A Brief History on the Growth of Bitcoin

A Brief History on the Growth of Bitcoin

In November 2008, a paper was posted on the internet under the name Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System. This paper detailed methods of using a peer-to-peer network to generate what was described as “a system for electronic transactions without relying on trust”.

In January 2009, the Bitcoin network came into existence with the release of the first open source Bitcoin client and the issuance of the first Bitcoins, with Satoshi Nakamoto mining the first block of Bitcoins ever (known as the “genesis block”), which had a reward of 50 Bitcoins. The values of the first Bitcoin transactions were negotiated by individuals on the Bitcointalk forums with one notable transaction involving a 10,000 BTC pizza.

In June 2011, Wikileaks and other organizations began to accept Bitcoins for donations. The Electronic Frontier Foundation began, and then temporarily suspended, Bitcoin acceptance, citing concerns about a lack of legal precedent about new currency systems, saying that they “generally don’t endorse any type of product or service.” The EFF’s decision was changed in 17 May 2013.

Back in early 2010, a single Bitcoin could be bought for less than $0.01. 10,000 Bitcoins were used to buy a single pizza, and no buyers were found for Bitcoins that were being auctioned off; however, in June 2010, the price jumped by 1000% in five days, rising from $0.008 to $0.08.

From that point, Bitcoin value slowly but surely rose, and in early 2011 reached parity with the US Dollar.

A few months later, in July 2011, the first Bitcoin “bubble” occurred; Bitcoins peaked at a price of $31, before slowly beginning to fall back down in price, stopping at $2 in December 2011. It took the price a year to slowly rise back to $13 at the end of 2012.

Currently, Bitcoins have never been as valuable, with prices reaching as high as $900 for a single Bitcoin. This explosion of value has not been without issues, though.

In October 2013, the FBI closed down notorious online black market website Silk Road, seizing over $3m worth of Bitcoins. Silk Road was responsible for millions of Bitcoin sales, and for a long time was the main source of Bitcoin transaction. The Bitcoin price fell by 8.6% as a direct result of the raid.

Despite this, Bitcoin managed to bounce back. The price rebounded several weeks after the seizure, and since November 3rd, prices have risen from $200 to $900. The rise is due to several reasons:

  1. Bitcoins are a finite resource; there will only ever be 21 million Bitcoins. As more are mined, less are mineable, making them a commodity constantly growing in value.
  2. Bitcoins are beginning to be accepted by certain popular, mainstream sites as a valid method of payment, e.g OkCupid, WordPress, Reddit and Baidu.
  3. Bitcoins have been receiving a lot of media attention lately, raising interest and desire; certain stories of Bitcoins bought for a few dollars now being worth tens of thousands have caught the interest of many looking for new ways to make some money.

It is likely that the current exponential growth of Bitcoin value will not continue at this pace for long, but a slower, steadier pace will continue unimpeded for a good while longer.

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