Happy Birthday, Bitcoin! A Look Back at the Insane 10 Years of Cryptocurrency
Time sure flies. It’s been 10 years since Bitcoin’s whitepaper was published online by the mysterious Satoshi Nakamoto, thus bringing cryptocurrency and blockchain technology to the world.
Much like a 10-year-old child, blockchain technology has gone through growing pains and has had a few temper tantrums along the way. There’s still a long road ahead before blockchain reaches maturity, yet it has grown at breakneck speeds since it was born — they just grow up so fast, don’t they?
In celebration of blockchain’s first decade, let’s see what Bitcoin and blockchain technology has accomplished in the past 10 years and examine where it’s headed.
Bitcoin is Born
On October 31, 2008, an anonymous person (or people?) using the pseudonym Satoshi Nakamoto released a paper entitled Bitcoin: A Peer-to-Peer Electronic Cash System to an obscure cryptographer mailing list. The paper outlined an alternative model to the world’s traditional banking system — fitting, considering we were going through one of the worst financial crises the world had ever dealt with. This new financial system wouldn’t be controlled by single giant entities, instead it would be transparent, trustless, and completely decentralized.
Just a couple months later, the open-source Bitcoin network officially went live. At that time, nobody had any idea that this new technology would end up paving the way for tens of thousands of other cryptocurrencies to eventually be born, and hundreds of revolutionary use cases and projects would be created that are currently transforming our world as we know it.
Blockchain Begins Making Waves
For the first 4 years of its life, Bitcoin was pretty much completely unknown. Nobody had yet truly understood what blockchain’s purpose was or how it could be utilized.
However, that slowly began to change around 2014, when people started to realize that blockchain could be used for more than just anonymous and secure online payments — it actually had the potential to be a highly useful and efficient tool for a plethora of industries.
Once savvy entrepreneurs woke up to this powerful fact, there was a massive surge of investment in businesses that were exploring how blockchain technology could impact not only the banking and financial world, but even industries such as supply chains, healthcare, voting, internet identity, IoT, cloud storage, real estate…the list goes on and on.
As more companies and investors learned about this newfangled technology, new projects exploring blockchain’s potential uses started popping up each day — and they continue to do so up to the present, with no end in sight.
A Challenger Appears
A young yet gifted Russian-Canadian boy who was an initial contributor to the Bitcoin codebase became quite frustrated with Bitcoin’s programming limitations. He began criticizing its flaws online, pointing out that Bitcoin needed a scripting language for application development. His ideas, however, were mostly just met with resistance from the Bitcoin community.
Deciding to take matters into his own hands, 19-year-old Vitalik Buterin went to work creating his own blockchain and cryptocurrency, now known as Ethereum. Buterin published Ethereum’s whitepaper in 2013, describing it as a “decentralized mining network and software development platform rolled into one.”
In 2015, Ethereum went live and became the first public blockchain that anyone could create new cryptocurrencies and applications on. One particularly revolutionary feature of Ethereum is that it can be used to create “smart contracts” — that is, self-executing contracts that are trackable, transparent, and irreversible, since they’re built on a decentralized blockchain. This completely removes the need for expensive third parties to facilitate transactions.
Smart contracts have attracted massive attention from large businesses around the globe, including Microsoft, Intel, JPMorgan Chase, BP, and Mastercard, to name a few.
Ethereum has made a huge impact on helping blockchain technology gain mass adoption. Thousands of cryptocurrencies and projects have been created on Ethereum’s network since its inception just a mere 3 years ago.
Some Hiccups Along The Way
As cryptocurrency began to rise in popularity with more and more people investing in and trading these new digital tokens on online exchanges, it also caught the attention of hackers.
The big problem with keeping cryptocurrencies on online exchanges is that these platforms are centralized, meaning if someone hacks into the system, they can go ahead and gain access to everyone’s accounts. As a result, many exchanges and those using them have become victims to system-wide hackings, losing all of their funds instantly as a result.
The most notable crypto hack so far has to be the Mt. Gox debacle, where it was discovered that around 850,000 bitcoins — $460 million at the time, though now worth about $5.5 billion today — had been swiped by hackers. Mt. Gox was the largest Bitcoin exchange at the time, controlling 70% of all bitcoin trades, and this massive hack caused them to instantly go bankrupt.
