Bitcoin’s bumpy revolution may be only just beginning – The Independent

Bitcoin was born out of despair. Hidden among the lines of code in the first ever batch of the cryptocurrency was a headline from the frontpage of that days edition ofThe Times: Chancellor on brink of second bailout for banks.

It was 3 January, 2009, and the world was in the midst of the worst financial crisis since the Great Depression. Banks were collapsing, businesses were foreclosing and people were losing their homes.

It was the result of the worst excesses and greed of a capitalistic system that was teetering on the edge of comprehensive collapsed. But Satoshi Nakamoto, bitcoins pseudonymous creator, believed he had a solution.

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It came in the form of a revolutionary electronic cash systemthat ditched centralised systems like banks and governments in favour of a peer-to-peer payments network supported by an online ledger known as a blockchain.

But for all its promise, it turned out to be a bumpy revolution. Nothing much actually happened for the first few years after bitcoins birth, and it lay largely dormantuntil after the worst of the periods economic turmoil had already passed.

On 3 January, 2009, the genesis block of bitcoin appeared. It came less than a year after the pseudonymous creator Satoshi Nakamoto detailed the cryptocurrency in a paper titled 'Bitcoin: A peer-to-Peer Electronic Cash System'

Reuters

On 22 May, 2010, the first ever real-world bitcoin transaction took place. Lazlo Hanyecz bought two pizzas for 10,000 bitcoins the equivalent of $90 million at today's prices

Lazlo Hanyecz

Bitcoin soon gained notoriety for its use on the dark web. The Silk Road marketplace, established in 2011, was the first of hundreds of sites to offer illegal drugs and services in exchange for bitcoin

On 29 October, 2013, the first ever bitcoin ATM was installed in a coffee shop in Vancouver, Canada. The machine allowed people to exchange bitcoins for cash

REUTERS/Dimitris Michalakis

The world's biggest bitcoin exchange, MtGox, filed for bankruptcy in February 2014 after losing almost 750,000 of its customers bitcoins. At the time, this was around 7 per cent of all bitcoins and the market inevitably crashed

Getty Images

In 2015, Australian police raided the home of Craig Wright after the entrepreneur claimed he was Satoshi Nakamoto. He later rescinded the claim

Getty Images

On 1 August, 2017, an unresolvable dispute within the bitcoin community saw the network split. The fork of bitcoin's underlying blockchain technology spawned a new cryptocurrency: Bitcoin cash

REUTERS

Towards the end of 2017, the price of bitcoin surged to almost $20,000. This represented a 1,300 per cent increase from its price at the start of the year

Reuters

On 3 January, 2009, the genesis block of bitcoin appeared. It came less than a year after the pseudonymous creator Satoshi Nakamoto detailed the cryptocurrency in a paper titled 'Bitcoin: A peer-to-Peer Electronic Cash System'

Reuters

On 22 May, 2010, the first ever real-world bitcoin transaction took place. Lazlo Hanyecz bought two pizzas for 10,000 bitcoins the equivalent of $90 million at today's prices

Lazlo Hanyecz

Bitcoin soon gained notoriety for its use on the dark web. The Silk Road marketplace, established in 2011, was the first of hundreds of sites to offer illegal drugs and services in exchange for bitcoin

On 29 October, 2013, the first ever bitcoin ATM was installed in a coffee shop in Vancouver, Canada. The machine allowed people to exchange bitcoins for cash

REUTERS/Dimitris Michalakis

The world's biggest bitcoin exchange, MtGox, filed for bankruptcy in February 2014 after losing almost 750,000 of its customers bitcoins. At the time, this was around 7 per cent of all bitcoins and the market inevitably crashed

Getty Images

In 2015, Australian police raided the home of Craig Wright after the entrepreneur claimed he was Satoshi Nakamoto. He later rescinded the claim

Getty Images

On 1 August, 2017, an unresolvable dispute within the bitcoin community saw the network split. The fork of bitcoin's underlying blockchain technology spawned a new cryptocurrency: Bitcoin cash

REUTERS

Towards the end of 2017, the price of bitcoin surged to almost $20,000. This represented a 1,300 per cent increase from its price at the start of the year

Reuters

In the early 2010s it was only a core group of cypherpunks and cryptography enthusiasts that really understood bitcoins potential but its semi-anonymous nature meant it soon found use among drug dealers and cyber criminals on the dark web.

After a brief price surge in 2012 it began to gain more widespread recognition and by late 2017 it was making frontpage headlines of its own as its market capitalisation briefly exceed $300 billion more than the entire GDPof over 140 countries.

Some warned at the time that the phenomenal price growth was the result of a bubble and, sure enough, it eventually crashed. Throughout 2018 its value tumbledrepeatedly and sometimes spectacularly as naysayers pronounced its death and late investors lost millions.

