Bitcoin, the world’s most famous (or infamous) cryptocurrency is 10 years old today. It was on this day, 31 October, 2008, that mysterious Japanese scientist Satoshi Nakamoto distributed his work titled “Bitcoin: A Peer-to-Peer Electronic Cash System”. Nakamoto’s work set the stage for the development of Bitcoin and helped it garner community support that helped it to grow quickly.
On this day in 2008: Bitcoin white paper released by Satoshi Nakamoto pic.twitter.com/3fsPKqCYdY
— Jon Erlichman (@JonErlichman) October 31, 2018
Since then the digital currency has grown huge and has attained a somewhat notorious stature amongst global currencies.
On its 10th anniversary I’ll like to take us on a brief tour of the history of Bitcoin. Why was it created? Why did it become so popular? Why is it so volatile? And what could the future hold for it?
How and Why Was Bitcoin Created?
The idea behind the creation of Bitcoin was a noble and simple one. Its creators aimed to create a currency that was secure, private and independent of third-party institutions like banks.
Bitcoin turns 10 years old today 🎂
In 2010, a software developer bought 2 pizzas for 10,000 Bitcoins. Today, those 10,000 Bitcoins can get you a yacht https://t.co/ZkKaLhvpme pic.twitter.com/Ld57p0gdcy
— Bloomberg Quicktake (@Quicktake) October 31, 2018
It creators believed the currency would be so superior it would reduce notorious transaction fees placed by other institutions for payments processing.
The creators of Bitcoin moved quickly and released the software to the public in January 2009.
How Did Bitcoin Become Popular?
Although when Bitcoin was launched, it already had quite a following. However, the first major adopters of the Bitcoin currency was the black market community.
Bitcoin was the most important payment medium for many illegal ecommerce websites. One of the most prominent of these was “Silk Road”. Launched in 2011, the Silk Road black market platform sold everything from porn to fake driver’s licenses and used Bitcoin exclusively for payments. During the over two years existence of the website, 9.9 million Bitcoins were transacted. This amounted to over $200 million by the time the US FBI closed it down in 2013.
Bitcoin’s price began to rise gradually after 2011. Initially trading at $0.30 per coin its value rose to $16.41 by August 2012. Its price crossed $1,000 first in 2013, before slipping. But by January 2014, with more, this time legit, platforms accepting Bitcoin payments, its price shot up to $770.
However in the same year, Bitcoin was once again in the news for its link with criminal activities. The world’s largest Bitcoin exchange platform at the time, Mt.Gox disappeared from the internet, scamming users of over 850,000 bitcoin, valued $450 million at the time. Bitcoin dropped from $867 to $439 after the news.
But its price rebounded in 2016 and by January 2017, its price reached $996.
Volatility and Regulation
Nevertheless, Bitcoin caught the eyes of regulatory bodies not just for scams, but for the volatile manner with which its currency swung.
In 2017, Bitcoin’s value rose rapidly and broke several milestones all through the year. Its price shot up from $996 to $6,469 in July 2017.
Bitcoin’s value continued to rise as it got widespread acceptance by various financial institutions. At the height of its growth, Bitcoin’s market value crossed $300 billion in December 2017, up from $11 billion at the start of the year.
However during this period, bitcoin’s value fluctuated widely as speculators continued to fret about the value of the currency.
At several times throughout the year, the currency crashed violently before picking up to reach record levels.
This unusual behavior continues to worry financial regulators all over the world.
Various central banks and exchange regulators showed desire to rein in this behavior in late 2017. According to them, this wild swings are not evidence of a reliable currency. The Nigerian Central Bank governor in 2018 called the currency a huge gamble and promised to push measures to control it.
China, Russia, Japan and South Korea have all put forward several plans to control Bitcoin and cryptocurrency platforms in general.
Although these measures are expected to rein in the volatility, price fluctuations have not completely stopped. And in fact, at first, it leads to drastic reduction in Bitcoin prices across several platforms. The currency which was trading at around $19,000 in mid-December dropped to $9,477 following news of regulation.
Today is bitcoin's 10th anniversary. This fall, the price is stable and BTC is trading around $6,500 with relatively small deviations (now $6,320). Bitcoin volatility is nearing its lowest marks. pic.twitter.com/kH8sMc1LxX
— ICO Drops (@ICODrops) October 31, 2018
However, regulation has helped to discourage currency speculators and has helped to keep Bitcoin and other crypto currency prices “stable”. Bitcoin has fluctuated around the $6,500 range for the better part of 2018. This is much safer than the wild bull runs it witnessed in 2017.
What Does the Future Hold for Bitcoin?
In 2017 several governments raised concerns about Bitcoin and appeared willing to ban the currency and other digital currencies. But many of those governments have muted talks about banning the currency.
Countries like Nigeria and Russia have done little to oppose any further development of Bitcoin. And with the volatility of the currency gradually reducing, it paves the way for actual development and support for the currency.
Going forward, I believe the Bitcoin chapter is not over yet. Plenty of developments is in the works. And as long as bitcoin value remains “stable”, governments and financial institutions can push ahead with initiatives that will lead to a truly acceptable global digital currency.
Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!