Bitcoin or Bust

A view of Romania’s first bitcoin ATM is seen in downtown Bucharest. REUTERS/Bogdan Cristel

To this day the identity of the man behind it, known as Satoshi Nakamoto, is still unknown.

It has been an intense and unpredictable first decade for cryptocurrencies.

In 2009, very few people knew about Bitcoin.

Initially, Bitcoin was an experiment known only to cryptography enthusiasts, the underlying concept built on peer-to-peer transactions, asymmetric cryptography, and distributed ledger technology.

For the whole first year, the value of a Bitcoin was technically zero.

People used to just send it back and forth between them to try it out. One user allegedly tried to auction 10,000 bitcoins at one point for the hefty fee of USD50, but found no buyers; it would be worth a bit over USD72 million at today’s prices.

That was in fact the same amount of Bitcoin used for the first known commercial transaction ever recorded using the digital currency, by someone named “Lazlo” from Jacksonville, Florida.

He famously bought two pizzas from Papa Jones for the amount. Of course, Bitcoin was worth less than a cent back then, so it was a fair trade.

As the small initial community grew, so did the value of the network.

In 2010, with the launch of the now dead BitcoinMarket.com, trading was made easier. The following year, Bitcoin reached parity with the US dollar for the first time.

As the currency is built on open-source code, new cryptocurrencies started to emerge.

We would have to wait until 2013 for Bitcoin to pass USD100 in price, but only another year after that for it to cross the USD1,000 threshold.

The evolution was staggering to say the least. In 2014, with the shutdown of the MountGox exchange, the price took a big hit, but eventually recovered.

From its very beginning, the cryptoverse has been plagued by security breaches, scam projects, technical barriers, and basically bad press, but it has strived nonetheless.

The community grew larger, more exchanges came into play, along with new concepts and technologies, as more and more people looked at the potential of a decentralized anarchic transaction system known as blockchain to disrupt other industries.

It wasn’t until January 2017 that the price of Bitcoin crossed the USD1,000 barrier again, but once it did, it took off.

That was, perhaps, the most important year so far for cryptocurrency adoption.

With the rise in price came media attention, naysayers, predictors of doom-and-gloom, and the die-hard fans.

By 2017, forums and blogs had grown to full-fledged news websites dedicated only to the cryptoverse. Information was everywhere, and when the news of spectacular financial returns started to emerge in newscasts on TV, everybody else wanted to join.

At least that’s what it felt like from inside the cryptosphere when the price skyrocketed from USD1,000 to USD20,000 in 11 months.

This was around the time everybody started questioning the fact that the Bitcoin network was consuming more electricity than the whole of Denmark.

And when most news outlets started linking cryptocurrencies to the darknet, drug, arms, people smuggling, money laundering, tax evasion, and all types of criminal activity, not without reason.

Chinese magnates started driving the market and investors began setting up Bitcoin mining farms in Iceland because the country’s weather helped to cool the mining GPUs.

Those same GPUs, in the meantime, were in short supply, with the crypto-craze emptying out stores as users wished to be rewarded for mining cryptos from their own homes.

There were spreadsheets and calculations all over Twitter to figure out where it would be most profitable to mine, factoring costs of electricity, weather, regulations, power, and connectivity reliability.

But the real truth is, still today, very few people own Bitcoin or any other crypto. Even though it is impossible to know exactly how many have bought in, a study has found that 32 million wallets had been opened by December 2018. Even if we were to ignore the fact that many users hold several different wallets and that many wallets are no longer active, if each of those wallets corresponded to one bitcoin owner, that is still less than 0.5% of the world’s population. Saying there is room for growth is a serious understatement.

Of course, now we enter the better-known part of this story.

After the great peak came the fall.

When Bitcoin rose, it took the rest of the market with it, which meant that any new blockchain project was finding massive amounts of capital to launch their platforms.

When it crashed, it crashed hard, and it has been slow to recover throughout 2018 and 2019.

Today it is worth a bit over USD7,000, which still certainly beats the performance of any other asset class this decade. The whole market is worth around USD200 billion (miniscule when compared to the forex or stock markets), but cryptocurrencies and the blockchain technology that powers them are about much more than money.

It is about disrupting our financial systems, overcoming the overdependence on monolithic and often opaque private financial institutions; about self-empowerment, fairness, and protecting wealth from national economic crashes, inflation rates, and much more.

It also has a profound effect in empowering people under autocratic regimes.

Beyond all that, it represents an incredible new technological frontier.

The cryptoverse today counts over 4,000 different tokens, the lifeblood of over 4,000 new attempts to disrupt technology.

Central banks now have their own blockchain development teams, and so do most tech and major companies.

From the energy sector to logistics, insurance, health, education, farming, transport, and entertainment… nearly every area of human activity has at least one team trying to use blockchain to improve on what already exists.

The first decade of existence for cryptocurrencies has been one of youth; wild, volatile, passionate, and full of revolutionary ideas. It is hard to predict what its second decade will bring, even though many people try, but it surely will be interesting to watch unfold.