Mt. Gox hasn’t been the only exchange to suffer attacks. In August 2016, users holding bitcoin on the popular crypto exchange Bitfinex lost a combined 120,000 bitcoin overnight, $72 million at the time. Japanese cryptocurrency exchange Coincheck lost $534 million to cybercriminals in January 2018. This barely scratches the surface of all the hacks that have happened these past 10 years. Legions of unsuspecting crypto holders have lost huge sums of money because the exchanges they use are centralized and not secure.
All of these terrible hacks has given rise to decentralized exchanges, known as DEXs. DEXs don’t hold everyone’s crypto in one centralized place, which means they don’t have one single point of failure like centralized exchanges. They’re not controlled by one single entity. DEXs allow users to control their crypto holdings themselves, the way Satoshi Nakamoto envisioned it in the first place. DEXs still have a while to gain more adoption, but they certainly help solve the security issues that come with using centralized exchanges.
Something amazing happened in 2017. Bitcoin began the year at around $900 per BTC, and by December, just one single bitcoin was worth nearly $20,000. Nerdy young kids suddenly became millionaires with Lamborghinis. Every news outlet was reporting on the crypto craze — “What is this newfangled thing called Bitcoin?”
Cryptocurrency, namely Bitcoin, started to go mainstream. All this publicity only further shot up the price as more and more people bought in without really knowing what a blockchain even is.
Tons of businesses also scrambled to cash in on the mania — some actually interested in utilizing the new technology, but also many that were just taking advantage of the crypto frenzy to rake in the dough.
A beverage company called Long Island Iced Tea decided to change their name to Long Blockchain. Their shares jumped nearly 300%.
A banana plantation in Laos created Bananacoin, a cryptocurrency pegged to the export price of one kilo of bananas. They’ve sold over 6.8 million coins.
Even Pablo Escobar’s brother joined in on the crypto frenzy. It’s called “dietbitcoin” — and Roberto Escobar wants the world to know his coin is definitely “not a scam.”
You can’t make this stuff up!
Where We’re At Now
While we saw insane highs at the end of 2017, that all dropped, and dropped, and dropped some more, throughout 2018. (Just watch the little featured video to quickly understand how the crypto market has been doing.)
The good news is, these dropping prices means all those greedy money-grabbers attempting to get rich overnight are falling away and only those truly serious in changing the world with blockchain technology have stayed. The purpose of crypto was never so people can use it as in investment to make boatloads of money overnight. It’s potential uses are so much cooler than that.
People are using blockchain in astonishing ways. The United Nations provided crypto-based vouchers to Syrian refugees so they could buy food — since they don’t have bank accounts, this ended up being the easiest way to get money to them.
Big projects like Stellar and OmiseGO are providing low-cost financial services to the unbanked in Africa and Asia so migrant workers can send money back to their families without getting gauged by high fees from Western Union.
There’s blockchain projects working to eradicate voter fraud and bring the voting system into the 21st century. Since the network cannot be influenced or corrupted by a single party, meddling and tampering with elections would be impossible, and we could all finally vote straight from our phones or computers.
These examples are just a teensy tiny tip of the iceberg. It’s truly an incredibly exciting time for blockchain technology, and we get to see how it all unfolds and transforms our world before our very eyes.
What’s To Come?
Now that Bitcoin turned 10, this means we’re currently entering the teenage years of blockchain. Hopefully it will learn from its past mistakes and start growing more mature as it enters adulthood.
If there’s anything we’ve learned from watching these events unfold over the past 10 years, it’s that it’s truly impossible to try and predict the future of the crazy blockchain world.
However, more likely than not, we should see more adoption of decentralized exchanges take place, to protect against more giant hacks and offer a more secure method of trading.
Stablecoins have become very popular lately — those are cryptocurrencies pegged to an underlying asset such as USD or even gold. They are extremely useful because they solve the price volatility problem that cryptocurrencies suffer from. We could see a big rise in adoption of stablecoins for day-to-day transactions as a result.
More scammy projects will continue to fall away, while the ones with great ideas and working products rise up. More interesting uses will be thought up and enabled for this versatile technology. Nobody knows what will happen next, but one thing is for sure: It definitely won’t be boring. Teenagers get pretty wild, after all!