First Stage Investor

Bitcoin Has Come a Long Way in 10 Years

Bitcoin Has Come a Long Way in 10 Years
By Andy Gordon
Date October 4, 2018

Ten Halloweens ago, a mysterious figure uploaded a bomb to the internet.

It was a white paper outlining a digital framework for spending money without the “help” of banks.

To this day, the identity of the white paper’s creator is a mystery. He is known simply by his alias, Satoshi Nakamoto.

He sent the paper to a cryptography mailing list. It began this way…

A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.

Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network.

It was the first time the public learned about bitcoin. Here are some other noteworthy firsts:

  • Three months after Nakamoto sent that paper, the first block of 50 bitcoins was mined.
  • On May 22, 2010, the first recorded bitcoin transaction took place. Programmer Laszlo Hanyecz emailed 10,000 bitcoins to a stranger on the internet, and the stranger sent him two pizzas.
  • The price of bitcoin reached $0.99 on Valentine’s Day 2011. It first went over the $1 mark by April of that year.
  • In July 2012, it went over $10 for the first time.
  • In March 2013, it surpassed $50 for the first time.
  • On the week of its fifth-year anniversary, it surged past $200 for the first time.
  • That November, it climbed to a few dollars short of $1,000 before falling back. It then had to wait more than three years before revisiting and then topping the $1,000 level in February 2017.
  • On January 9, 2014, Overstock became the first major retailer to accept bitcoin.
  • On September 23, 2014, PayPal became the first online payments processor to accept bitcoin (as well as litecoin and dogecoin).
  • On April Fool’s Day 2017, it became a legal form of payment in Japan.
  • In early October 2017, its price jumped past $5,000.
  • On October 30, it went above the $100 million market cap mark for the first time.
  • In late November, bitcoin’s price surged past $10,000.
  • On December 10, bitcoin futures first launched on an established exchange, the Cboe Futures Exchange. (A week later, bitcoin futures launched on CME.)
  • On December 10, its price exceeded $15,000.
  • Six days later, it touched $20,000 before falling back to $19,247.

Its 10-year anniversary comes at a particularly sensitive time. Prices are dropping. The SEC has yet to approve the next important first: a bitcoin ETF. Regulatory uncertainty still hangs over bitcoin and the greater cryptocurrency community like a dark cloud. Hacks still happen too frequently.

That said, I believe bitcoin is here to stay. The head of the Commodity Futures Trading Commission agrees with me. J. Christopher Giancarlo said earlier this week, “I personally think that cryptocurrencies are here to stay.”

It’s worth noting that the CFTC has deemed bitcoin a commodity, which the CFTC regulates.

My sense is that bitcoin, other cryptocurrencies and the blockchain are increasingly recognized as the centerpiece of the next technological revolution – one that will be comparable to the internet.

And while prices are on the downswing, the technology keeps advancing. And it’s the technology that will ultimately decide the fate of bitcoin and cryptocurrencies. Which is why, on the 10th anniversary of bitcoin, I’m in a celebratory mood.

Good investing,

Andy Gordon
Co-Founder, First Stage Investor

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