The history of bitcoin, the first cryptocurrency

Bitcoin (BTC) was the first cryptocurrency ever created back in 2009, and today it remains the most popular and valuable digital currency in the world. Bitcoin is a decentralized blockchain-based digital currency supported by a network of users who verify and record transactions without relying on a central authority or intermediary.

Bitcoin is an alternative to fiat currencies, such as the US dollar, controlled by governments and central banks. Transactions are verified through a process known as the proof-of-work consensus mechanism. Bitcoin miners compete to verify transactions by solving complex mathematical functions using powerful computers.

Some bitcoin enthusiasts simply view cryptocurrency as an interesting asset for trading and speculation, while others believe that it could eventually become a universal currency of the digital world. There is no doubt that bitcoin's popularity has increased since its inception, but the first 13 years have also revealed many of the main drawbacks of the most popular digital asset in the world.

Here is an overview of several key epochs in the brief history of bitcoin and how they may affect its future:

• When did Bitcoin appear?
• The history of bitcoin prices.
• crypto-winter of bitcoin 2022.
• Bitcoin price forecasts.

no coincidence that bitcoin was born during one of the most chaotic financial environments in the history of the United States. During the global financial crisis from 2007 to 2009, distrust of banks and central governments reached its peak.

Bitcoin was created in 2009 by a person or group of people using the pseudonym Satoshi Nakamoto, a name that appeared in the original 2008 Bitcoin white paper, which first described a blockchain system that would serve as the basis of the entire cryptocurrency market.

Over the years, many people have claimed to be the real Satoshi Nakamoto, but none of them has been able to provide sufficient evidence to support their claims.

The Bitcoin blockchain was officially launched when the first bitcoin block, the genesis block, was created on January 3, 2009. Satoshi reportedly mined up to 1.1 million bitcoins in the first seven months after the launch of bitcoin. At the prices of August 2022, the value of these coins will now be about $ 22 billion.

Joshua Beck, founder and chief investment officer of the cryptocurrency hedge fund trocode Capital, says that the first bitcoin enthusiasts were fascinated by its design, even if they were not quite sure what it would actually be.

"It had some economic value, but I looked at it more from an engineering point of view, thinking that we could use it to transmit secure messages or get strong encryption into the hands of ordinary users, so the financial value was somewhat secondary," says Beck.

The first real financial transaction using bitcoin was reported on May 22, 2010, when a man from Florida agreed to pay 10,000 bitcoins for a Papa John's pizza at a price of about $ 25. This transaction valued the price of one bitcoin at almost a quarter of a cent. To this day, the Bitcoin community celebrates Pizza Day on May 22.

"Over time, financial value has become more widely understood, and, of course, today it has become the cornerstone of the fastest growing asset class of my generation," says Beck.

Bitcoin Price History

Bitcoin first became available for purchase, sale and trading on online exchanges in 2010. In April 2011, the price of bitcoin exceeded the $1 threshold for the first time.

Bitcoin also faced its first crypto contest in 2011. Litecoin (LTS) was launched in October 2011. The Ethereum blockchain was launched a few years later, in 2015.

As the price of bitcoin continues to rise, so does its fame, popularity and volatility. By November 2013, bitcoin prices had reached $1,000. Bitcoin prices and trading volumes really started to snowball at the end of 2017 – prices first reached $10,000 per coin in November 2017 - and reached around $20,000 in December 2017.

One of the driving forces behind the equivalent rise in bitcoin prices was the announcement of SM Group. (Ticker: CM) that Bitcoin futures will be launched in December 2017. These contracts represent the first bitcoin-related financial product offered by a regulated U.S. financial institution.

Garik Herniak, founder and CEO of generation Lambda, says bitcoin has followed a common innovation path known as the Gartner hype cycle. According to the model, with the advent of such a new technology as bitcoin, expectations initially rise to an unreasonably high level.

"At first, most people ignore it, and then suddenly everyone is more enthusiastic, until it becomes clear that promises cannot match reality," says Herniak.

"This situation and lack of liquidity combined with little regulation made them ready to manipulate the market."

At the end of 2017, the hype, hype and craze for the crypto market created a perfect storm of an asset bubble. Many startups have taken advantage of the cryptocurrency boom to raise funds through initial coin offerings, or ICOs. In 2017 and 2018, more than 800 ICOs attracted almost $20 billion in funding. The ICO space was engulfed by outright fraud, and the value of many of these ICO tokens collapsed within a year.

By the end of 2018, the bursting of the crypto bubble led to the fact that bitcoin prices fell below $ 4,000 per coin.

crypto-winter of bitcoin 2022

The next major surge in bitcoin's popularity occurred during the covid-19 pandemic in late 2020. Prolonged shutdowns of entertainment and leisure enterprises, such as sports and casinos, along with numerous rounds of government payments for economic incentives have left many young Americans with disposable additional income and free time, which contributed to the rise in bitcoin prices at the end of 2020.

The ProShares Bitcoin trading Strategy Foundation (Beto), the first bitcoin exchange-traded fund, or ETF, launched on a major US exchange, began trading in October 2021. The Bito ETF launch was followed by several other cryptocurrency futures ETF launches, including the Valkyrie bitcoin ETF (PTF) strategy, the Vanik bitcoin ETF (zbtv) strategy, and the Global X blockchain and bitcoin ETF (bit) strategy.

Bitcoin reached an all-time high of over $20,000 in December 2020 and eventually brought it to $68,990 in November 2021.

Unfortunately, persistently high inflation prompted the Fed to begin aggressively tightening monetary policy in early 2022, which led to a sharp sell-off of cryptocurrencies and other risky assets. To make matters worse, the sharp drop in cryptocurrency prices in early 2022 caused a liquidity crisis that led to the collapse of the $10 billion crypto hedge fund three Ames capital and the bankruptcy of the cryptocurrency creditors Celsius and Voyager digital.

The volatility of the cryptocurrency market also led to the collapse of the $60 billion Luna and the associated Tera USD stable coin and led to the world's largest stable coin briefly losing to the US dollar in May 2022.

Omid Malkan, an author and associate professor at Columbia Business School, says that the rapid rise in cryptocurrency prices in 2021, along with a strong tightening of central bank policy, led to the beginning of the crypto winter of 2022.

"The collapse of Luna and OST created a hole in the balance sheets of major players and led to successive refusals of cryptocurrency lenders such as Celsius and hedge funds with excessive leverage, accelerating the decline," says Malkan.

Bitcoin Price Forecasts

At the time of writing this article, one bitcoin is worth about $20,000. Its value is far from the 2021 high of more than $68,000, but it is still above the 2018 lows of less than $4,000.

Even after the 2022 sell-off during the crypto winter, bitcoin remains one of the most efficient financial assets in the long run. However, bitcoin's extreme volatility remains an obstacle if it wants to gain recognition as a truly global currency.

At the moment, bitcoin remains a high-risk speculative investment, and there is no clear way to estimate its intrinsic value or predict where its price will go next. Nevertheless, bitcoin bulls are still convinced that the outstanding global cryptocurrency has a bright future.

"It's hard to predict the future – especially for something as volatile as bitcoin – but as long as public acceptance continues, digital assets of all kinds are increasingly coming back to normal, and regulators are creating reasonable protective barriers, then prices should rise in the long run," says Malkan.