By Harvey Day
It’s 2018 and – amazingly – Bitcoin has now been around for ten years. The origins of the cryptocurrency are still shrouded in mystery but it ultimately stems back to the shadowy figure of Satoshi Nakamoto, which is rumoured to be a pseudonym used by the cryptocurrency’s collective founders.
And Bitcoin has been controversial from the start, with claims that it encourages criminal activity as well predictions that the whole endeavour is going to crash and burn.
But there are also plenty of high-profile backers, including the CEO of Twitter who thinks we’ll all be using it eventually, and investors such as the Winklevoss twins who’ve made mega big bucks by investing in Bitcoin.
So as we mark the ten-year anniversary, here’s how much you could have made if you invested your cash in the cryptocurrency back in 2008:
In the first couple of years, Bitcoin was worth basically nothing, with users sending Bitcoins to each other for fun.
The first Bitcoin exchange, BitcoinMarket.com, started operating in March 2010, with 1 BTC worth just $0.003.
If you’d invested $100 at this point – and you’d have needed to be a soothsayer to do so – you’d have been able to get yourselves 33,333.33 of them. At today’s Bitcoin price of $6397.63, if you’d held onto them, they’d now be worth a whopping $213,254,333. If you did do this, we assume you’re having this article read out to you by a servant on your private island.
By July 2010, the price had already rocketed, growing 900% in five days to reach $0.08. A hundred greenbacks would have netted you 1250 BTC, which would now be worth $7,997,037.50.
In February 2011, following more dramatic price rises, Bitcoin took parity with the US dollar, so $100 would have got you 100 BTC, which would now be worth $639,763 – still not a bad little investment.
By December 2012, Bitcoin had continued rising, up to $13, meaning that your $100 investment then would now be worth $49,212.54.
In June 2013, dropping from a first peak of $266 in April of that year, one Bitcoin was worth $100. So your one Bitcoin would now be worth – you should be able to work this out yourself – $6397.63 today.
Between then and April 2017, the price seemed to stabilise – a relative term, since it remained hugely volatile, swinging between around $350 and $1250. If you’d invested at a median point, say $800, you’d have been able to buy 0.125 BTC for your $100, which would now be worth $799.70.
2017 was the year of prolific growth, as Bitcoin went from $1250 in April 2017 to its peak in December 2017 of $17,900. If you’d been unlucky enough to invest then, you’d have got just 0.0055 BTC for your $100, which would now be worth only $35.74. We are sorry for your loss.
Since February this year, however, prices have remained relatively stable – one Bitcoin was worth $6,200 then, and it’s now at $6,300, so you’d be pretty much exactly where you were if you’d invested your $100 earlier in 2018.
Maya Kumar, head of UK and Ireland at cryptocurrency exchange Luno, thinks it would have been hard to predict how the price of Bitcoin has changed over time.
“I don’t think that anyone could have predicted the value of Bitcoin that we’ve seen when it was first created,” she told ShortList.
“Early adopters would’ve had some faith that Bitcoin would slowly increase in value thanks to the benefits of a new decentralised economy, but I doubt they would’ve have expected Bitcoin to ever reach the prices we have seen in the last 12 months.”
And what factors should investors consider when investing in start-up financial trends, like Bitcoin in 2008?
“People buy cryptocurrencies for many different reasons, ranging from need (because it’s safer, faster, cheaper, borderless) to greed (because they want to make quick money).
“Some investors are speculating – betting on future price movements – and some are investing for the long term, hoping that the market will mature because the potential value of cryptocurrencies as a payment system is so great.
“We don’t give investment advice but we do encourage everyone to do their own research and due diligence before buying. It’s important to only invest in things you understand.”
So is the current price of Bitcoin sustainable?
“The price of many things such as stocks, currencies or oil can be quite volatile: moving up and down a lot against a base currency.
“The total Bitcoin market is still relatively small compared to other industries, which means it doesn’t take significant amounts of money to move the market price up or down, thus the price of a Bitcoin is still somewhat volatile.
“That said, the volatility of Bitcoin has consistently been going down and it has become much more stable in recent times.
“No one can predict the future price or any asset, not least Bitcoin. However, the price is a reflection of how the technology is developing, how infrastructure is improving, better regulation and participation by other institutions like investment funds and high net worth individuals.
“Currently, cryptocurrency is being used more as a store of value than a payment method but this could change as a result of critical mass adoption in the future.”
Meanwhile Matthew Newton, cryptocurrency analyst at eToro, argues that Bitcoin found its footing much quicker than other ‘revolutionary technology’.
“Bitcoin was immediately considered a revolutionary idea, admired by many, and derided by others,” he said. “It was always intended to become a globally accepted method of payment, and there has been substantial progress towards this goal in the past decade.
“And when compared to other revolutionary technologies, Bitcoin has far outpaced their development. The Internet took far longer than ten years to be embraced by the mass-market, and yet we’re already discussing Bitcoin’s use as a payment method.”
And does he think the current price of Bitcoin sustainable?
“If the Bitcoin project is to be successful, and people start using it as an everyday way to pay for things, then the price of Bitcoin has a lot of headroom.
“However, it’s likely to be a bumpy ride. New innovations tend to succeed in fits and starts, rather than in a long smooth journey, so we should all expect more headlines about the price of Bitcoin swinging one way and then the other.”
