Considering that we are living in the most economically turbulent era of history, the history of Bitcoin is similarly turbulent. It has seen many drastic ups and lows in its value. However, Bitcoin was never expected to sail smoothly especially when it is something this uncertain. Before the beginning of Bitcoin, many people experimented with cryptographed digital currency, and let’s just say that no one was able to actually crack it. Since Bitcoin became part of reality, it has seen many extreme highs and lows. Its current value is less than approx $53,000 but it is not certain if the value will increase or sink back to the pit. However, for some of the people who own Bitcoin, these extremes make Bitcoin more appealing and “fun”.
But how do we know where Bitcoin is today in reality and what is its future? How it was started and who were the masterminds behind it? Let’s take a look at the brief history of Bitcoin and its origin and find out the answers to all the questions.
The Beginning of Bitcoin
The ideology of Bitcoin was introduced to the world on 31st October 2008 under the pseudonymous name Satoshi Nakamoto. He posted a message on a cryptography mailing list. It has a link inside it to a white paper. Inside these papers, Nakamoto built the mere concept of Bitcoin as a decentralized digital currency. This meant that it can be stored on computers and there is no single administrator but rather a public ledger of transaction. The coins are sent from one user to another on the peer-to-peer network without any intermediaries.
The blockchain was launched on 3rd January 2009, when the first block named genesis block was mined. A week later, the first transaction happened. This was the point when Bitcoin had no real financial value. More than a year would take for the first economic transaction to take place. Eventually, on 22nd May 2010, a man from Florida negotiated to get two Papa John's pizzas worth $25 delivered to his place for 10,000 Bitcoins. That transaction was initially responsible for the establishment of the initial real-world price of Bitcoin at 4 Bitcoins in exchange for a single penny.
Laszlo Hanyecz post on Bitcointalk forum
If we fast forward to the present, the same transaction would have a value of about one hundred fourteen million dollars. In honor of this pivotal moment in the history of the Bitcoin establishment, the fans of cryptocurrency like to call May 22nd, Pizza Day. The value of Bitcoin was originally not fixed and in the beginning, the first transactions were negotiated on the internet forum with people who, in exchange for Bitcoin, were bartering for goods and services.
It became easier to buy, sell, trade, and store Bitcoin once it became available on exchanges. Bitcoin can also be priced alongside the US dollar. From worth only a few cents in 2010 to the highest rate of $20,0000 for each Bitcoin in 2017, it has come a long way from 10,000 Bitcoins for two pizzas. Bitcoins are certain to continue dominating the cryptocurrency market in the coming future as well. But it can just easily sink and land back to where it all started.
Who made Bitcoin?
Satoshi Nakamoto is nobody but a pseudonym. The person behind the ingenious idea of Bitcoin still remains a mystery to be unveiled. It has been a secret for so long that people have started to speculate that it's more than one person as it is not likely that a single person can develop something as comprehensive as the Bitcoin network. Other theories suggest that it is indeed a single person who is among the Bitcoin developers. There are numerous theories on the subject but unfortunately, none have been verified.
Some theories say Satoshi is the founder of Bit Gold, Nick Szabo, whose ideas were very similar to that of Nakamoto. Other people suggest that he may have been Hal Finney who is a well-known developer. He was the person to whom Nakamoto sent the Bitcoins in the first-ever transaction back in 2009.
Another speculation for the identity of Nakamoto was made when a man literally said that he was Satoshi Nakamoto. A person named Craig Wright, who is an Australian businessman, came forward and claimed to be Satoshi Nakamoto. He not only claimed to be him and also assured people that they will give proof of it. So far, he has not given any proof on the claim and the mystery of Satoshi Nakamoto continues to remain hidden in the codes of the cryptography world.
How was Bitcoin made?
Bitcoin began by publicly distributing the ledger; this is what Nakamoto called the blockchain. The people who are willing to use CPU power to run the software would maintain the blockchain collectivity by forming a network. They will produce new currency in the process. The computers running the software would compete to solve cryptographic puzzles. The miner who first solves each puzzle would be given 50 Bitcoins. The block of the associated transaction will be included in the chain. The puzzles will become difficult as the number of miners increases.
