Bitcoin Price | Bitcoin Value
The Bitcoin price has been highly unpredictable but has proven to be one of the best speculations ever with multiple years having returns in excess of 5,000% each.
- Overview - Table of Contents
- 2009-2012 - The Early Days
- 2013 - The Insane Bitcoin Price
- 2014 - The Long Grind
- 2015 - Continued Building
2009-2012 - The Early Days
When Satoshi released the software in January 2009 there was no Bitcoin price because there was no Bitcoin value since it could not be used for anything. As found in The Book of Satoshi on Aug. 27, 2010 he proposed:
As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties:
- boring grey in colour
- not a good conductor of electricity
- not particularly strong, but not ductile or easily malleable either
- not useful for any practical or ornamental purpose and one special, magical property:
- can be transported over a communications channel
If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it.
Maybe it could get an initial value circularly as you’ve suggested, by people foreseeing its potential usefulness for exchange. (I would definitely want some) Maybe collectors, any random reason could spark it.
After a couple years the value of Bitcoin increased as bitcoins traded for about $0.30 on January 1, 2011, went to $31.50 about six months later and ended the year at $4.25. 2012 proved to be a less volatile year with the Bitcoin price staying under $15.
2013 - The Insane Bitcoin Price | Bitcoin's Value Increases
But 2013 is a year to remember in Bitcoin since the Bitcoin value increased with use cases and innovation. The Bitcoin price started January around $13.25, hit $266 in April, crashed to $50 a week later, consolidated for about six months and then after the United States Senate hearings on Bitcoin launched to the moon and briefly reached $1,240 before ending the year at around $800.
2014 - The Long Grind
2014 saw this downtrend and consolidation continue with the Bitcoin price and ended around $325. This was primarily a year of making Bitcoin easier to use with infrastructure being built with more than $300 million of venture capital investment being announced to build out Bitcoin value and usefulness. Additionally, there appeared to be a bubble with mining equipment that got corrected.
2015 - Continued Building
2015 has seen a fairly stable Bitcoin price but what is really exciting is that in the first quarter over $175 million of venture capital investment was announced. Just like the Internet's value in 1994 was difficult to use and required substantial venture capital investment to be made useful so likewise is the Bitcoin value, usefulness and utility currently being built out.
The lesson may be to never invest more than you are willing to lose. The Bitcoin price is highly volatile, may not be related to the underlying Bitcoin value and the highly promising blockchain technology that for the first time in history enables distributed consensus, triple-entry bookkeeping and programmable trust by being able to transfer value over a communications channel is still being proven.
However, it may be wise to take Satoshi's advice to buy Bitcoin, even just a little, just in case it becomes something of extreme usefulness. Plus, developing the technical literacy to do so is valuable. There was a time when everyone had to learn how to send an email.