Financial experts have been calling Bitcoin’s demise for over a decade. All of them have yet to be right so far. But what about now? Is Bitcoin truly dead this time? Let’s go through Bitcoin’s ups and downs.
Ever since Bitcoin first came around in late 2008, it has been a topic of dispute and even controversy. Some believe it to be the natural progression towards decentralized finance, while others see it as a scam and a way for folks to buy drugs legally on the Internet.
Table of contents:
1. The Crypto World of the 1990s – Where Did Crypto Start?
Surprisingly, the decentralized finance thing dates back to the 1990s, when the technology started to become more widespread and available.
The idea for DeFi was impossible before then due to technological limitations. DeFi is said to have emerged from Moore’s law, Kryder’s law, and the overall increase in data storage and processing power of widely available devices. In short, financial institutions and bankers were no longer necessary to carry out complex calculations and keep the data safe.
2. Global Crisis 2008: Origins of DeFi
- The idea for DeFi might have been laid out in the 1990s; however, it picked up in late 2008 and early 2009. Some consider the 2008 financial crash to have been the main driving force behind figuring out a new, safer financial system that did not depend on failing financial institutions.
- More and more developers, hackers, and programmers were realizing there was no need to be controlled by centralized financial organizations and began their fight for financial independence.
- The main idea was that every Internet user should be able to retain the right to keep their data and privacy for themselves and not be regulated and spied upon by the authorities.
3. The Beginnings of Bitcoin: Satoshi Nakamoto’s Manifesto
The first cryptocurrencies were created in 2008 and included hash cash and bit gold. Bitcoin (BTC) quickly gained popularity following Satoshi Nakamoto’s manifesto. Satoshi’s true identity is yet to be discovered. Whether it was a single person or a group is still being determined.
The manifesto titled Bitcoin: Bitcoin: A Peer-to-Peer Electronic Cash System was published on October 31, 2008. The timing was perfect as more and more everyday folks were beginning to question the authority of centralized banking institutions amidst the unfolding financial crash.
Satoshi addressed the fears and growing distrust in centralized finance in the manifesto. He detailed and described methods of using peer-to-peer (P2P) networks that would enable the inception of “a system for electronic transactions without relying on trust.”
P2P networks enable users to transfer assets directly from the sender to the addressee. This would mean that people would be free from banking institutions, private companies, government organizations, and other intermediaries when managing their money. In a nutshell, the birth of Bitcoin was to be the birth of true financial independence for all.
4. An Early History and Bitcoin’s Ups And Downs
The early part of 2009 was when the first bitcoin block was mined. May 22, 2010, was one of the most prominent events in the cryptocurrency world as the first Bitcoin payment was successfully carried out (two pizzas were ordered for 10000 bitcoin).
a. The First Major Bitcoin Exchange: Enter Mt. Gox
- Back then, there was no major exchange that would allow for instantaneous exchanges and purchases of cryptocurrencies. To own Bitcoin, you must purchase it from a third party or mine it by leasing your computing power.
- The process could have been more optimal and would take less time. It changed in 2010 when the Mt. Gox exchange was first established. Mt. Gox, based in Shibuya, Tokyo, Japan, handled over 70% of all bitcoin transactions between 2013 and 2014. Mt.Gox was also where Bitcoin first reached $1000 on November 28, 2013.
- However, DeFi would only be DeFi with major crashes and collapses. The dominance of Mt.Gox would be short-lived and would end in 2014 when the exchange collapsed and began the process of liquidation. It resulted in panic and an overall decrease in trust and interest in crypto.
b. Where is Satoshi? Satoshi Nakamoto’s Departure From Bitcoin and Its Effects on Bitcoin’s Price
There were other significant Bitcoin’s ups and downs. In 2011, Satoshi Nakamoto, the bitcoin founder, left the project altogether. This resulted in one of the first significant crypto mayhems, characterized by mass hackings, collapsing exchanges, and general panic. Something you probably are familiar with if you’ve been in crypto for at least the last couple of months.
That said, the network would recover relatively quickly, only to spring up and come back much stronger. In the following months, bitcoin continues to grow in popularity, attracting more interest not only from regular everyday people but also from official authorities all across the globe. This further expands the currency as more institutions and entities adopt Bitcoin as a payment option.
c. Bitcoin Blooms: Can’t Have Bitcoin Without All the Drama
Having reached over $1000 for 1 BTC in 2013, the Bitcoin price slumped and fluctuated, varying wildly until 2017.
After a slow start to 2017, most crypto enthusiasts needed to know what was in the books. Nobody expected what was soon the be first massive boom in Bitcoin price and the crypto market in general.
Even though the start of 2017 was not very successful for Bitcoin owners, the later months showed a growing popularity and normalization of other cryptocurrencies, such as Ethereum, XRP, and Litecoin, to name a few.
The final months of 2017 saw the Bitcoin price grow to $10,000 per Bitcoin. If that wasn’t shocking enough, the BTC price grew, reaching a jaw-dropping $19,000 the following year. It was a time when skeptics became believers, and your old-school holders would say, ‘I told ya.’
d. Bitcoin Gets $20,000
- It was also around that time when China banned decentralized cryptocurrency exchanges, causing commotion and divisiveness. That said, considering the tight grip the Chinese Communist Party was famous for holding its citizens under, this did not surprise most DeFi enthusiasts. The idea, after all, was purely a Western one, seeking individual freedom above all.
- Bitcoin shook the ban instead, quickly reaching $20,000 per BTC by the end of 2018. Around that time, large US exchanges, including CME and CBOE, launched their first futures contracts, which led to further market stabilization and allowed more prominent players to trade.
5. Is Bitcoin Truly Dead This Time?
No.
- The fluctuations that we can observe are relatively minor.
- The crypto market is still highly green.
- Many people investing in cryptocurrencies are still new traders and investors who need to gain experience in how the market works.
- This leads to more emotion-driven decisions, panic-selling, and greedy buying, mirrored in prices.
The Bitcoin price has been dramatically inflated and what we have been experiencing since the end of 2017 is an excellent market correction.
6. Bitcoin’s Ups and Downs and A Dose Of Skepticism
Skeptics are still skeptical; however, it’s pretty hard to argue that Bitcoin is not progressing – or worse – dying when we consider that the market’s capitalization has been doing more than reasonable:
- In 2010, it was $1 million for bitcoin;
- in 2013 – $1 billion;
- in 2017 – more than $100 billion;
- in March 2021 – more than $1.1 trillion.
2022 brought us back to some $320 billion, which resulted in more fear and skepticism. However, as you have already learned, this has happened before.
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