The history of Bitcoin started in 2008 to its peak price in 2021; it has taken the world for quite a ride. In over a decade, the first cryptocurrency has spiked and crashed repeatedly.
Bitcoin is a decentralized peer-to-peer electronic platform. This definition means that people can send money to one another without a bank or third party as an intermediary.
Bitcoin was created to end centralized control. From companies to governments or financial institutions down to conducting financial transactions.
This system has helped people carry out transactions without network glitches or bias from central entities. The Bitcoin blockchain relies on a proof-of-work method for tracking and verifying transactions.
Today, Bitcoin is the world’s most popular cryptocurrency, and there are theories that it could one day replace fiat currencies.
The history of Bitcoin and its growth has given birth to a passionate community excited about cryptocurrency, the opportunities it has presented for investors’ businesses, and what it has in store for the future. Bitcoin has also inspired the development of thousands of other cryptocurrencies.
In this article, we will be looking at:
- The History of Bitcoin
- Bitcoin Price History
- Bitcoin and Blockchain Technology
- Bitcoin Today
History and Evolution of Bitcoin
Initially, Bitcoin was created in 2008 as distrust of banks and their role in the financial system grew.
An individual or a group named Satoshi Nakamoto issued a white paper. This whitepaper addresses the centralized control of money and the trust required in handling citizens’ cash.
Third parties can reverse or meddle with transactions in the traditional financial system. This meddling causes transaction costs to add up.
At first, Bitcoin was presented as a way to transact without the interference of a third party. Instead, the Bitcoin system uses cryptographic proofs to maintain the integrity and security of the network.
Thus, eliminating the need to rely on a third party like banks and other centralized institutions.
The blockchain was launched on January 3, 2009, when the first block, known as the genesis block, was mined. The first test transaction occurred about a week later.
At this point, Bitcoin had no real monetary value. This statement was according to Mark Grabowski, an associate professor at Adelphi University and the author of “Cryptocurrencies: A Primer on Digital Money,”.
Miners, who use powerful computers to solve complex math problems to discover new Bitcoins and ensure that previous Bitcoin transactions are legitimate and accurate, would trade Bitcoin for fun.
On May 22, 2010, a Florida man negotiated to have two Papa John’s pizzas, valued at $25, delivered for 10,000 BTC. According to Grabowski, “that transaction established the initial real-world value of Bitcoin at 4 Bitcoins per penny.”
In today’s world, that amount of Bitcoin is worth nearly $400 million. To commemorate this moment, crypto enthusiasts and supporters have designated May 22 as Pizza Day.
In the early days, at internet forums, investors negotiated the first Bitcoin transactions with people bartering for goods and services in exchange for Bitcoin.
Garrette Furo, a partner at Wilshire Phoenix, a New York-based investment management firm, reported this report. “Bitcoin’s initial value was arbitrary.”
Furo claims that in 2011, miners and developers began to build other networks, such as Ethereum and Litecoin and began to improve the code behind Bitcoin’s blockchain, reconstructing it for different uses.
“This broader base of applications attracted more people, which contributed to the increase in Bitcoin’s perceived value,” he says.
There was also an increase in the use of Bitcoin after certain businesses began accepting the asset alongside traditional currency.
After it was made available on exchanges in 2010, Bitcoin became easier to buy, sell, trade, and store. Thanks to these exchanges, Bitcoin now has a reliable price against the US dollar.
Bitcoin Price History and evolution
Bitcoin has indeed shown a track record of being volatile. As an emerging asset class, Bitcoin carries much speculation, with the basis for its value debated. Despite the price fluctuations, Bitcoin’s price has exploded since its market in 2009.
“The history of bitcoin is one of astronomical growth punctuated by a few severe price retrenchments,” Peter C. Earle, economist and research fellow at the American Institute for Economic Research.
In February 2011, Bitcoin’s price crossed the $1 threshold. For its first few years, as it grew, its price was under $2, says Kris Marszalek, CEO of Crypto.com. “In June 2011, it hit its first bubble, rocketing to around $31 before sinking back down to the single-digit range.”
Almost two years later, in April 2013, Bitcoin reached $200. By the end of November of the same year, it was worth more than $1,000.
It rose again to $10,000 in November 2017 and up to its most significant price of nearly $68,990 in November 2021. I don’t know about you, but that’s one hell of a ride.
In 2017, Bitcoin was in a bubble, with investors paying a premium to own Bitcoin. A boom led to the 2017-2018 initial coin offerings (ICOs) bubble. Some market veterans compare the Bitcoin bubble to the internet boom at the end of the 20th century.
“Everyone from your next-door neighbor to the wealthiest hedge fund managers was talking about Bitcoin or some altcoin, new network or protocol,” Furo says. “The ICO craze brought in billions of dollars into the crypto space. Investors saw the value of coins fall dramatically in the early months of 2018 as prices crashed amid uncertainty, fraud, and a lack of belief, among other psychological and technical factors.”
After the fall of Bitcoin’s value, what you call a “more mature market” arose around the cryptocurrency. “Fidelity entered the custodian space, (and) it gave national banks the permission to take custody of digital assets,” Furo says.
“Because of these developments, the market for Bitcoin has become mature,” he says. “Smart and efficient exchanges exist, and core institutional-grade players are adopting the necessary measures to create a sustainable and viable market for the trading and investing of Bitcoin and other cryptocurrencies.”
Bitcoin and Blockchain Technology
The Bitcoin concept gave rise to blockchain technology and many other cryptocurrencies. Blockchain technology underpins Bitcoin and other cryptocurrencies. In essence, this means that cryptocurrencies will not exist without blockchain technology.
“Blockchain” is a secure distributed ledger technology that stores data in a shared database. It uses Encryption methods are used to secure data within the blockchain.
When a transaction occurs on the blockchain, information from the previous block is copied to a new block. The latest data is now encrypted and verified by network miners.
The Bitcoin blockchain network’s miners all attempt to verify the same transaction simultaneously.
The mining software and hardware work together to solve the nonce. A nonce is a four-byte number in the block header that miners attempt to solve.
A miner hashes or regenerates the block header until it meets a target number specified by the blockchain. The block header is “solved,” and a new block is created for more encrypted and verified transactions.
When a transaction is verified, a new block is created. Bitcoin is made from it and given to miners who verify the data within the block as a reward.
This transaction data is encrypted into a 256-bit hexadecimal number and stored in a block. That number contains all the transaction data and information associated with the previous block.
Today, 1 Bitcoin is worth about $20,000.
This price is far from its all-time high but higher than its post-peak bottom in 2018, which was about $3,000. Bitcoin has made way for other cryptocurrencies to rise as well.
These currencies include ETH, with an all-time high of $4,878 and a current price of $1,085. Also, there’s BNB with an all-time high of $690 and a current price of $228 and the likes of them.
All these occurrences in price devaluation are due to the market’s volatility.
So what is in store for Bitcoin’s future?
No one can tell, considering the mystery behind Bitcoin and its creator, Satoshi Nakamoto.
But Furo sees it as a bright and exciting place. “Investment vehicles that are innovative, cost-effective and transparent are nearing reality. These investments will help make investing in cryptocurrency even more accessible,”
This access would rival that of traditional markets.
Whatever you do, remember that no investment, especially a frontier investment, is without risk.
If there is one lesson you can learn from Bitcoin’s history, it is that what goes up can also come down, and it can come down.