Happy Birthday Bitcoin!
2019 is a big year for celebrating! Apart from our own 10-year anniversary, this month Bitcoin turned ten years old! In celebration we’re going back and looking at Bitcoin’s evolution over the last decade and its rapid explosion into becoming the flagship for hundreds of other digital currencies.
All the way back in 2008, as the collapse of the Lehman Brothers plunged the global economy into recession, the pathway to a new, alternative currency was being paved. Satoshi Nakamoto, whose identity still remains elusive, registered the bitcoin.org domain with Martti Malmi, before releasing his original Bitcoin paper and registering the Bitcoin Project at sourceforge.net, an open-source software platform.
The paper stated that Bitcoin’s original goal was to be a ‘purely peer-to-peer version of electronic cash, allowing payments to be sent from one party to another without any need for a financial institution” — paving the way towards a truly decentralized currency market. Designed to rely on ‘distributed ledgers’, the virtual currency is transferred through the Bitcoin network, with all transactions recorded in an ongoing chain that can’t be altered — now widely known as blockchain!
On January 3, 2009 at 18:15:05 the Genesis Block, which is the first block of a blockchain, was established, following the mining of the first 50 Bitcoins! Just one week later the first ever Bitcoin transaction went ahead, where Satoshi sent 10 BTC to a software developer called Hal Finney.
As the year progressed, ‘dwdollar’, the first cryptocurrency exchange, burst into existence. Just a few months later the globe’s first real Bitcoin transaction took place, where a programmer in Florida paid 10,000 Bitcoins for 2 pizzas… At the time the pizzas cost around $25. Now however, those same Pizzas would cost an earth-shattering $63 million dollars! We hope he at least got some extra cheese…
2010 heralded the first few Bitcoin currency exchanges being born, with Bitcoin Market popping up in February, followed by Mt. Gox in July. It wasn’t all plain sailing for Bitcoin though, as a vulnerability in the Bitcoin protocol was spotted and exploited, generating 184 BTC! However, the transaction was soon erased and, by November, Bitcoin’s market cap surpassed $1 million for the first time.
Along came 2011, where Bitcoin’s popularity just continued to grow, reaching parity with the US dollar, and getting its own Conference and World Expo in New York! It was at this point, however, that Satoshi emailed a fellow developer to explain that he (or she) would be ‘moving on to other things’. Some estimate that Satoshi walked with around 1 million BTC… Valued today at around $6.2 billion!
However, one of Bitcoin’s first successes was its use after the establishment of Silk Road. Created as an online black market, and the first modern darknet market, Silk Road facilitated users to be able to order drugs and other prohibited items delivered directly to their door, paid with Bitcoin. With almost anonymous transactions possible, the cryptocurrency really began to grab the public’s attention.
Five years after Bitcoin was first created, the first Bitcoin Halving Day was observed on November 28, 2012. A halving day is where a 50% reduction in block rewards comes about. So, as more and more Bitcoins are mined, the reward for mining becomes smaller and smaller as more Bitcoins come into circulation. In 2012, block 210,000 had a block reward of 25 BTC, with the next halving in 2016 seeing the block reward decrease to 12.5 BTC at block 420,000.
As 2013 came along, positive and negative developments in the Bitcoin blockchain came about. That March, Bitcoin stumbled into a technical crisis where Version 0.7 and 0.8 diverged from each other because of a bug in the system, causing the chain to break into two, or ‘fork’. Luckily, thanks to the quick thinking of the developers, crisis was averted, and later in the year its total market cap smashed through the $1 billion mark. As Bitcoin’s price passed the $1,000 value mark, mining difficulty passed 1 billlion towards the end of the year.
At around the same time, public perception began to shift, with the University of Nicosia (based in Cyprus) becoming the world’s first university to accept Bitcoin payments for tuition! It was also at this time that a trader, intoxicated and stressed from trading, announced that he was ‘hodling’. The typo was then written in stone, becoming a firm addition to cryptocurrency terminology.
From 2014 to 2016, Bitcoin’s meteoric rise to fame took a mini sabbatical, with its value hanging around the $1,000 point. It wasn’t a couple of years of nothing however, with the University of Nicosia launching the world’s first Master’s degree in Digital Currency, mining becoming increasingly difficult and passing 35 billion, and the state of New York releasing ‘BitLicense’, which outlined the rules Blockchain startups should follow!
2016 even saw someone fraudulently claiming to be Satoshi Nakamoto and Bitfinex (the largest Bitcoin exchange at the time) loosing 119,756 Bitcoins to hackers!
2017, though, was the year that Bitcoin blew up. At the start of the year, its value finally smashed through the $1,000 and just kept on going, hitting $3,000 by June of the same year! But, let’s take off the rose-tinted glasses for a moment to look at some of the pitfalls with the Bitcoin Network around that time…
More miners meant higher fees and more time processing transactions. In response, a fork in the network was created and Bitcoin Cash (BTC) came about, which now stands as the 5th largest cryptocurrency by market cap!
Bitcoin’s price just kept on climbing though. Hitting $6,000 in October, reaching $10,000 by November and peaking at a whopping $19,783 in December. The graph below gives a startling visual of Bitcoin’s price fluctuation.
Following such a record-breaking year, Bitcoin’s ability to maintain its astronomical growth began to wane. As 2018 ticked by, many Bitcoin users started selling their Bitcoins, causing a steady decline in value, with current market price at an underwhelming $3,633. Other factors through the year also had a detrimental effect on Bitcoin’s price, with the Bithumb Exchange hacking scandal back in June sending the price of Bitcoin and those of other altcoins tumbling down. Hackers seized $31 million from online vaults for the second time in a year, slaughtering public opinion on the safety of using cryptocurrencies overall.
With normal fiat currencies, traders are able to look at economic factors to speculate about price movements. However, cryptocurrencies aren’t afforded that luxury, with price being dependent on less measurable factors like public opinion, technological progress and adoption in society. So, we ask, how will the cryptocurrency landscape change in the coming year? Will 2019 be the year that the crypto bubble really pops? Or are cryptos headed for the sky? Only time will tell.
While you’re celebrating Bitcoin’s anniversary, check out the FXPRIMUS 10-year anniversary! Celebrating a decade of performance, persistence & perfection.
