 2010, what would become one of the biggest Bitcoin exchanges in the world was created. The MtGox Bitcoin currency exchange market was first established by Jeb McCaleb as a way for enthusiasts of the popular card game “Magic: The Gathering” to trade cards online. However, it was later transferred to Mark Karpeles and at its peak handled 80% of the world’s Bitcoin trading volume. In November of that year, the Bitcoin market cap exceeded $1 million for the first time in its existence, increasing in popularity as trading volumes were off the charts.
The MtGox Bitcoin exchange was first developed as a card trading platform, but would soon become the largest Bitcoin exchange at its height.
Silk Road Pirates Emerge
In February of 2011, a new Bitcoin marketplace called the Silk Road emerged. However, this wasn’t just your average cryptocurrency marketplace, as it turned out to be the first modern darknet marketplace famously known for drug exchanges. Additionally, these purchases could only be made using Bitcoin, once again inciting fear amongst many people who now saw Bitcoin as a tool for pirates to go through with illegal activities online. It wasn’t long until the FBI finally seized and shut down the website in 2013.
The Silk Road was the first instance of an illegal marketplace that solely utilized Bitcoin. Many critics saw this as an opportunity to spread FUD over Bitcoin’s potential as a tool for illegal activities.
Bitcoin Passes Major Currencies
As 2011 rolled in following Bitcoin’s vast development in 2010, Bitcoin’s value finally hit trading parity with the U.S. Dollar in February of that year, exchanging at 1 USD/BTC on Mt. Gox. As the hype around Bitcoin substantially increased following this feat, it eventually hit par with other major currencies like the Euro and British Pound just a few months later. At this point, Bitcoin prices experienced its biggest spikes and eventually saw the Bitcoin money stock pass $10 million in value.
On June 12th of that same year, Bitcoin reached its all-time high (at the time) of $31.91 but quickly fell back down to close to $10 in a matter of days, receiving the title as the Great Bubble of 2011.
Bitcoin’s value reaching parity with that of many other major currencies was a huge milestone in its development. This really opened the floodgates for Bitcoin’s eventual meteoric growth years after.
Tweens & young adulthood (2013–2014)
Bitcoin Market Cap Exceeds $1 Billion
By late March of 2013, Bitcoin’s market cap had finally surpassed $1 billion. The value of Bitcoin was nearing $92 per coin when it finally hit this milestone, representing a meteoric yet problematic growth for Bitcoin during the first half of 2013.
Despite all the negative news that was seemingly destroying Bitcoin, ample time healed all wounds and allowed Bitcoin to start its rapid growth into a widely used asset around the world. Eventually, its market cap surpassed $1 billion and caught the attention of many people. The second half of 2013 saw an unprecedented surge in Bitcoin’s price, quickly soaring from $150 to $1000. Analysts attributed this spike in price mainly to a couple fraudulent trading bots which drove the price up to $1,124.76, a value it wouldn’t hit again until 2017. Irrespective of how the price was driven up, 2013 proved to be an important year for BTC as it was the first time that most people outside a limited circle gained exposure and awareness to its platform.
Bitcoin Ruled A Currency
In August of 2013, a Texas judge ruled that Bitcoin is a currency or form of money. The landmark ruling allowed US regulators to sue a suspected fraudster Trendon Shavers of BTCST, who was accused of misleading investors in a Bitcoin-based ponzi scheme product he was selling.
Even small decisions made in smaller courts sent ripples across the crypto world. This was a monumental decision at the time, legitimizing Bitcoin in the eyes of many critics.
Mt. Gox Breach
Such high trading volumes made MtGox a target for hackers, resulting in one of the largest Bitcoin hacks in history in 2014. Over $460 million worth of Bitcoin was stolen from the exchange, causing the company to go into bankruptcy and significantly dropping the price of Bitcoin. For many, this absolute collapse created fear and doubt as to whether a digital currency like Bitcoin could truly serve as a viable investment.
All good things must eventually come to an end, which is exactly what happened to the MtGox Exchange following the largest Bitcoin heist in history. So much money was stolen that it forced the exchange to shut down, temporarily dropping the price of Bitcoin.
All grown up (2015–2017)
China Bans Bitcoin
The People’s Bank of China (PBOC) and four other financial regulators issued a joint notice outlining the risks associated with Bitcoin, stating that it’s not a currency and prohibiting banks and other financial institutes from trading in it. At the same time, the government acknowledged the cryptocurrency as a “commodity traded online” and allows the public to buy and sell it as they please at their own risk. However, this action didn’t go unnoticed in the Bitcoin market. Bitcoin’s price dropped over 20% as a result of this, dipping under $1000 but recovered once the market settled
Just when the world thought Bitcoin was going to gain legitimacy through pretty much every large country, China essentially banned Bitcoin. This hurt Bitcoin’s price temporarily, but it was able to jump back up after the market settled.
