Bitcoin: Tracking the History of Bitcoin 9 Years Later
Oct. 31st, 2017 marked the 9th anniversary of Bitcoin. While initially perceived under a negative light, Bitcoin value history has now transitioned towards more of a positive aspect of society’s growth.
On its anniversary, bitcoin hit over $9,000 CAD, and today bitcoin prices are above $10,000 CAD. As Bitcoin continues to break records, make news headlines, and fork into new digital currencies, it’s important to understand how it got to where it is today so as to learn about what it means for the future.
Early days of Bitcoin value history
When Bitcoin first came out, it had a price point of essentially nothing, and was mainly used by cryptography fans.
The first bitcoin exchange opened on March 17th, 2010 and drove its value to $0.0039 CAD.
May 22nd, 2010 marked the first real-world transaction being made with bitcoin by Laszio Hanyecz, who bought two pizzas in Jacksonville, Florida for 10,000 bitcoins (BTC) at a price point just under $0.013 CAD.
Notable early adopters, inventors, and investors that validated this technology and gave it value includes Bitcoin’s secretive founder Satoshi Nakamoto and early adopters Hal Finney, Wei Dai, Nick Szabo, and Gavin Andresen.
2011: The double-digits
Subsequent changes in Bitcoin value were steady as bitcoin grew from $0.104 CAD to $1.30 CAD, to $2.60 CAD in the beginning of the year. The first ‘bubble’ came when values spiked at over $40 CAD, but came back down to $16.90 CAD by the end of the year.
These fluctuations were driven by the an emergence of an ecosystem based on Bitcoin, a viral video released by WeUseCoins that promoted Bitcoin, as well as the creation of the Bitcoin Magazine, founded by Vitalik Buterin and named one of Top 100 most influential companies in blockchain by Richtopia. This marked Buterin’s beginnings as a blockchain prodigy as the now-founder of Ethereum.
They were also driven by important moments of acceptance, such as a U.S. patent being filed based on the Bitcoin technology and the Electronic Frontiers Foundation as well as Wikileaks accepting bitcoin.
2013: The journey to $1,000
From April to June of 2013, prices fluctuated from around $300 CAD down to $143 CAD due to the Silk Road incident but then quickly rebounded to about $260 CAD several weeks later. Near the end of 2013, the price say drastic fluctuations from $450 CAD to over $1,600.
These crashes and rebounds occurred due to various factors.
Rises and steady growth were driven by increased adoption and usage with global companies and universities such as Coinbase, OkCupid, FinCEN (which introduced regulations on digital virtual currencies as well as bitcoin miners), BitInstant, M-Pesa in Kenya, University of Nicosia, and Overstock.
Additionally, the recognition of high-ranking political figures such as U.S. Federal Judge Amos Mazzant contributed positively to bitcoin’s value.
Falls were driven by other seizures such as the U.S. Drug Enforcement Administration listing of 11.02 bitcoins as a seized asset, technological failures such as the Mt. Gox and BitInstant (payment processors) delay issue, and political decisions such as the Foreign Exchange Administration and Policy Department in Thailand decrying bitcoin as illegal.
After the shutdown of Mt. Gox in Feb. 2014, the largest bitcoin exchange in the world at the time, Bitcoin’s price dropped hundreds of dollars from its January 2014 high of over $1,100 CAD. Prices remained low mid-year, fluctuating between $400-900 CAD.
During this time, however, Bitcoin continually hovered around $650 CAD due to continual adoption and recognition by multiple global retailers, major Las Vegas hotels, government bodies, and global tech companies. As well, Bitcoin was recognized by the U.S. Commodity Futures Trading Commission, the first time a U.S. regulatory agency approved a Bitcoin financial product.
From gaming to gambling, Bitcoin saw its first mainstream and legitimate adoption outside of the underworld.
2015 and 2016: The journey towards quadruple-digits
These years were marked by further acceptance and growth of Bitcoin in economic, political & legal, and educational aspects of society.
Venture capital funding for digital currency-based startups were significantly achieved by two frontrunners in the space: 21 Inc and Coinbase (a raise of $150.8 million CAD for the former and a Series-C funding for the latter, a ‘unicorn’).
Merchant and financial acceptance rose to 160,000 bitcoin accepting merchants such as most notably Uber, Barclay’s, and Steam as well as a rise of bitcoin ATMs to 771, doubling since 2014
Academic research grew from 83 research papers in 2009, to 424 in 2012, and 3,580 in 2016.
Government recognition such as the Cabinet of Japan’s recognition of all digital currencies such as bitcoin being similar to that of fiat currency was a hallmark moment in adding credence to this technology.
The standardization of Bitcoin reached a birthday when the Unicode Consortium added a codepoint for the Bitcoin symbol.
These events allowed for a steady rise of a range from $572-819 CAD to $1,040-$1,495 CAD in January 2017. Downturns occurred primarily due to technical failures such as a major hack that led to Bitstamp’s crash which resulted in 19,000 bitcoins being stolen.
The network rate of Bitcoin also increased, driving value upwards in 2016 since the network became more capable.
2017: High value, high growth
So far, 2017 has been a good year for Bitcoin value history.
In terms of enterprise B2B transactions, BitPay reported a threefold increase in usage compared to January 2016. The Russian government legalized the use of digital currencies, albeit potentially by launching their own centrally-controlled one, the CryptoRuble.
In terms of the technology itself, GitHub projects related to bitcoin passed 10,000. Additionally, exchange trading volumes continue to increase on digital currency exchanges, with more investors seeing the value of Bitcoin and other digital currencies as asset classes.
These developments allowed Bitcoin to break its own value-growth records, eventually reaching $9,000 CAD. One major dip occurred when China cracked down on bitcoin’s ICO and exchange, but otherwise the growth trend has been strong.
Interestingly, the hard fork from Bitcoin to Bitcoin Cash resulted in a positive contribution to bitcoin’s price as traders were motivated to purchase more BTC given that they would own an equivalent amount of BCH for every BTC purchased.
With all this happening one might wonder why Bitcoin isn’t already being used universally, and the reason is due to Bitcoin’s huge transaction fees. Depending on the day, it can take $10 CAD or more to send bitcoin to someone.
This is due to the network rules built into the Bitcoin blockchain. Since miners are rewarded for each block they mine, with each bitcoin’s value halving every two years, fees exist in order to incentivize miners to keep mining.
The system assigns a priority to each transaction order based on its age, size, and number of inputs (how many chunks of BTC are in the wallet in total). What this means is quite complicated, but essentially the system prioritizes older and higher-value coins via an algorithm to determine whether a transaction fee is required. Then, said fee is calculated by checking the byte size of said transaction.
Some experts claim bitcoin will go as high as $130,000 CAD in 10 years, while others such as Warren Buffett say it will be worthless. Since the technology is still not fully understood, it’s impossible to say which predictions are correct and which will round out bitcoin value history.
Bitcoub's low of $1,800+ yesterday simply could not be maintained. In the long term Bitcoin moves above $500,000 within three years. Bets?
— John McAfee (@officialmcafee) July 17, 2017
Bitcoin could hit $100,000 in 10 years, says the analyst (KVP) who correctly called its $2,000 price https://t.co/7laMn5OKwA
— Kay Van-Petersen (@KVP_Macro) May 31, 2017
This incites those to say that there’s a bubble, but one that won’t deter bitcoin’s value from continually rising unless if a major rival emerges or general disillusionment towards digital currencies take hold.
Image credit: publicdomainpictures.net
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