Bitcoin is a cryptocurrency (digital money) and a blockchain (decentralized network). To remain decentralized and circulating without using a central bank-like authority, Bitcoin uses a distributed governance system called proof of work. After the network’s genesis block in 2009, participants from around the world called miners joined in to host the Bitcoin network, earning BTC rewards in a process known as mining. Bitcoin’s early days between 2009 and 2013 are characterized by slow but steady growth of the network as more miners joined, and BTC became adopted as an internet currency. However, Bitcoin’s slow growth days changed forever when, during 2013, BTC prices climbed from $80 to just shy of $1,000.
Bitcoin’s evolution into digital gold
Despite experiencing a few hiccups en route to global acceptance, Bitcoin’s ascendance in value has, in large part, been due to its role as a hedge against currency inflation. Similar to the way gold has been bought and traded as a store of value for centuries, Bitcoin has emerged as a form of digital gold used to store wealth during periods of volatility. It should come as no surprise that the emergence of the COVID-19 pandemic in 2020 catalyzed Bitcoin’s most significant price appreciation, taking BTC prices from $3,000 to $60,000 within a single year. While central banks continue inflating US dollars, euros, and pounds, Bitcoin’s decentralized infrastructure halves the inflation rate every four years, thus reducing the already finite supply of BTC. The programmed reduction in inflation means that Bitcoin is provably scarce and will continue rising in value as supply decreases further. In 2021, Bitcoin’s total valuation surpassed the $1 trillion mark, making it more valuable than Facebook, Tesla, and most of the world’s national currencies. Ironically, the very banks who created the financial crisis from which Bitcoin was born, such as JP Morgan and Goldman Sachs, are now buying as much BTC as they can.
Whoever and wherever Satoshi Nakamoto is, they are undoubtedly enjoying the twist of fate wrought by history.