Bitcoin

How Bitcoin blazed a trail for the modern cryptocurrency market

While Bitcoin is only in its second decade as an established entity, it has endured significant peaks and troughs during this time. However, it has undoubtedly begun to emerge into the consumer mainstream, with its total market capitalisation currently estimated in the region of $199.4 billion.

During this time, Bitcoin has also emerged as a poster boy for the marketplace and a raft of alternative tokens, enabling platforms such as Ethereum and Tether to also become highly dominant entities.

We’ll appraise the history of Bitcoin briefly below, while asking how it has opened the door for a diverse range of new and exciting tokens from across the globe.

The early history of Bitcoin and the technology behind it

The precise history of Bitcoin can be traced back to August 18th, 2008, when the Bitcoin.org domain was registered by an anonymous entity as a precursor to the launch of the token.

This was followed by the launch of a white paper establishing a model for Bitcoin, while also underlying the role that blockchain technology would play in underpinning the digital currency.

Blockchain, which is a transparent and immutable system that records transactions pertaining to cryptocurrencies across a peer-to-peer network, actually has a history that can be traced back to 1991. At this time, a cryptographically secured chain of blocks was described for the first time by W Scott Stornetta and Stuart Haber, and seven years later computer scientist Nick Szabo initiated the first rudimentary decentralised currency known as ‘bit gold’.

It’s blockchain that affords Bitcoin all of its core advantages, including transparency, anonymity and lack of central control, and these continue to underpin the token’s success in the current climate.

Following its inception in 2008, the growth of Bitcoin was pronounced. For example, the New Liberty Standard set the first ever Bitcoin exchange rate against the dollar on October 5th, 2009, at which time one $1 was equal to 2303.03 BTC.

Less than one year later, the first ever physical purchase was completed using Bitcoin, when Laszlo Hanyecz bought two pizzas for a total of 10,000 BTC.

Bitcoin in 2020 and its role in the marketplace

While Bitcoin has endured some significant troughs since these milestones (including being used as the currency of choice on the so-called ‘silk road’), the currency has enjoyed sustained growth in recent times and expanded to influence a number of applications.

As a result of this growth and evolution, for example, Bitcoin has become a viable and tradeable asset class in its own right. More specifically, it can be bought and sold through investment vehicles such as CFD trading, enabling investors to speculate on price shifts and the inherent volatility that underpins all cryptocurrencies.

Of course, the value of Bitcoin has soared as it has benefitted from wide scale adoption across the globe, creating a scenario where some controversial investors even refer to the token as a safe haven during times of austerity. This has been borne out during the coronavirus pandemic, when the value of Bitcoin has largely increased as countries have rolled out various stimulus measures.

Make no mistake; this has also paved the way for other currencies and tokens to grow and emerged as viable asset classes, with Bitcoin helping to establish this new marketplace and identifying it as an increasingly viable option.

Photograph by Typography Images