On the 8th of January, Bitcoin, the father of cryptocurrencies, completed 10 years of existence.
When Satoshi Nakamoto launched the official Bitcoin client in 2009, no one would have imagined that cryptocurrencies would reach the level of adoption they have today. The initial idea to offer a way of exchange based on cryptography aimed to solve an ever growing demand of a system of payments and transactions in a digital world, without the need for banks or creditors. But in these 10 years the coin created a revolution in the financial world and in the way we deal with money in the digital era.
The Financial Revolution
Bitcoin was initially created to be a decentralised P2P (peer-to-peer) exchange option without the need for an intermediary. In fact, for years Bitcoin was the “official” way to pay for products and services in the deepweb (a protocol of the World Wide Web that is not indexed by search engines like Google or Bing, thus making it much harder to access through standard methods). In its early years, it was common to associate cryptocurrencies to criminal or illegal methods of commerce, like buying and selling of drugs, sexual services, etc.
The first real-world purchase made with Bitcoin happened on the 22nd of May of 2010 in Papa John’s chain, when 2 pizzas were bought for a total of 10,000 BTC. Back then, each BTC was worth less than 1 cent of a US dollar, but right there a shift happened in the general sentiment of its users: in 5 days the price rose sharply by 900%. This marked the start of Bitcoin’s adoption in the real world.
As the years passed by, the use of Bitcoin as a way of payment for “real” products and services continued to grow. Big companies and organisations started to officially accept cryptocurrency (like Wikileaks in 2011) and already in 2012 the payment portal Bitpay reported having more than 1,000 shops in its database accepting Bitcoin.
From there on the growth was exponential. In 2013, the giant Coinbase announced it sold more than $1,000,000 in Bitcoin in a single month. In 2014, other giants of the technology industry also started accepting Bitcoin, like Microsoft, Dell, and Zynga. In 2015, the coin was officially accepted in more than 100,000 merchants around the world.
The Bumpy Road of Regulation
It did not take long for governments and regulatory entities to have their eyes on Bitcoin. Due to its decentralised and digital nature, the cryptocurrency was being widely used in illegal matters or even to avoid taxation. In 2013, the Department of the Treasury of the United States issued an official report about centralised and decentralised digital currencies and extended its anti money laundering regulations to include Bitcoin.
But the relationship between the cryptocurrency and governments was never amicable. Banks and other financial entities have a strong connection with governments, and Bitcoin poses a threat to the hegemony of those companies. From the ban of bank accounts that purchase Bitcoin, to entire countries considering adopting Bitcoin as their official currency, the journey of this cryptocurrency has had its fair share of ups and downs.
Even today the future of Bitcoin’s regulation is uncertain. More and more names join the ever growing list of countries that officially accept, recognise, and regulate this cryptocurrency as a currency like Australia, Canada, France, Germany, and others. At the same time countries like Ecuador, China, and Bolivia still consider Bitcoin to be illegal, going to the extreme of a total ban of any type of use, like Vietnam does (you can see the list here).
“One Cryptocurrency To Rule Them All”
At the same time that Bitcoin was gathering more and more popularity around the world, lots of other types of cryptocurrencies started to appear that followed the same model. The technology behind Bitcoin (blockchain) enabled the birth of new coins like Ethereum (ETH) in 2014, which was born from the idea of “improving Bitcoin” with a development language for applications in the same network.
Other projects used the same idea to create coins that would solve some of Bitcoin’s structural problems. From this premise, Bytecoin (BCN) was created in 2012, promising to be an improved version of Bitcoin especially with regard to privacy and in turn, Bytecoin made possible the birth of the giant Monero (XMR) after a hard fork on its blockchain.
Is the Future Decentralised?
Bitcoin’s influence in today’s world cannot be ignored. Its existence started from a growing demand for an online, secure, and decentralised payment system. Even though today there are many studies pointing out that Bitcoin is not the ideal candidate for a single worldwide currency because of its problems of scalability, slow transaction processing time, and high fees, there is no denying that its initial idea is genius, and that there is a demand for such a technology.
In its 10 years of existence Bitcoin proved that it is possible to make a transaction between two unknown people without the need for an intermediary. It also proved that one can make international transfers in a matter of minutes and with minimum fees (compared to regular bank systems). It showed that it is possible to create an economic system based on transparency, presenting a way to hinder corruption and money laundering.
Bitcoin gave people financial power, making them the rightful owners of their own money. Crypto-projects born from Bitcoin’s initial idea today offer formidable solutions to our daily problems, and make real the possibility of a single worldwide currency. The appetite for cryptocurrencies and blockchain technology is visibly growing and specialists bet that in the next years this technology will have worldwide adoption.
We are on the verge of a drastic change in the way we do business, treat money, and even relate in the online world. The technology of cryptocurrencies has opened a new world of possibilities ready to be explored. The future is brilliant and decentralised. Thank you, Satoshi Nakamoto!
This article was translated from my original article in Portuguese posted on theNovadax Blog.