When in 2008, Nakamoto's paper came to the surface people had no trust in government's and bank's ability to manage the economy and money supply. The government was wasting money on the car companies and Wall Street. Money was being printed to stimulate the country's economy. The price of gold was rocketing as well. Amongst all that, Bitcoin had nothing to do with the politicians who were responsible for wrecking the country's economy. It only required faith in Nakamoto's algorithm.
On 3rd January 2009, Nakamoto mined the first fifty Bitcoins himself which later came to be known as the genesis block. In the initial years, his development remained in a tiny group of original adopters. However gradually, the news of Bitcoin spread in the outer world beyond the walls of cryptography. Even the country's greatest minds recognize the significance of the alternative money that is possibly the future of the world's economy.
Wei Dai, who invented b-money, says that Bitcoin is "very significant". The creator of bit gold also owns Bitcoins and considers it a great contribution to the world. Hal Finney, the cryptographer behind RPOW believes Bitcoin to have the potential of possibly changing the world. Even the electronic frontier foundation started accepting donations in Bitcoin.
The confined group of early adopters of Bitcoin all shared the communication spirit of an open-source software project. A coder in New England, Gavin Anderson, bought 10,000 Bitcoins for just $50 and gave them up for free on a self-created site called Bitcoin Faucet for no reason at all. A programmer in Florida, Laszlo Hanyecz conducted the first-ever real-world Bitcoin transaction. He paid 10,000 Bitcoins to get two pizzas from Papa John's. This was considered a pivotal moment in the history of the Bitcoin establishment which set the initial real-world price of Bitcoin to 4 Bitcoins for a penny. David Foster, who was a farmer in Massachusetts, also decided to start accepting Bitcoin in exchange for the alpaca socks.
When they didn’t mine, they tried to solve the persistent mystery of the man who called himself Satoshi Nakamoto. Someone also realized that in Japanese, Satoshi means wise and clever. Many theories started to circulate about the identity of the hidden man. People also wondered if the name can be a sly pseudonym to technology companies like TOSHIba, SAmsung, NAKAmichi, and MOTOrola. However, people doubted if Nakamoto was even Japanese. His English seemed to have a flawless ring that could have been of a native speaker.
Nakamoto only communicated with few people and limited his conversation to the technical discussion. However, he did write a post on the Bitcoin forum when the Bitcoin owners started to call Wikileaks to accept Bitcoin donations. He wrote that project needed to grow gradually and he made an appeal to Wikileaks to not use Bitcoin. He said Bitcoin is a small community and they won’t get anything more than just pocket change. Moreover, it will destroy them at this crucial stage.
However, Nakamoto disappeared from the picture just as he appeared. Anderson, who was the only person with whom he communicated, told the fellow coders that Satoshi suggests deemphasizing the whole ‘mysterious founder’ thing. After that, Nakamoto even stopped replying to Anderson’s emails and just simply vanished.
Bitcoiners did wonder that why he left them but by then, his invention has taken roots in the cryptographic financial market.
History of Bitcoin price
In the February of 2011, Bitcoin's price reached $1. For years, its price remained under one dollar range but in June 2011, it hit the scale and crossed $31 but eventually sinking once again to the single-digit range. Then in April 2013, almost two years later, it crossed $200. At the end of November, its price rocketed to more than $1000.
Once again, in the November of 2017, it finally reached $10,000, the highest price of Bitcoin reach about $19,650 which it reached in December 2017.
Bitcoin hits almost $20,000 in 2017
These developments resulted in making the Bitcoin market more mature. The current pandemic also created a boom for digital currency owners. It is reflected by the current price of Bitcoin which is at $53000 (on 26.03.2021).
What Happened to Bitcoin in 2018?
After the highest peak, the prices went downhill for the next few years that followed. The prices that were about to reach a mark of $20,000 started falling and entered the slab of $3000s. The drastic change in prices was due to several elements. The biggest reason was SEC’s announcement that the operators of two “Initial Coin Offerings”, Airfox and Paragon Coin are selling unlicensed securities and are thus entitled to fines and restitution for breaking the law. Airfox and Paragon Coin without getting bitcoin registered as security offerings paid civil penalties. This led to several warnings from central banks and even JP Morgan boss Jamie Dimon. Dimon even claimed that bitcoin is a fraud, stupid, dangerous, and is only fit for murderers, drug dealers, and people who live in places like North Korea.
