Today in History: Bitcoin Breaks the Bank
by M.C. Millman
The entire cryptocurrency market, worth more than $2 trillion today, was created fifteen years ago based on the idea that money can be sent and received directly by anyone, anywhere in the world, without going through a financial institution.
On January 3, 2009, Satoshi Nakamoto, an anonymous developer, launched the Bitcoin network and block zero (or Genesis Block) at 1:15 p.m., allowing for uncensored "online payments to be sent directly from one party to another without going through a financial institution". This new development significantly changed the financial system by creating an entire cryptocurrency economy using blockchain technology to support peer-to-peer transactions between users on a decentralized network.
Bitcoin is the world's largest cryptocurrency. Each Bitcoin is a digital asset. It can be stored at a cryptocurrency exchange or in a digital wallet. Buyers do not have to purchase an entire Bitcoin but can buy a Satoshi or partial share named after Bitcoin's creator. Each Satoshi is equivalent to a hundred millionth of one Bitcoin.
In 2020, 36% of small-medium businesses in the US were accepting Bitcoin, and that number has only surged over the past four years. Bitcoin's value increased by 157% in 2023. On Monday, its value rose to $45,913, the highest level it has traded at since April 2022.
Some advantages of investing in Bitcoin are that once a person owns Bitcoin, transfers can be made anytime or anywhere, reducing the time and potential expense of transactions.
Another advantage to Bitcoin, or any cryptocurrency, is that transactions do not contain personal information. This makes transactions more private than other financial endeavors, such as credit card transactions.
Buyers also appreciate that Bitcoin is a decentralized currency outside the control of regular banks, governing authorities, or other third parties.
Investors like the growth potential of Bitcoin, gambling that its value will grow as it matures.
Some concerns raised regarding the purchase of Bitcoins are the gamble involved with making the purchase. While Bitcoin's value has risen dramatically over the years, like any investment, a buyer's fortunes can vary widely depending on the timing.
There are also hacking concerns. Even though Bitcoin is considered more secure than traditional electronic money transfers, there have still been hacks, including one in May 2019 when over $40 million in Bitcoin was stolen from accounts on the cryptocurrency exchange Binance. Additionally, unlike bank funds, cryptocurrency is not protected by the SIPC.
Be that as it may, Bitcoin is still growing by leaps and bounds, with companies like Tesla accepting Bitcoin as payment for its cars in the US.
Tesla's terms and conditions caution customers to be careful when inputting both the bitcoin address and amount to be paid, reminding customers that "bitcoin transactions cannot be reversed" and "if you input the bitcoin address incorrectly, your bitcoin may be irretrievably lost or destroyed."
Even with the help of companies like Tesla, Bitcoin specifically, and cryptocurrency in general, which have really taken off in on fifteen years, there is still a long way to go before this relatively new transaction method becomes more widespread.