In 2008, an anonymous man (or an anonymous group of persons) going by the name of Satoshi Nakamoto authored a whitepaper named ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ where a decentralized and peer-to-peer network approach was hypothesized, leading to the creation of blockchains and the entire revolution surrounding it, from Ethereum to Solana to NFTs. Even United Payments Interface (UPI) uses blockchain in its system for recording transactions in ledgers.
Coming back to this whitepaper, Satoshi Nakamoto came up with a digital currency known as Bitcoin (BTC) for the approach. Bitcoins used to be so cheap that in 2010, a person spent 10,000 BTC (then worth only $40) to buy two pizzas from Papa Johns. Cut to 2021, an Australian cricket named Pat Cummins donated 1 BTC (worth 43 lakh INR or $58683) to Indian NGOs in her battle against the deadly Covid-19 second wave.
Wow, what just happened?
Early prices of BTC
For quite some time, the price of 1 BTC was below $1. From its introduction in early 2008 at $0, the price of BTC started publicly trading around $0.0008 to $0.08 per coin in July 2010 (the exact prices are not available in the public domain at the moment). BTC first breached the threshold of $1 around February 2011.
However, BTC started to catch the attention of speculators around the world in early 2011 with a 3,200% rise in prices from $1 to $32 over the course of April, May, and June of the same year. This was followed by immediate bearish sentiment with the prices dropping down to $2 per coin in November 2011. This was the earliest sign of the irrational volatility that BTC would come to represent for the rest of the decade.
BTC’s 2013 rollercoaster
With respect to rapid volatility, 2013 was the big year with respect to BTC price, beginning the year trading at $13.40 and then going through two massive price bubbles in the same year. The first bubble took place when the price shot up from $15 to $220 by the beginning of April that year, followed by an equally rapid bear run that saw the price of 1 BTC drop to $70, a 33% fall inside 10 days.
The second bullish run took place as a result of another rally towards the end of that year in October, with the price of 1 BTC rallying from $125 to $1,150 in just 3 months, while later falling $760 in just three days. These rapid bubbles were followed by a slump in BTC prices for multiple years, at which point people started writing off the hype of cryptocurrencies and blockchain as just that - hype.
Guess who’s back?
Most stocks that hover around price ranges of $800-$1000 would be considered volatile. But for BTC, it was a period of stagnancy, in contrast to its rapid growth from less than a cent to multiple dollars. It would have been easy to write off the story at this point, but as it would seem, the initial bubbles were just the trailer, the real movie was just beginning.
2016 ended up becoming a very eventful year in the growth of BTC prices. Due to the confirmation of the Brexit vote, demonetization of the ₹500 and ₹1,000 Indian currency notes, and the election of Donald Trump as the 45th President of the United States, caused some members of the society to distrust the use of fiat currency backed by National Federal Banks and started liking the idea of a deregulated decentralized currency instead. Bitcoin and other cryptocurrencies were the obvious contenders.
From mid-March 2017 to 17th December 2017, the price of 1 BTC shot up from $975 to $20,090. This run truly gave bitcoin, blockchain, and cryptocurrencies the spotlight it deserved ages ago, with internationally acclaimed economists showing interest and Federal Banks starting to fear a potential takeover of the fiat currency.
But make no mistake, this was still only a discussion and not a realistic possibility yet. But the movements were enough to keep it in the spotlight until the prices started going sideways for another two years again.
However, this time the conversation regarding blockchain has not died down. Developers were trying to implement blockchain projects and entrepreneurs wanted to use blockchains in operations. The Ethereum blockchain and its smart contracts started becoming a favorite for its ability to self-execute commands with ease.
The COVID-19 pandemic forced many people around the world to find newer sources of income, with businesses forced to lay off in masses and employees seeing salary cuts. This encouraged people to look into equity markets and cryptocurrencies as an option.
As a result, there was a large influx of new traders and investors into these markets, and that shot up these prices even more. While we are all aware of the bull run in our Indian stock markets, the growth in crypto markets, especially Bitcoin, was a thing of marvel. The year started off with BTC at $7,200 per coin, while ending the year at $24,000 per coin. The growth continued till the price of one BTC hit $62,000 per coin, before ultimately crashing along with the entire crypto market to $28,000 per coin.
BTC prices today
As of 23rd September 2021, BTC’s price levels have been hovering around $42,000 levels, bouncing back from its $28,000 levels sharply to $52,900 and falling down. Elon Musk briefly accepting Bitcoins as a mode of payment, followed by El Salvador accepting Bitcoin as nationally recognized legal tender has only increased the faith in this phenomenon. We can only expect this volatility to continue over time, and the price per coin of BTC to scale newer all-time highs.