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The First Cryptocurrency, The History of Bitcoin

The relatively little history of Bitcoin has seen a lot of ups and downs.

Since its inception in 2009, Bitcoin (BTC) has remained the most widely used and valuable form of digital money worldwide. Bitcoin is a decentralised digital currency built on the blockchain that is supported by a network of users who verify and log transactions independently of a central authority or middleman.

The U.S. dollar and other fiat currencies that are managed by governments and central banks are alternatives to bitcoin. An approach known as a proof-of-work consensus technique is used to validate transactions. By employing powerful computers to solve difficult mathematical problems, bitcoin miners compete to validate transactions.

Some Bitcoin aficionados just view the cryptocurrency as a fun thing to trade and speculate with, while others think it might eventually replace fiat money as the standard of the online economy. There is no denying that Bitcoin has had a rapid growth in popularity since its launch, but the first 13 years have also brought to light a number of significant problems and deficiencies in the most well-known digital currency in the world.

An summary of some significant periods in Bitcoin’s brief history and how they may impact its future may be seen below:

  • When did Bitcoin start?
  • Bitcoin price history.
  • 2022 Bitcoin crypto winter.
  • Bitcoin price predictions.

When Did Bitcoin Start?

It’s no accident that Bitcoin was created in one of the most turbulent financial climates in American history. During the 2007–2009 global financial crisis, there was a high level of mistrust of banks and centralised governments.

Using the alias Satoshi Nakamoto, which first appeared on the 2008 Bitcoin white paper that first described the blockchain system that would become the foundation of the whole cryptocurrency market, a person or group of people established Bitcoin in 2009.

Many people have claimed to be Satoshi Nakamoto throughout the years, but none of them have been able to back up their claims with enough proof.

When the genesis block, the first Bitcoin block, was produced on January 3, 2009, the Bitcoin blockchain was formally launched. Satoshi is said to have mined up to 1.1 million Bitcoins in the first seven months after the creation of the currency. Those coins would now be worth nearly $22 billion at August 2022 pricing.

Even though they weren’t entirely sure of what it was going to be, early Bitcoin supporters were fascinated by its design, according to Joshua Peck, founder and chief investment officer of cryptocurrency hedge fund TrueCode Capital.

The economic value was somewhat secondary, according to Peck, who was considering it more from an engineering standpoint with the idea of using it for secure message transfer or putting powerful cryptography in the hands of common consumers.

On May 22, 2010, a Florida man reportedly made the first Bitcoin transaction in the real world when he agreed to exchange 10,000 BTC for two Papa John’s pizzas, which were worth roughly $25. In that transaction, one Bitcoin was worth around one-fourth of a cent. The Bitcoin community continues to observe Pizza Day on May 22.

According to Peck, the financial value has grown in popularity over time and is now the cornerstone of the asset class that is rising the fastest for his or her generation.

Bitcoin Price History

Online exchanges first made it possible to purchase, sell, and trade bitcoin in 2010. The first time that the price of Bitcoin went over $1 was in April 2011.

In 2011, Bitcoin also encountered its first rival in the cryptocurrency industry. In October 2011, Litecoin (LTC) was introduced. Later, in 2015, the Ethereum blockchain became operational.

Bitcoin’s visibility, appeal, and volatility all increased along with the currency’s price. The cost of one bitcoin topped $1,000 by November 2013. With prices initially reaching $10,000 per coin in November 2017 and reaching roughly $20,000 in December 2017, bitcoin prices and trade volumes really began to soar in late 2017.

Announcing that it would begin offering Bitcoin futures contracts in December 2017 was one of the factors that caused the parabolic surge in Bitcoin prices. CME Group Inc. (ticker: CME) made the announcement. These contracts were the first financial instrument associated with Bitcoin that a licenced U.S. financial institution had ever marketed.

Bitcoin, according to Jarek Hirniak, founder and CEO of Generation Lambda, follows the Gartner Hype Cycle, a typical innovation trajectory. The model predicts that as a new technology, like Bitcoin, becomes more well-known, initial expectations rise to an absurdly high level.

