May 22nd, 2020, marked the tenth anniversary of the first Bitcoin transaction a date now known as “Bitcoin Pizza Day.” Bitcoin is the preeminent name in cryptocurrency, but exactly how has this digital currency evolved over the past decade? Below we will walk you through the evolution of Bitcoin, where we see it headed, and what the ten year anniversary of Bitcoin Pizza Day truly marks.
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.” This first sentence of Satoshi Nakamoto’s white paper would introduce Bitcoin and with it an entirely new industry.
History of Bitcoin
In August 2008, the domain name bitcoin.org silently occupied the online space. Two months later, a paper entitled ‘Bitcoin: A Peer-to-Peer Electronic Cash System‘ was passed around a cryptography mailing list, signaling the birth of a possible new payment process. The white paper was authored by Satoshi Nakamoto, an anonymous alias we attribute as the “Father of Bitcoin.” Members of the whitepaper mailing list include Hal Finney who participated in the first-ever Bitcoin transaction with Nakamoto, smart contracts pioneer Nick Szabo, and Crypto++ cryptographic library creator Wei Dai.
By 2010, a handful of merchants started accepting Bitcoin in lieu of established currencies. Originally valued at $.08 per coin, the digital currency has experienced a volatile evolutionary path reaching a peak of nearly $20,000 per Bitcoin in late-2017 and averaging an $8,000 value in 2020. As for adoption behavior, the rise of Bitcoin started to take off in 2013.
The early demise and rise of Bitcoin
Following the exposure of the Bitcoin pizza purchase, the digital currency gained traction among an online dark-web marketplace dubbed the Silk Road, where both legal and illegal products could be bought and sold freely.
It wasn’t until March of 2013 that the value of all Bitcoins in circulation hit $1 billion, and the currency began attracting the attention of Silicon Valley venture capitalists. Early adopters turned millionaires include Digital Currency Group CEO Barry Silbert, former Managing Director at J.P. Morgan Chase Blythe Masters, and most notably, Tyler and Cameron Winklevoss.
Jump to 2014, when Tokyo-based cryptocurrency exchange Mt. Gox – an exchange that at its height accounted for over 70% of all Bitcoin transactions, was hacked and filed for bankruptcy. The news of suspended withdrawals from the exchange sent the price of Bitcoin down by 20%. It was later discovered the exchange “lost” over 850,000 Bitcoins, or 6% of the Bitcoins in circulation at the time. By 2015, Bitcoin made positive headlines first by Microsoft’s acceptance of Bitcoin payments and then the coin’s front-page feature on the Economist.
As the currency’s price rose in 2017, so did debates around the possible measures to address scaling issues affecting Bitcoin. An unsettled decision on the Bitcoin protocol resulted in a hard fork from the original Bitcoin blockchain – giving birth to Bitcoin Cash.
Many factors stacked against Bitcoin’s formative years, including an early association with illegal activity, security concerns, and adoption woes since Bitcoin wasn’t issued as a monetary unit by any country in the world. Despite these factors, Bitcoin’s price value has soared and is today increasingly used as a medium of exchange by individuals and merchants worldwide.
Cred’s introduction to Bitcoin
Founded in 2018, Cred became a licensed California-based lender providing partners with turnkey crypto lending and borrowing services on digital assets such as Bitcoin. In October of 2018, Cred partnered with one of the most influential names in the space, Bitcoin.com to expand global lending and earning on cryptocurrency. Through the addition of partners, Cred has helped further the vision that blockchain technology can enable a more fair and transparent financial world.
Interesting Bitcoin Facts:
Bitcoin has brought forth an entirely new financial process. As popular as it is interesting, here are a few Bitcoin “fun” facts you may or may not know:
- As a founding innovator, Bitcoin has spawned thousands of cryptocurrencies and an entire industry based around its underlying blockchain ledger.
- Despite being the “father of Bitcoin,” Satoshi Nakamoto’s true identity has yet to be discovered.
- Bitcoin’s supply is finite. At present, over 18 million have already been mined and are being traded. The last bitcoin will be mined in 2140.
- A Satoshi is the “smallest” unit of Bitcoin unless you dive into micropayments, then you get a unit called Millisatoshi (MSAT), one-thousandth of a Satoshi.
The future of Bitcoin
Bitcoin recently underwent its third halving, an occurrence that cuts the reward for mining Bitcoin transactions in half and reduces the rate at which new coins enter circulation. The halving and recent volatility of Bitcoin’s price have increased the digital currency’s media exposure and sparked optimistic discussion on its future. Crypto as a whole is continuing to grow and become an established mainstream asset class that is attracting capital from high profile investors.
One factor alluding to the future of Bitcoin is adoption behaviors. Established financial players have taken an interest in crypto. Whether through a company statement on the belief of blockchain’s potential in payments, investing in crypto companies, or even directly linking crypto wallets to bank accounts for fund management. There are clear signs that blockchain is here to stay.
The COVID-19 pandemic rocked the financial market, leaving many to question the stability of traditional financial institutions. Cred CEO Dan Schatt addressed a question by Forbes on Bitcoin’s resilience pertaining to current market disruption, stating, “Bitcoin has proven to be very resilient. It is still up 33% from a year ago. Why? It continues to gain favor as a store of value that will not be diluted…” He goes on to say, “Bitcoin could have a massive run if more investment funds are permitted to invest in the form of ETFs or other financial vehicles. The floodgates will open when the regulatory environment becomes more clear for pension funds, insurance funds and endowments.”
The post-COVID-19 era could also play a factor in the future of Bitcoin and cryptocurrency. Blockchain publication Crypto Briefing dives into this topic and quotes Dan Schatt on Bitcoin’s qualities as a hedge against current uncertainty; “Gold and Bitcoin are both up, and like gold, Bitcoin is increasingly seen as a good hedge against times of political and economic uncertainty.”
From Nakamoto’s white paper to the present day, Bitcoin has filtered its way into the mainstream financial system. Ongoing criteria will need to be met for mass adoption such as the balance between the structural complexity and consumer ease of use, a maintained decentralized nature with adequate consumer security, and user anonymity without illegal activity. Once these conditions are met we can make a logical prediction that as the understanding of Bitcoin becomes more widespread, there will be a front-running decentralized financial system.