Bitcoin Emerging: A Tale of a Meteoric Rise

08/06/2020 | Blog posts

Bitcoin Emerging

Out of all recent emerging markets and technologies, none have seen such an explosive entrance as Bitcoin. From introducing Blockchain to the world to creating the best-performing asset of the decade, it’s certainly left a huge mark. Today, we’re taking a look into what kind of impact Bitcoin has made.

The Birth of Bitcoin

The tale of Bitcoin began all the way back on the 31st of October 2008 – and no, we’re not talking about halloween. On this very day, Satoshi Nakamoto produced Bitcoin’s whitepaper, which outlined how Bitcoin was to function and which role it’d fulfill. The 3rd of January 2009 ended up being the fateful date where the very first Bitcoin block would be mined – also known as the Genesis Block. This marked the beginning of Bitcoin, and the start of an epic journey. But why was it created?

Satoshi Nakamoto, whose true identity remains a mystery to this day, left a pretty clear message in the first-ever Bitcoin block mined: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”. This headline referred to the crisis that was plaguing the economy back in 2009. Not only was Bitcoin created in response to the current economic crisis, but the very first sentence of the whitepaper couldn’t portray its purpose more clearly: “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”. Bitcoin removes trusted third parties, giving everyone complete control over their own money.

Looking back 10 years later, Nakamoto’s masterpiece truly has made an impact unlike anything we’ve seen before. Let’s take a look at several important key indicators to show the massive evolution it’s undergone since 2011.

Volatility & Best Performing Asset of the Decade

Whenever discussing Bitcoin’s impact and evolution, the most iconic one is its price. Never before have we seen an asset see such an extreme growth in just a couple of years. Going from the 2011’s lowest price of a mere 2 dollars and 5 cents, to a whopping $20,035 at its peak late 2017. This approximate 10,000x in growth is exactly what Bitcoin is known for: it’s explosive growth in value. Sure enough, Bitcoin has been the best performing asset of the decade – by a landslide! It’s vastly outclassed stocks, gold and other traditional assets.

Bitcoin’s renowned for its volatility as well. Just by comparing each year’s lowest price against its highest price, vast differences can be seen. While we all know and love 2017 for it’s incredible $20,035 BTC valuation, it actually was only worth $756 earlier that same year. While this volatility may scare off some, seeing it as unstable, there are many who have greatly profited from it as well. 

The highest prices showcase the bullish potential of cryptocurrencies: high spikes with an overall positive trend. This is only supported by the lowest annual values being consistently higher with only 1 year as an exception. From 2011’s highest price to 2019’s, we see a massive growth of well over 72,000%. With numbers like these, it’s no surprise that this decade’s best performing asset, Bitcoin, has attracted so much attention and interest.

Active and Total addresses

Now of course, without anyone actually using Bitcoin, there wouldn’t be much of a purpose. The evolution in how many people actually start their Bitcoin journey is best displayed by taking a look into the amount of existing and active addresses. Each of these show a different story.

The figures above showcase some impressive numbers from 31 December 2019 – with over half a billion existing Bitcoin addresses existing! When looking at the evolution of the amount of active addresses, it shows a consistent and fast-paced growth.. Right up until 2017. Sure enough, the extreme price action of 2017 drew a large crowd and introduced the mainstream to the #1 ranked cryptocurrency. In 2018, the number of active addresses took a large plunge. 2019 did show some recovery on this, but was still well off from 2017’s incredible performance. The growth percentages showcase this pretty clearly. From 2011 till 2019, there was a vast 21424% growth in active addresses, while in 2019 alone that was only 21%. Unsurprisingly, this is likely linked to 2018 and 2019 having been so-called “bear markets” – times where the price was on average going down.

We see a contrast when looking at the number of existing Bitcoin addresses. The amount of total addresses did continue to show pretty steady growth all across the board. While the price was taking a plunge, the amount of new addresses kept on increasing consistently instead of stagnating. What we can take away from this is that people kept getting drawn to Bitcoin, despite its declining value at the time. 

