When people speak of cryptocurrency, the first word that comes to mind is Bitcoin. Even though there are over a hundred other cryptocurrencies, the uppermost in our minds is Bitcoin. It’s not surprising since Bitcoin was the pioneer of all cryptocurrencies. So how did this revolution we call Bitcoin all start?
What is Bitcoin
Before we look at the history, let’s look at Bitcoin in simple terms, it’s a way for people to send each other funds without going through the traditional banking system. No intermediary facilitates payments in this exchange of funds. That was the main purpose of Bitcoin, for people to send money to one another without any third party’s involvement.
All this works because of the Bitcoin blockchain. This technology allows users to remain anonymous and not have to upload personal data. This technology also makes it difficult for hackers to access users’ Bitcoin.
How it started
Bitcoin was created in 2008 amid the Great Recession people were losing trust in the banks and the financial system as people were losing their pension funds, life savings, and even houses. Satoshi Nakamoto issued the first white paper to address the need for a decentralised money system.
Instead of relying on third parties or banks, the Bitcoin system relies on cryptographic proof to maintain the system’s integrity. The Bitcoin system runs on blockchain technology; the first block in this blockchain was mined on the 3rd of January, 2009. The first users of Bitcoin would mine the Bitcoin and trade it back and forth for fun because it had no monetary value at this stage.
The first Bitcoin transaction occurred in 2010 when Laszlo Hanyecz negotiated to pay for two pizzas ($25) with 10 000 BTC. Fast forward a decade, and bitcoin is quite common payment option these days, but this journey has not been without obstacles. In July of 2010, Bitcoin started trading at $0.0008. By the month-end of July, it was at $0.08. It rose slowly to about $10 in 2011, then spiked to $250 in April 2013.
As the value of Bitcoin increased, more people started to invest in the currency and trade with it. The anonymity of the BTC transactions also attracted criminals, particularly in the cybersecurity space. Ransoms were being demanded in BTC by hackers who held companies hostage and locked them out of their network systems.
Because of the rise in these activities, governments worldwide started implementing stricter measures around the use and trade of Bitcoin. The People’s Bank of China implemented the most rigid regulations; in December 2013, financial institutions were prohibited from using Bitcoin, and in September 2017, a complete ban on using Bitcoin was issued.
As expected, the regulations hurt the already volatile price of BTC, but the story continues. At the end of 2017, Bitcoins’ value rose drastically. Everybody was investing or wanted to buy coins; this bubble brought billions into the cryptocurrency space. Of course, other players like Ethereum(2015) and Ripple (2012) were also on the scene and benefitted from this bubble. But by mid-2018, the value of BTC had fallen as prices crashed. That year ended with its value at $3 709, coming down from a range of $6000 – $8000.
Over the past decade, Bitcoin has gained in popularity and won the trust of governments as countries like El Salvador and the Central African Republic have adopted Bitcoin as a legal tender. Bitcoin’s price volatility still makes new investors wary, but it has proven to have longevity, if not stability.
As of April 2022, 15 174 businesses worldwide accept bitcoin as a payment method. There are 36 659 Bitcoin ATMs in the US, and over 26% of small businesses accept bitcoin payments. The gaming industry has also accepted bitcoin and other cryptocurrencies as payment and deposit methods. In November of 2021, the value of BTC was around $68 000 and currently stands at $22 500, so it’s clear that the price of Bitcoin is not about to stabilise anytime soon. And if you want to buy coins, you need to factor this into your decision-making.
Nobody truly knows who Satoshi Nakamoto is; there are many theories on the internet. Some claim it’s a group of people, and others say it’s a government agency. Either way, the BTC concept he established over a decade ago is still going strong. What was formerly seen as an alternative investment option is being mentioned in retirement portfolio discussions? Some fund managers even recommend a 10% cryptocurrency investment in order to diversify your portfolio. Whatever the future holds for BTC, one thing is clear: it’s here to stay.