The majority of people initially disregard it, but then suddenly everyone becomes more enthusiastic until it becomes clear that promises cannot keep up with reality, according to Hirniak.

“Such circumstances, coupled with a lack of liquidity and lax regulation, were ideal for market manipulation.”

Late in 2017, a crypto market frenzy, enthusiasm, and hype combined to form the ideal environment for an asset bubble. Initial coin offerings, or ICOs, were used by many firms to raise money as a result of the cryptocurrency boom. Over 800 ICOs raised $20 billion in investment between 2017 and 2018. The value of several of these ICO tokens fell in value within a year due to the prevalence of outright frauds and scams in the ICO arena.

The deflating of the cryptocurrency bubble had sent Bitcoin prices back down to less than $4,000 per coin by the end of 2018.

2022 Bitcoin Crypto Winter

The COVID-19 epidemic in late 2020 marked the beginning of the next significant rise in Bitcoin’s popularity. Numerous rounds of government economic stimulus payments, combined with protracted closures of entertainment and leisure industries like sports and casinos, left many younger Americans with excess cash and free time in late 2020, which contributed to another spike in Bitcoin prices.

In October 2021, trading for the ProShares Bitcoin Strategy ETF (BITO), the first Bitcoin exchange-traded fund (ETF) to debut on a significant American exchange, started. The Valkyrie Bitcoin Strategy ETF (BTF), the VanEck Bitcoin Strategy ETF (XBTF), and the Global X Blockchain & Bitcoin Strategy ETF were among the cryptocurrency futures ETFs that debuted after the BITO ETF (BITS).

In December 2020, Bitcoin reached new all-time highs of over $20,000. Later, in November 2021, it reached a peak of $68,990.

Unfortunately, persistently rising inflation forced the Federal Reserve to begin rapidly tightening monetary policy in early 2022, causing significant sell-offs in cryptocurrencies and other risky assets. To make matters worse, the early 2022 severe drops in cryptocurrency prices sparked a liquidity crisis that resulted in the bankruptcy of Celsius and Voyager Digital as well as the failure of the $10 billion crypto hedge fund Three Arrows Capital.

The $60 billion collapse of Luna and its related stablecoin Terra USD (UST) was also a result of cryptocurrency market volatility, and in May 2022, Tether (USDT), the largest stablecoin in the world, briefly lost its peg to the dollar.

According to author and adjunct professor at Columbia Business School Omid Malekan, the 2022 crypto winter was initiated by the sharp increase in cryptocurrency values in 2021 and aggressive central bank tightening.

Malekan claims that the fall of Luna and UST “blew a hole in the balance sheet of big participants” and “led to cascade failures of crypto lenders like Celsius and over-leveraged hedge funds, increasing declines.”

Bitcoin Price Predictions

One Bitcoin is currently valued almost $20,000. Although its value is far lower than its 2021 high of over $68,000, it is still greater than its 2018 lows of around $4,000.

Bitcoin will still be among the best-performing financial assets over the long run, even after the 2022 sell-off during the crypto winter. But if Bitcoin is ever going to be accepted as a truly global money, its high volatility will remain a barrier.

Since it is now impossible to determine Bitcoin’s intrinsic value or forecast its future price, it remains a high-risk speculative investment. The world’s leading cryptocurrency still has a bright future, according to Bitcoin bulls.

“It’s difficult to foresee the future, especially for something as volatile as Bitcoin, but values should rise in the long run,” adds Malekan. “Digital assets of all kinds should normalise further, and authorities should establish realistic guardrails.”

Also Read: Crypto Exchange CEO  Thodex arrested by Albanian Police

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Riya Kapoor

Riya Kapoor writes about lifestyle, entertainment, news and gadgets. She has been in this industry for almost 4 years now. She is a graduate from Delhi University with English Hons and had deep connection with writing since her childhood.

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