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Bitcoin: A Brief History and a Peek Into the Future

Money has changed a lot of forms since its inception in 600 BCE. From cowrie shells to beads and gold coins to physical notes and virtual currencies, money has been the standard for exchanging value for decades.

“Money is not coin and banknotes. Money is anything that people are willing to use in order to represent systematically the value of other things for the purpose of exchanging goods and services.”
Sapiens (2011) by Yuval Noah Harari

Since the inception of Bitcoin in 2009, over 22,932 cryptocurrencies have emerged. Despite so many virtual currencies, Bitcoin is still the #1 cryptocurrency with a total market cap of $606.10B.

Ever wondered what makes Bitcoin stand out from the crowd? Who invented Bitcoin? What gives Bitcoin value? In this blog, we will uncover Bitcoin’s history and take a peek into its future. If that sounds exciting, let’s get going.

Bitcoin: The inception

An anonymous entity, Satoshi Nakamoto, published a whitepaper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008 to counter the Global Financial Crisis (GFC) that fueled inflation and adversely affected the economy in the early 21st century.

A few months later, on January 3, 2009, the first-ever block was mined on the Bitcoin network. It is called Block 0. It is also known as the “genesis block” and contains “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks,” which is proof that the block was mined on or after that date.

The first-ever Bitcoin transaction (The Genesis Block)

Satoshi Nakamoto, the anonymous founder of Bitcoin, transferred 10 BTC to Hal Finney, a computer scientist, on January 12, 2009. Finney became one of the few pioneers to embrace Bitcoin and mine the asset.

First-ever P2P Bitcoin Transaction - Speed Blog

Hal Finney is also believed to be among the very few people who have communicated with Satoshi.

“Today, Satoshi’s true identity has become a mystery. But at the time, I thought I was dealing with a young man of Japanese ancestry who was very smart and sincere. I’ve had the good fortune to know many brilliant people over the course of my life, so I recognize the signs.”
– Hal Finney, an early Bitcoin adopter, and pioneer

Sadly, in 2009, Finney was diagnosed with ALS and was paralyzed. However, he was at peace with his involvement in the Bitcoin project and was curious to see how his Bitcoins would help his family. He remarks, “My bitcoins are stored in our safe deposit box, and my son and daughter are tech savvy. I think they’re safe enough. I’m comfortable with my legacy.”

The first-ever real-world Bitcoin transaction

First-ever Real-world Bitcoin Transaction - Speed Blog

May 22, 2010, is one of the most important days in the history of Bitcoin. On this day, Laszlo Hanyecz, a developer and an early Bitcoin miner, exchanged Bitcoin to purchase physical goods. He wanted two large pizzas for a whopping 10,000 BTC. This was when Bitcoin’s price was a little less than half a cent per coin.

After waiting a few days, his request was fulfilled by another user Jeremy Sturdivant, who went by the username “jercos” on Bitcointalk.org. If he had held the Bitcoins until the currency reached its all-time high of $68,990 in 2021, they would be worth $690 million today. That amount of cash could buy him 46 million large Papa John’s pizzas at $15 a piece.

Bitcoin: an alternate to banks?

During the Global Financial Crisis in 2008 and 2009, a lot of banks and financial institutions failed, which affected millions of people worldwide. It was one of the worst financial crises of the decade that swept away $2 trillion from the global economy.

The 2008 financial crisis unearthed the hidden vulnerabilities of our financial system. People realized they needed a currency they could trust, money that could not be inflated or controlled by a central authority.

Bitcoin was conceptualized to break financial barriers, bank the unbanked, eliminate dictatorship and prevent inflation. Today, there are over 44 million Bitcoin users worldwide, transacting over 400,000 times a day on average.

Here’s how Bitcoin solves existing problems with banks and other financial institutions:

  • Bitcoin is completely decentralized & free from dictatorship. Thus, it cannot be controlled by a single entity or person. No one can inflate it or print it at will. Bitcoin is programmed such that it is autogenerated through software, and there will be, in total, only 21 million coins in existence.
  • Bitcoin is fraud-proof and cannot be frozen/stolen away. Payments made via Bitcoin are peer-to-peer — eliminating all the intermediaries from a transaction. Thus, no one can freeze your funds or impose any restrictions on its use.
  • Bitcoins are accessible to anyone, anywhere, 24×7. On the contrary, you cannot use banking services over weekends or public holidays. Moreover, in a few remote areas, there are no banks at all — keeping a lot of citizens unbanked.
  • Transferring Bitcoin anywhere in the world is fast, simple, and cost-effective. While international bank transfers can take an eternity and cost you a fortune, Bitcoins can be transferred anywhere around the globe almost instantly.
  • Banks and other institutions can be hacked and exploited by malicious attackers. However, crypto is safe and secure as it cannot be tempered without your private keys.
  • Banking charges are overwhelming and oftentimes unpredictable. Not everyone can afford the account maintenance fees, overdraft charges, and other expenses imposed by banks. With Bitcoin, all you pay is a nominal network fee, which is a tiny fraction of the total transaction amount. No other fees/additional charges.
  • Banks can be biased towards a particular individual or a group of people. For instance, if you have indifferences with a financial officer from a certain bank, he may delay your transactions or raise false claims. This makes them unreliable and untrustworthy.

