The Little Bit That Could, and DID!
On January 3rd, 2009 Satoshi Nakamoto launched the Bitcoin network by creating the "genesis block,". This is the very first entry in Bitcoin's global transaction register. It included the following: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." Few, took notice.
On January 9th, 2009 Nakamoto announced Bitcoin version 0.1, on the Cypherpunks mailing list. Previously, in November of 2008, he posted a paper to the list which explained the design and function of the Bitcoin network. Few, still took notice.
Some people, myself included, immediately recognized that if Bitcoin caught on, it's early users could become very wealthy. It was estimated that if Bitcoin became the world's reserve currency, each Bitcoin could be worth as much as $100 million. "The possibility of generating coins today with a few cents of compute time may be quite a good bet,". Nakamoto agrees: "It might make sense just to get some in case it catches on." Hal Finney mined bitcoins for a few days, but then he turned the program off because it made his computer run too hot. The first Bitcoin transaction ever occurred on January 12th, 2009 when Nakamoto sent some Bitcoins to Finney.
Bitcoin was slowly attracting users and gaining a following. Tyler Gillies sent a note to the bitcoin e-mail list e-mail stating; "i just downloaded bitcoin, epic piece of software. the digital cash age has arrived.". Growing interest in Bitcoin lead to the first increase in the difficulty of bitcoin-mining. The network automatically adjusted the difficulty of producing bitcoins so that a new batch was produced every 10 minutes, on average. By December 30th, 2009, there were enough miners that the network had to increase the difficulty to prevent bitcoins from being generated too quickly.
On May 18th, 2010 Laszlo Hanyecz is, arguably, regarded as the first person to spend bitcoins in an actual financial transaction. He offered 10,000 BTC to anyone who would order him a pizza, and someone did. The transaction, at that time, valued each bitcoin at around $0.0025, or just over 2/10th's of ONE CENT. Today, those same 10,000 BTC would be worth around $60,000,000.
In Mid 2010 Gavin Andressen created the Bitcoin Faucet, a Web site that gave out free bitcoins. Early versions of the faucet gave out 5 BTC per visitor — worth around a penny in 2010, but worth about $30,000 today. In July of that year the technology news site Slashdot covered Bitcoin, generating a surge of interest in the cryptocurrency.
After the U.S. government shut off the watchdog group WikiLeaks' access to it's funds, a bitcoin user suggested that WikiLeaks could use bitcoins. Others, though, warned that getting involved with the controversial organization could bring it unwanted attention. "Bring it on," one Bitcoin enthusiast quipped. "Let's encourage WikiLeaks to use Bitcoins and I'm willing to face any risk or fallout from that act." "No, don't 'bring it on,' " Nakamoto later responded; "The project needs to grow gradually so the software can be strengthened along the way." On December 12th, 2010 Satoshi Nakamoto posted his last message on the Bitcoin Forum. Within a few months, he stopped contributing to the Bitcoin project at all and Andressen took over the project as developer. We still, to this day, have no idea nor even a clue as to who Satoshi Nakamoto was.
On February 9th 2011, Bitcoin's price rose to reach a 1 to 1 parity with the U.S. Dollar for the first time. In April that year Jerry Brito wrote what was the first article about Bitcoin for a mainstream media organization. As the currency's price rose, it generated more media attention, which in turn fueled more demand for the currency. By June Bitcoin's price rose above $30.00 for the first time, but then the price begins to fall. Later that same month a Bitcoin user on the Bitcoin Forum named allinvain" claimed that hackers stole 25,000 bitcoins from him, worth around $500,000 at the time. You can read his post HERE. Those bitcoins would be worth just over $150,000,000 today. The incident raised awareness of the security risks associated with holding bitcoins. By November, Bitcoin prices bottomed out at $2.00. All seemed lost for Bitcoin; however, by the end of the year, it had risen to a respectable $5.00.