Online theft of cryptocurrencies, ICO frauds, mining scams, and no intrinsic values were also considered as the reasons for the downfall. But the prime reason was SEC’s warning that snatched the investor’s trust from bitcoin and the prices started declining. 2018 wiped off $70 billion from the cryptocurrency market value.
87% Rise in 2019
The hopeless bitcoin investors saw hope in 2019 when the prices and their return on investment started increasing. Margin trading was introduced by bitcoin exchanges. Trading leveraged to traders, thus increasing the trade volumes astronomically. For those who don’t know, margin trading is the trading made on borrowed money, which is returned after the transaction is complete. Another reason was realizing the importance of blockchain technologies. China’s President Xi Jinping announced that the blockchain community will be the prime focus of development in the future which also gave a boost to cryptocurrencies based on blockchain technologies. The prices rose to the slab of $7000-8000 by end of 2019.
2020 and Bitcoin
2020 was a roller coaster for bitcoins and cryptocurrencies. In February of 2020, Bitcoin and its trading were made legal in the USA, Japan, the UK, and many other developed countries. This gave a boost to the online trading platforms. The prices reached $10,000 in February 2020, but due to increased Covid-19 cases around the world, the prices dropped to nearly $3000-4000 in March but increased to nearly $8600 by end of April because many institutions started endorsing bitcoin. Financial analysts thought that the bitcoin could be a good hedge against inflation and the prices started rising till the end of December when the closing price was nearly $29000.
Tesla and Bitcoins
Bitcoin touched the $57,469 price in February when Elon Musk announced that Tesla invested $1.5 billion in the cryptocurrency. This surged the prices, and investor’s enthusiasm and the future price of bitcoin are expected to change drastically.
"In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, we may invest a portion of such cash in certain specified alternative reserve assets. Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt" - said in the Tesla SEC report.
Present of Bitcoin
A more mature market came around cryptocurrency. National banks were given authority to custody digital currency. For today, Bitcoin trading is offered in all fifty states. Speaking of today, one Bitcoin is about $53000. It has come a long way from a white paper text send by a man who calls himself Satoshi Nakamoto to being the cryptocurrency asset of today’s world. To this day, nobody knows who Satoshi was and perhaps will never know but the subject will remain a center of the debates, speculations, and even conspiracy theories.
The theories are too many, from it being a stunk work to a secret project of an intelligence agency. People believe that it is a trapdoor project, which means that when it’s big enough, a party that is waiting patiently in the shadows will surface to take control of it.
Bitcoin is relentlessly growing into its role as a store value and unit of account cryptocurrencies. Since IRS does not accept Bitcoins, it has buried the idea that money is not considered money unless it is accepted as the payment for taxes.
Future of Bitcoin
The fundamental question that is asked by people is that what is the future of Bitcoin?
Well, nobody can tell for certain but many great minds see it as the gateway to a bright and exciting place. What is exactly meant by the bright and exciting place? This, the future will tell.
Investment vehicles that are cost-effective, innovative, and transparent are nearing the world of reality and will make investing in cryptocurrency more accessible than ever before. This access can rival easily that of traditional markets.
Some claim the price will reach $1 million by 2027, while some claim it will reach $500,000 by 2030.
One thing we should bear in mind is that no investment, particularly frontier investment is not at risk. If there is one lesson that a person can learn from the history of Bitcoin is that what goes up can just as easily come down. It is not certain that the peak of Bitcoin's price will sustain. From what we know, the prices can come down and it can come down faster than you can imagine.
Future of economy or not, Bitcoin is certainly the presence of the economical breakthroughs with the current price of more than approx. $55000 for each Bitcoin. We know nothing about the mysterious founder of the Bitcoin network except that he has is a pseudonymous person called Satoshi Nakamoto and he disappeared just how he appeared, suddenly and quietly. What do you think about the journey of Bitcoin and its mysterious origin? Do you think Nakamoto will appear again or the Bitcoin will fall?