Barclays Becomes First Major Bank to Accept BTC
In what was one of the most promising milestones for Bitcoin, Barclays decided to begin accepting Bitcoin as payments for charity initiatives in 2015. Although this was a relatively small feature on the mobile app, it was a monumental first step towards financial inclusion among large institutions across the world. Despite critics’ outcries that Bitcoin was a tool for illicit activities, Barclays still took the first step in legitimizing Bitcoin.
During a time when anyone who was anyone stayed away from Bitcoin, Barclay’s took a small but rewarding risk by becoming the first major bank to accept BTC.
Faster Than All Supercomputers… Combined!
By the beginning of 2016, Bitcoin’s network was extraordinarily fast, a network which programmers had not seen the likes of ever. Bitcoin’s network exceeded 1 exahash per second, making it 300,000 times faster than the world’s fastest supercomputer and 43 thousand times faster than every supercomputer on the Top500 list combined! Finally, Bitcoin was making strides and heading towards its peak.
At this point in time, people’s opinions about Bitcoin were all over the place. Through all of this, Bitcoin’s network had advanced so much that it literally became one of the fastest systems ever seen.
Bitcoin Hits All Time High
As 2017 progressed, we witnessed Bitcoin’s meteoric rise to hit its all time high value of just under $20,000 in what seemed like a matter of weeks. But just as quickly as its price spiked, it fell even quicker leaving tons of investors who fell into FOMO with large losses. It’s important to be aware of the fact that Bitcoin’s price was growing incredibly fast even before the extremely popular spike which happened by the end of the year. By June 4th of 2017, the price of BTC had more than doubled and was sitting at $2500. 2017 saw a truly unprecedented growth of Bitcoin’s value, but nobody was prepared for what the rest of the year had in store.
The rapid increase in price that everyone speaks about took place at the end of 2017, when Bitcoin’s value climbed to just under $20,000. Since then, we haven’t witnessed prices even close to the all time high.
Midlife crisis? (2018)
Bitcoin Regulations Emerge
Bitcoin regulations differ widely all around the world, which has led to unsustainable regulation policies in the industry. As such, it’s been famously said that at any given moment we are just one favorable regulatory decision away from seeing Bitcoin’s price surge. This year alone, we’ve witnessed numerous countries place stricter regulations on the legality of Bitcoin as well as ICOs. Check out how countries across the world regulate Bitcoin and other cryptocurrencies as well as the many new regulations that have been introduced this year.
Regulators have been working to set clear rules as to the legality of Bitcoin across the world. Many blame this year’s regulatory uncertainty for Bitcoin’s low prices.
Bitcoin & Crypto Winter
Following the excitement and promise which led Bitcoin through 2017 and recent years, 2018 has been quite disappointing up to this point. Despite what John McAfee and other financial leaders across all industries have predicted about where Bitcoin will end up after 2018, the price of Bitcoin has only been decreasing since the year began. In fact, the entire cryptocurrency world just witnessed the largest market retracement and correction in years, leaving Bitcoin trading at a yearly low of $5,833 — a price that hasn’t been touched since October of 2017.
Since reaching a yearly high of $17,135 on January 6th of this year, the price of Bitcoin has only decreased by large amounts. Although there have been several spikes bringing the trading price close to $12,000, Bitcoin’s price has been moving below $10,000 for the majority of the year. Looking at the rest of what this year has lined up for Bitcoin, it’ll be interesting to see if the recent market correction will allow for the top cryptocurrency to make significant movements back to, or even close to, it’s ATH.
This year, we are in what is being referred to by many as a “Crypto Winter” where prices won’t move close to their all time highs for a while. In this bear market, short traders aim to make money by capitalizing on temporary spikes while those who aim to HODL are still waiting.
Conclusion
Bitcoin has come a very long way since its network went live back in 2009. With a few predecessors to Bitcoin that never really solidified into a usable asset, Bitcoin has proven many critics wrong by standing the test of time and getting to its current point. However, are we seeing this bubble finally pop or is it just going through another rough patch? Look at this way: if Bitcoin has been able to survive every seemingly catastrophic meltdown in its history, why should it come to an end now? Bitcoin — and all cryptocurrency for that matter — is still extremely young in terms of its overall growth, and while new regulations are continuously being introduced, let’s see what Bitcoin has in store for us as the year goes on.
When did you finally buy in to Bitcoin or altcoins?
Let us know when & why in the comments!