In September of 2012, The Bitcoin Foundation was created. The organization became the quasi-official home for the cryptocurrency and began providing a salary to lead Bitcoin developer Gavin Andressen.
In January of 2013, BitPay, a startup company that helps merchants accept bitcoins, raised over $500,000 in startup money. It is one of the first Bitcoin startups to raise significant investment capital. In May, that same year, BitPay raised another $2,000,000 in capital.
In April, Bitcoin prices soared to $266 from a low of $13.50 at the beginning of that year. Then, once again, the currency nose-dived and plunged to $50 within the week. (I am beginning to see a pattern here)
In November The Senate Committee on Homeland Security and Governmental Affairs held the first congressional hearings on Bitcoin. Two days later, the Senate Banking Committee held hearings as well. These hearings; however, turned out to be love fests, with federal regulators stressing the importance of not hindering Bitcoin innovation with unnecessary regulations. Days later Bitcoin's price hit a, then, all-time high of $1,242. In December The Bitcoin startup Coinbase raised $25,000,000, to become a first American based Exchange.
Since 2013's end we have seen the fall of the Mt. Gox exchange. the BTC-e exchange and many ups and downs in the price of Bitcoin. We will always have our nay-sayers, as every single new technology has. Nikola Tesla had Thomas Edison and Bitcoin has James Dimon. Just as Edison was proven wrong about Alternating Current, Dimon will be proven wrong about Bitcoin and cryptocurrencies in general. Just as the music industry ignored the potential of digital downloads in favor of physical media such as compact disks, in the beginning, and lost hundreds of millions if not billions of dollars in revenue, so some have ignored the power and potential of digital currency. As with new technologies, we early adopters stand to make a fortune as cryptocurrencies go mainstream, while those who refuse to see the, inevitable, end of physical money will continue to sit, scoff and bemoan their self-inflicted plight.
Where To From Here?
2017 has been the dream year for Bitcoin. We have seen 6X growth surpassing, even the most liberal, predictions of Bitcoin's potential...so far. Yes, we will continue to have up's and down's; however, I believe that the days of hyper-drops are nearly behind us. Case in point was, what I call, the September Twosome, when James Dimon went on NBC on Sept 12th, calling Bitcoin a fraud and then two days later China closed all Chinese crypto-exchanges. This resulted in the devaluation of Bitcoin by nearly half of it's value due to panicked investors, who probably never truly understood Bitcoin in the first place. They failed to see Bitcoin, as an investment, to be more like a Gold Commodity, but instead saw it more like a regular stock. They didn't perform their research into the history of Bitcoin and when the price started falling they panicked and began selling their Bitcoin driving the price down even further. Within one week; however, Bitcoin had rebounded by over half and within a month had exceeded it's previous high. At the time of this writing Bitcoin is, up nearly $2,000 from it's previous high, trading at over $6,000.
To the Future, it's looking very bright. Would I suggest putting all of your eggs in one basket? No, definitely not. Would I suggest that anyone who is not investing in Bitcoin in some capacity is a fool? Absolutely! I would. With the growing adoption, recognition and acceptance of Bitcoin, and cryptocurrencies in general, a growing network of users, miners and nodes only serves to buffer and strengthen an already strong network. This strengthening serves to drive the value of Bitcoin to new heights on a daily basis. If you have Bitcoin, hold on to it. If you start to see the price dip, DON'T PANIC! It will rise again. If you do not own any Bitcoin, my suggestion to you is to start buying now. The value of Bitcoin is only going to go higher. It is estimated that by 2020 Bitcoin prices will be in excess of $25,000 and by 2027 in excess of $1,000,000. If the rate of yearly growth continues, as it has this year, even these estimates will be blown out of the water by Bitcoins growth. The pattern I noticed is, that when Bitcoin falls, it never falls to the point of it's previous low and when it rebounds it always surpasses it's previous high. What’s Bitcoin’s long-term potential? Bitcoin could easily become so valuable that even millionaires can’t afford to purchase an entire coin.