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