Bitcoin holds tremendous potential and can be an ideal alternative to banks. Several countries like El Salvador and the Central African Republic (CAR) have adopted Bitcoin as a legal tender. More countries are soon to follow the trend as banks around the world are becoming increasingly unstable.

The future of Bitcoin

Being the oldest, largest, and most mature cryptocurrency, Bitcoin holds tremendous potential to be the next best alternative to banks. Its wide accessibility, global acceptance, and ability to store value make it an ideal currency for the future. In the last three years, Bitcoin’s price has tripled, and it has grown by 1,500% in six years. It’s the only currency that holds half the value of the entire crypto market.

▷ The best-case scenario

Michael Saylor, a Bitcoin maximalist and chairman of Microstrategy, one of the largest independent publicly traded analytics and business intelligence companies, believes that Bitcoin is the future of money. They have converted most of their cash reserves into Bitcoin and are continually buying more whenever they have spare cash to invest.

Let’s look at a few outcomes if everything works out in Bitcoin’s favor:

  • Global adoption: Giant corporations like Starbucks and Microsoft will embrace Bitcoin and other cryptocurrencies as a standard payment method. Your groceries? Bought with Bitcoin. Flying to The Bahamas? You can buy your tickets with CheapAir — an airline that supports Bitcoin.
  • Government approval: Governments around the world will not only embrace cryptocurrencies but also promote their use with favorable regulations and lenient taxation rules. More and more countries will start accepting Bitcoin as legal tender, following El Salvador.
  • Large-scale investment: Giant investment firms will start investing in Bitcoin, which will boost its demand and add credibility. Investors will start looking at Bitcoin as a long-term investment, which will continually boost its price.

While this sounds dreamy, know that it’s a best-case scenario. Now let’s look at the other side.

▷ The worst-case scenario

Warren Buffet, the billionaire chairman and CEO of Berkshire Hathaway, described Bitcoin as a “gambling token” in an interview with CNBC. In a previous interview, he mentioned that Bitcoin “doesn’t have any intrinsic value … but that doesn’t stop people from wanting to play the roulette wheel.”

Let’s see a few outcomes if Bitcoin turns out to be a “gambling token”:

  • Global ban: Governments and big financial institutions may ban Bitcoin, devaluing the currency to almost $0.
  • Obsolescence: If a new currency emerges which has superior technology, better security, lower energy consumption, faster transactions, and stronger privacy — it may make Bitcoin completely obsolete.
  • A technical flaw: Bitcoin is based on robust technology. However, if a major security threat is discovered, Bitcoin will suffer a sharp decline in price.

Note that, above mentioned scenarios are very unlikely and extremely pessimistic. None of that may ever happen, as Bitcoin has been around for decades. So let’s explore the middle ground while considering both aspects of Bitcoin.

▷ The middle ground: a realistic approach towards Bitcoin

Bitcoin is yet to see a lot of good and bad days over the next few years. With virtual currencies already shaping financial markets, Bitcoin is likely to make a difference in the lives of many.

  • Favorable regulatory conditions: A lot of countries have started taking cryptocurrency seriously. Governments are actively working to regulate crypto and use it optimally such that it boosts the economy.
  • Slow and steady adoption: An increasing number of businesses, NGOs, and individual merchants have started accepting crypto. As the user base increases, these numbers will continue to grow until crypto becomes a standard payment method.
  • Competition from other currencies: Today, there are over 22,932 cryptocurrencies worldwide. Bitcoin is likely to face competition as new coins emerge with faster transaction speed, more privacy, and better features.
  • Technological advancements: As the Bitcoin network grows, we will see a lot of technological advancements: additional security measures, better payment experience, etc.
  • Volatility: Bitcoin is far from stable. If anything, Bitcoin is highly volatile. And it will remain that way as the market conditions change. 

Final words

Bitcoin’s future is uncertain. It can either be an alternative to banks and a dominant currency or disappear entirely.

In the near future, cryptocurrencies will be more than just an investment. They have the potential to reach where money can’t. They are already used across diverse industries, from eCommerce to entertainment and everything in between.

Having said that, Bitcoin has tremendous potential to transform the way money works. If you are seeking to start using Bitcoin for your day-to-day transactions, sign up with Speed Wallet today.

Merchants and businesses can start accepting Bitcoins across their online and offline touchpoints. Sign up for a merchant account to start using Speed Solutions commercially.

Speed Team

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