In January 2013, bitcoin was valued at $14. By the end of 2017, the cryptocurrency was trading for $19,000. For people who invested in the period, bitcoin is one of the best things to ever happen.
From the Silicon Valley to China, bitcoin has created millionaires all around the world. Retail stores like Microsoft and Overstock.com are among the largest beneficiaries of bitcoin’s growth. How was bitcoin able to defy the naysayers to become a mainstream currency?
Before bitcoin was launched in 2009, there had been attempts to build a cryptography-based monetary system. None of them succeeded. When bitcoin introduced its decentralized, immutable payment system, developers, investors and financial institutions got interested.
Drug operators embraced the network before everyone else and gave bitcoin a bad reputation for a while. But as people learned about the peer to peer payment system, good-intended investors gave the cryptocurrency publicity. By 2012, people had stopped viewing bitcoin as the payment method of choice for drug dealers. Instead, it was viewed as:
- A peer to peer payment network
- A decentralized protocol governed by the community
- A secure network that can’t be hacked
- Low payment fees
- Profitable mining
Bitcoin’s mysterious founder, Satoshi Nakamoto, also spurred interest in the revolutionary technology. With news networks searching steadfastly about the founder, more people became interested in bitcoin.
Infographic courtesy of PlayCasinoOnline.net.
Charmed the Silicon Valley
Home to the world’s biggest software companies, companies that impress Valley moguls tend to succeed. Although bitcoin’s remained unknown, the cryptocurrency’s technology was enough to draw the attention of startup investors. Venture capitalists began buying bitcoins worth millions in 2011. By 2014, there were already companies with a billion dollars’ worth of bitcoin-related investments.
While the money helped bitcoin grow in price, it gave the network credibility—something it had been lacking before. Sure, bitcoin’s fans will always remember the story of 10,000 bitcoins used to purchase 2 pizzas in 2010. But back then, how many people really cared about the cryptocurrency? It took the backing of famous Valley millionaires like Charlie Shrem and Gavin Andresen to help bitcoin gain credibility.
In March 2010, bitcoin was priced at $0.003. By the end of the year, its price had risen by 9500%. For thousands of investors in 2010, those numbers meant something. News channels couldn’t ignore bitcoin anymore. The cryptocurrency’s price moved up by 1400% in 2011 and again by 206% in 2012.
By then, anyone who had doubted bitcoin’s potential had nothing else to say but invest. Everyone went into a buying spree. Venture capitalists, celebrities and individuals all grabbed bitcoins. 2013 was yet another great year for the virtual currency. The association of bitcoin was drugs began to fade. Investors from China to the US and started paying serious attention to the cryptocurrency.
In 2014, bitcoin recorded a negative turnover for the first time in its history. From a growth rate of 6000% in 2013, the coin recorded -63%, sending thousands of investors into panic. Investors who held on, however, had a better year in 2015 and 2016.
In 2017, bitcoin strengthened its value. In a period of 12 months, the cryptocurrency went up from $1000 to $19,000. So far in 2018, bitcoin self-corrected and had its value decline to $6600 by September 2018. But the incredible run in value for the past eight years surely helped the coin go mainstream.
The ICO Craze
Right when bitcoin was gaining popularity, industry developers introduced a new financial model. Like an IPO, an Initial Coin Offering seeks to raise funds through a crowdfunding campaign. But instead of giving investors company shares; ICO startups give out new cryptocurrencies. Investors risk their money hoping the invested tokens will gain value in the future.
Ethereum is the most popular cryptocurrency to ever hold and ICO. The company also built a platform for new companies to hold their own ICOs. The fast success rate of many ICO companies indirectly publicized bitcoin. As people rushed to learn about the new crowdfunding campaigns, they learned about bitcoin first.
Many of the initial coin offering startups also asked investors to use bitcoins as payment/ Together with Ethereum, bitcoin’s popularity continued to soar. Within three years, ICO had become a billion dollar industry. Bitcoin’s dominance in the cryptocurrency industry reduced from 80% in 2014 to 40% by late 2015. Still, it was only one of a few virtual currencies known to the mainstream media.
Lack of Regulation
Many governments could have already regulated bitcoin if they had the authority to. Bitcoin was developed to avoid regulation. Its decentralized nature ensures anyone can own some. Irrespective of a country’s attitude toward a new monetary system people can always access the cryptocurrency.
Countries like India that prohibited bitcoin transactions from the onset, couldn’t stop denizens from accessing the cryptocurrency. The US government couldn’t do anything other than to caution users. As it became apparent that bitcoin was a currency for the people, users embraced it.
People who have always disliked the idea of government-controlled monetary systems became bitcoin supporters. In countries where local money is super-inflated, bitcoin was seen as a better alternative. Unsurprisingly, bitcoin has become tremendously popular in Venezuela, a country with a hyperinflated currency.
With news everywhere talking about bitcoin, the cryptocurrency became a household name. Enlightened kids started asking their parents to invest in bitcoin. Brothers started investing in bitcoin mining jointly. College students began using their loans to buy bitcoins. As of early 2018, most people that access the Internet regularly know of bitcoin.
Mentioned nearly every week for all sorts of reasons, bitcoins has certainly become a mainstream currency. While not accepted by all, the blockchain network is respected by developers and governments alike.
One of the best things about bitcoin is that it paved way for other cryptocurrencies. With hard forks and open source software, developers will continue to improve the technology. Its price isn’t always on a positive growth curve. But bitcoin’s popularity isn’t likely to fade away soon. The blockchain is particularly important to developers. While the cryptocurrency may lose value, its decentralized, secure, payment protocol is part of the future.