BTC Daily Volume and Amount of Transactions

So we now know that the amount of people accumulating Bitcoin has been rising, but what about it actually being used? For that, we can look into the amount of transactions and the daily volume. The volume refers to how much value is actually being transferred, while the amount of transactions just looks at how often a transaction occurs.

What can be clearly seen here is that the daily volume has surged along with the highest prices: in 2013 and 2017, we can see massive spikes in a similar fashion. 2017 in particular has seen enormous daily volumes during the famous bull run. The years after, this has calmed down a bit as we entered the bear market. 

The amount of transactions made is more indicative of a steady growth, however. Sure enough, 2017 still had a spike compared to 2018, though it wasn’t nearly as large in comparison. The 31st of December in 2019 actually saw more transactions than the same day in 2017 – even though we didn’t see humongous price action at that time. Looking at the data for price, addresses and transactions, we continuously see an undertone of steady growth in Bitcoin. 

Number of Existing BTC

From all of these continuously increasing statistics, we’re diving into a stagnating one… by design. In the beginning we mentioned how Bitcoin emerged in the midst of an economic crisis. Something that often occurs during economic crises is the printing of more money by central banks and governments. This can have a drastic effect on the value of money, however. Suddenly, there is a larger supply of money being created because another entity decided to turn on the money printer, with the common people having no say or power over this. This can potentially have catastrophic results, the most severe of which being hyperinflation. In this event, money can lose nearly all of its value.

Bitcoin is created as a disinflationary currency. Unlike traditional currencies, Bitcoin has a maximum amount of BTC that can ever be created: 21 million BTC. This hard cap means that the supply will always be limited. For another, less and less Bitcoins will be created over time due to an event known as the Bitcoin Halving. The Bitcoin Halving takes place roughly every 4 years and will cut the amount of new BTC created in half. Back in 2011, 50 new Bitcoins were created every 10 minutes. Now in 2020, that’s only 6,25 Bitcoin every 10 minutes.

This explains why the chart above is actually stagnating and helps to increase Bitcoin’s scarcity. Since its price is based on the economic basics – supply and demand -, Bitcoin becoming more and more rare may very well have a positive impact on its value. This is why some highly renowned investors such as Paul Tudor Jones are now banking on Bitcoin as a hedge against inflation. 

Places accepting BTC

One that we always get excited about is seeing how Bitcoin is being embraced more and more by companies, institutions and even governments. We’ve already shown how individuals keep getting more and more drawn to Bitcoin, but it’s gaining more and more uses as well. From tech giants like Microsoft to travel agencies like Expedia, there is a large list of companies that have embraced the technological wonder that is Bitcoin. So many exceptional purchases have been made throughout the years that we’ve created a dedicated article covering this.

What we can see from the data is that this list is rapidly expanding. According to Coinmap, there are currently close to 20.000 shops that are accepting Bitcoin as a form of payment. Seeing this impressive and rapid growth is a sign that the mainstream is becoming more and more open to Bitcoin as a legitimate payment method. This might very well be the largest sign of the evolution and change that Bitcoin has brought.

Always a fun note to end on whenever discussing places accepting Bitcoin: You can even get your ticket into space via Bitcoin.

Conclusion

Putting it simply: the numbers don’t lie. Bitcoin has seen a growth unlike any other asset in history. It’s extremely rapid rise continuously has been unmatched, and it’s volatility has attracted many. At the same time, there’s always underlying data to showcase a steady growth at the same time.

In the presented data, we’re seeing how its price has evolved over time, how more people join the world of cryptocurrencies and most excitingly: how it’s seeing more usage and a continuously increasing mainstream adoption. 

As the saying goes: successes achieved in the past are no guarantees for the future. We won’t claim to be experts on investment strategies and we’re not providing financial advice either. We must say, however, that looking at the past data certainly shows impressive statistics – and we’re excited to see what the future holds.