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Bitcoin has had a turbulent history since it was first introduced as a cryptocurrency. It has gone from being a skeptical investment to a multi-million dollar profit machine that has financed some of the world’s most recent achievements in art and entertainment. It has challenged the Federal Reserve in several different ways and has attracted some of the top investors and financiers of the day.
But while Bitcoin has continued to thrive through the recent introduction of NFTs and large company acquisitions, much of its history, along with its founder, still remains a mystery.
A Mysterious Origin
Bitcoin was first introduced as a cryptocurrency in 2008. Its founder, Satoshi Nakamoto, is highly secretive and operates under a pseudonym. Their gender, nationality, and age still remain a mystery. There has been speculation about who is behind the cryptocurrency. Forbes recently released a piece about possibly attributing identity to Princeton graduate and salutatorian Shinichi Mochizuki. John McAfee, famous programmer and controversial businessman, has also claimed he knows Nakamoto’s identity, but pledged to keep the person a secret. There has also been a series of lists that have suggested a wide range of investors, CEOs, and entrepreneurs ranging from Craig Wright, Hal Finney, Dr. Vili Lehdonvirta, and even Tesla CEO Elon Musk.
Despite the mystery surrounding the creator, the first official transfer of Bitcoin occurred in 2009 when Nakamoto sent 10 Bitcoins to Hal Finney. The crypto began to gain traction through underground websites like Silk Road as the Blockchain network it was based on could be utilized for stronger anonymity for online purchases.
Mining and the First Introduction
The cryptocurrency first began to make its rounds on several different platforms and virtual chat rooms throughout 2009 and 2010. BitcoinTalk became one of the early message boards that attracted early investors who discussed its potential practical applications.
The initial collection of Bitcoin occurred through a process called mining. By completing specific blocks, coders were rewarded with Bitcoin and other cryptos without having to put down any financially-backed money down as initial investments. Several coders quickly began to scour sites and complete blocks in an attempt to uncover Bitcoin that they could then add to their virtual wallets. The process, however, was strenuous, both on time and on the specific GPU of the device being used to mine.
Shortly after this process, the first official Bitcoin transaction from money to product occurred in May of 2011 when Laszlo Hanyecz traded 10,000 bitcoin in exchange for two large pizzas. The deal went on to be a monumental moment for the cryptocurrency in several different regards, ultimately culminating in a holiday celebrated by several Bitcoin investors.
Purchasing Power
When Bitcoin first started, its value was well beneath that of the dollar and other countries' currencies. When the first pizzas were purchased at 10,000, Bitcoin, the value was around $0.003. Quickly, several investors began to notice the potential of Bitcoin. Those investors included the Winklevoss twins of Facebook fame who decided to go in heavy into the cryptocurrency. They first discovered the cryptocurrency in 2012 and quickly chose to invest. Currently, they own over 179,605.25 Bitcoins, making their sum a total of over $1.4 billion.
In January of 2014, Bitcoin experienced its first major peak in value. The currency had skyrocketed, earning an estimated value of $713 per Bitcoin. The cryptos purchasing power continued to grow, reaching another high in 2017 when one Bitcoin was valued to be worth over $19,000.
Mainstream Acceptance
Even as the value of Bitcoin had continued to rise, it still avoided mainstream acceptance as a currency. Several financial officials were still skeptical of the currency. Charlie Munger, known for being Warren Buffet’s right hand man, has continued to dismiss Bitcoin, calling it "poison" and “too volatile to serve well as a medium of exchange”. The consistent lack of support from the government also served as a warning sign, keeping several investors away from the currency early on. But that changed in 2020 when PayPal announced that Bitcoin could be bought, sold, and traded on the financial platform, ushering Bitcoin into the mainstream.
The concept of Bitcoin as a value asset has also been featured heavily in the news. Its unexpected value showcased itself when 50 Cent discovered that his album Animal Ambition which he sold for Bitcoin had initially earned $450,000 but later accrued in value to well over $7 million.
But the several success stories of people discovering their newly found fortunates juxtaposed heartbreaking stories about those who had lost the passwords to their digital wallets. Stefan Thomas of San Francisco had around 7,000 digital tokens of Bitcoin in a virtual wallet. Having lost the password to the thumbdrive the coins were located on, he had lost almost $220 million in unrecoverable assets. Currently, there is an estimated over $140 billion in lost Bitcoin revenue from password changes and the inaccessibility of virtual wallets.
An Equally Unknown Future
One main reason behind Bitcoin’s continued rise in power is its finite number. With an economic principle of supply and demand ingrained into its value, as more people begin to acquire the currency, the more value it continues to hold. Certain financial advisors have even suggested that it's too late to hop onto the Bitcoin bandwagon. With much of the currency already released, there is still only 21 million Bitcoin in total, divisible into 100 million Bitcoin pieces. This still leaves an estimated 2.3 million Bitcoins in the wild, waiting to be mined by the next tech savvy coder.
Several major American companies have also paved the way, ushering Bitcoin into the mainstream. Tesla recently announced their over $1.5 billion investment in the cryptocurrency, opening up several avenues for individuals to purchase cars and products with Bitcoin. Several other businesses have also recently announced their acceptance of Bitcoin for purchases including Microsoft, Overstock, and BMW.
While a variety of companies are hopping on board and pushing Bitcoin further than before, there is still much flippancy between the government and Federal Reserve in response to Bitcoin. In March of 2021, Federal Reserve Chairman Jerome Powell described the currency as unsustainable and "highly volatile", solidifying Bitcoin as not a viable option for a transition to a cashless society. However, a few days later, the Federal Reserve also announced that Bitcoin could become a substitute for gold.
The fate of Bitcoin remains almost as mysterious as its origins. Those who will usher in the next phase of the coin are just as anonymous as its founder. But with such an uncertain situation, there is at least one guarantee with Bitcoin. That its value will fluctuate, making its journey a wild ride to watch.
Sources: Forbes, NY Post, Bitwala, MarketsInsider, MaltaToday, TradingEducation, MSN, ZipMex, Medium, Nakamoto, Exodus, PayBis, TechStory, CryptoNews, Bitcoin.com, TheLastFuturist, Investopedia