Bitcoin (BTC) was the first cryptocurrency to be developed in 2009, and it is still the world’s most popular and valuable digital currency today. Bitcoin is a blockchain-based decentralized digital currency that is supported by a network of users that verify and record transactions without the use of a central authority or an intermediary. Bitcoin is an alternative to fiat currencies regulated by governments and central banks, such as the US dollar. A proof-of-work consensus mechanism is used to validate transactions. Bitcoin miners compete to verify transactions by utilizing powerful computers to solve challenging mathematical calculations. Some Bitcoin supporters merely see the cryptocurrency as a fun asset for trading and speculation, while others feel it has the potential to become the digital world’s universal currency. There’s no denying that Bitcoin’s popularity has skyrocketed since its birth, but the first 13 years have also shown numerous fundamental weaknesses and shortcomings in the world’s most popular digital asset.
When Did Bitcoin Begin?
It’s no surprise that Bitcoin emerged amid one of the most turbulent financial periods in US history. During the global financial crisis of 2007–2009, there was widespread distrust of banks and central governments. Bitcoin was founded in 2009 by a person or group operating under the pseudonym Satoshi Nakamoto. This moniker initially appeared in the original 2008 Bitcoin white paper that explained the blockchain system that would serve as the backbone of the whole cryptocurrency industry. Several people have claimed to be Satoshi Nakamoto throughout the years, but none have provided sufficient evidence to back up their claims.
The Bitcoin blockchain was officially inaugurated on January 3, 2009, when the first Bitcoin block, known as the genesis block, was produced. Satoshi reportedly mined up to 1.1 million Bitcoins in the seven months following Bitcoin’s inception. Those coins are now worth almost $22 billion at August 2022 pricing. According to Joshua Peck, founder, and chief investment officer of cryptocurrency hedge fund TrueCode Capital, early Bitcoin aficionados were intrigued by its look, even if they weren’t sure what it would actually be.
History of Bitcoin Prices
Bitcoin became available to purchase, sell, and trade on internet exchanges for the first time in 2010. Bitcoin’s price crossed the $1 threshold for the first time in April 2011. In 2011, Bitcoin also encountered its first competitor in the crypto sector. Litecoin (LTC) was first introduced in October 2011. In 2015, the Ethereum blockchain became live after several years of development. As Bitcoin’s price increased, so did its visibility, popularity, and volatility. Bitcoin prices had topped $1,000 by November 2013. Bitcoin prices and trade volumes began to skyrocket in late 2017, with prices reaching $10,000 per coin for the first time in November 2017 and peaking at about $20,000 in December 2017.
Bitcoin, according to Jarek Hirniak, founder and CEO of Generation Lambda, followed a common innovation trajectory known as the Gartner Hype Cycle. According to the model, as new technology such as Bitcoin acquires exposure, expectations skyrocket at first. “At first, most people ignore it, but then everyone gets thrilled until it’s clear that promises can’t keep up with reality,” Hirniak adds. “Such a setup, coupled with a lack of liquidity and insufficient oversight, rendered it ripe for market manipulation.”
Bitcoin Crypto Winter 2022
The next large surge in Bitcoin popularity occurred in late 2020, amid the COVID-19 epidemic. Long-term closures of entertainment and leisure companies such as sports and casinos, along with repeated rounds of government economic stimulus payments, left many younger Americans with additional disposable income and time on their hands, fueling another boom in Bitcoin values in late 2020.
The ProShares Bitcoin Strategy ETF (BITO), the first Bitcoin exchange-traded fund (ETF) to be listed on a major US market, began trading in October 2021. Following the BITO ETF, several more bitcoin futures ETFs were launched, including the Valkyrie Bitcoin Strategy ETF (BTF), VanEck Bitcoin Strategy ETF (XBTF), and Global X Blockchain & Bitcoin Strategy ETF (BITS).
Bitcoin reached new all-time highs of more than $20,000 in December 2020, finally reaching $68,990 in November 2021. Unfortunately, consistently high inflation drove the Federal Reserve to start rapidly tightening monetary policy in early 2022, resulting in significant sell-offs of cryptocurrencies and other risky assets. To make matters worse, severe drops in crypto values in early 2022 created a liquidity crisis, resulting in the failure of the $10 billion crypto hedge firm Three Arrows Capital and the bankruptcy of cryptocurrency lenders Celsius and Voyager Digital.
Bitcoin Price Forecasts
One Bitcoin is currently valued at around $20,000 as of this writing. Its value is far lower than its 2021 high of more than $68,000, yet it is still greater than its 2018 lows of less than $4,000. Even after the 2022 sell-off during the crypto winter, Bitcoin continues to be one of the best-performing financial investments in the long run. However, Bitcoin’s extraordinary volatility remains a barrier to its acceptance as truly worldwide money.
Bitcoin remains a high-risk speculative investment at this time, with no clear way to gauge its inherent value or predict where its price will go next. Still, Bitcoin bulls believe that the world’s leading cryptocurrency has a bright future.