By the start of 2019, a bitcoin was worth less than $4,000 and excitement forthe great economic experiment had subsided before any truly mass-market use cases had even been realised.

But it was far from over. As the decade draws to a close, news about new digital currency projects have begun to emerge from vast multi-national corporations like Facebook, to some of the worlds biggest economies.

With each positive news story about cryptocurrency, the price of bitcoin hasgrown, yet the volatility remains.For some, this unpredictability is one of the reasons it can never achieve its potential as a mainstream form of currency.

Bitcoins first major price burst in 2013 was a small blip compared to subsequent price spikes of the 2010s (CoinMarketCap)

Sceptics remain and misconceptions of bitcoin being some kind ofmagic internet money with no inherent worth continue to dominate stale narratives about cryptocurrency.

Some cryptocurrency advocates point to the fact that, on the contrary, it is traditional currencies that can be created out of thin air through processes like quantitative easing. And while established currencies are no longer backed by gold or anything tangible, bitcoin has the blockchain to mathematically regulate a finite supply.

Nigel Green, CEO of London-based financial advisory firm deVere Group,claims cryptocurrencies areredefining and reshaping the financial systemand that critics are either ignoring, or simply not understanding, the promise they hold.

I would suggest that most people saying these things do not understand the crypto sector as it is relatively young and/or have vested interests in older, traditional ones, he tellsThe Independent.However, whether they like it or not, dyed-in-the-wool financial traditionalists need to accept that cryptocurrencies are here to stay.

What is cryptocurrency and the technology behind bitcoin and its rivals?

Bitcoin may have assured its place in history but its future remains uncertain.There have already been thousands of spin-offs there are currently 2,364 different cryptocurrencies listed on monitoring siteCoinMarketCap and some believe one of these will soon take its place as the dominant cryptocurrency.

Some of the more notable ones, like ethereum, ripple and bitcoin cash, offer something slightly different to bitcoin, such asquicker transaction times or greater anonymity.

Yet it is the pseudo cryptocurrencies being developed by countries and companies that could see the most mainstream success over the coming decade. They will not be decentralised and will likely be tools to track users rather than provide privacy, but they will solve two of the biggest problems: trust and stability.

Cryptocurrencies have arguably been the radical fintech innovation of the decade. But while the 2010s has been an exploratory phase introducing the concepts of cryptocurrencies and blockchain to the world the 2020s will be the decade for innovation and application, Christel Quek, co-founder of cryptocurrency company Bolt, tellsThe Independent.

Beyond new currencies inspired by bitcoin, a whole new industry is forming from its underlying blockchain technology. At its core, it provides an immutable andunhackableplatform for storing and transacting digital assets and records, meaningit could potentiallytransform everything from healthcare to the food industry.

Bitcoins underlying blockchain technology is set to transform dozens of industries (Gartner)

FelixShipkevich, a New York-based lawyer with expertise in blockchain regulations, says the technology "has the power to change the world for the better" by providing a new standard for accountability and trust.

Bitcoin has not only brought blockchain into existence, it has challengedregulatory obstacles that stand in the way of this new wave of applications being realised.

Cryptocurrencies have given rise to regulators acceptance of digital cash and fintech products and services that are both novel and progressive," Shipkevich tellsThe Independent. "Weve seen greater acceptance by regulators versus total rejection.

"We saw this happen in China, where crypto trading was strictly prohibited, but are now announcing the use of blockchain technology as a major government and fiscal technology initiative.

Thousands of cryptocurrencies have emerged in the 2010s, and more will certainly follow in the 2020s(Getty)

The 2010s may have been defined by bitcoin but the next 10 years will dictate which cryptocurrency truly takes off and emerges to rival traditional currencies.

It would be foolish to write-off bitcoin - its death has been pronounced more than 350 times in the press, according to a website tracking "bitcoin obituaries"- but its flaws could see it become simply a store of value rather than a mainstream form of exchange.

Much like MySpace and Bebo were usurped by Facebook in the early days of social media, another cryptocurrency could come along to take bitcoin's crown as the most popular cryptocurrency - maybe even Facebook's Libra.

If this happens, predictions about bitcoin's price reaching $500,000 or even $1 million over the next few years will appear wildly ambitious. Then again, it has proved its doubters wrong more than once before.

Cyber security pioneer and bitcoin believer John McAfee made a bold bet about the cryptocurrencys future (Twitter)

At the start of the decade, bitcoin was worth just $0.03. It will likely close out the 2010s somewhere north of $7,000.

Another Great Recession could cause enough of a seismic shift in the established order for bitcoin's price to rocket once again and for Satoshi Nakamotos vision to finally be realised.

Or it could continue its steady yet chaotic climb to achieve mainstream successthrough favourable regulation and greater commercial acceptance, which has been quietly underway over the last decade.

It may have been born out of despair but it enters the new decade full of hope.

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Bitcoin's bumpy revolution may be only just beginning - The Independent