The coronavirus pandemic has gotten most of the headlines over the past year, for obvious reasons, but the non-virus story has been all about Bitcoin. It seems as if every day there’s a new headline about the cryptocurrency, and there are some big ones, too — Tesla investing a significant amount of cash into the crypto made big waves, for instance. While there’s much to be said about the rising cost of Bitcoin, there’s also much more to know about the currency.
In this blog, we’re going to run through some of the key facts about Bitcoin that everyone, whether you’re a firm believer or skeptic, investor or just curious, should know.
The Creator Is Unknown
You’d think that if you invented a technology that so many people are interested in and which one day might change the world in massive ways, then you’d want people to know who you are. Yet, that’s not the case. While the name of the creator — Satoshi Nakamoto — is known, who that person is remains a mystery. It’s not their real name, so the person (or more likely, group of people) that invented the currency remains hidden. That hasn’t prevented people from saying they invented the currency, but so far, none of the claims has been verified.
It’s likely that we’ll never know who is behind Bitcoin, but there’s one thing that’s certain — that person will have a lot of Bitcoin in their possession, and that means they’re very, very rich.
How Many Bitcoins Are There?
Part of the appeal of Bitcoin is that there’s only a finite amount. With cash, you can just print more — but that’s never going to happen with Bitcoin. Twenty-one million have been created, but they’re not all in circulation yet. As of the end of February 2021, around 18.5 million of the currency are known — which means there’s still some three million out there just waiting to be mined. Some people got rich in the early days by mining Bitcoin, but it’s not really a feasible option for anyone anymore, in large part because of the immense computing power that’s required, which is beyond the means of most people.
It Was First Used To Buy…Pizza!
If you were wondering whether you should buy, well, anything with Bitcoin, you might want to consider the tale of the first purchase. Way back in 2010, someone offered 10,000 BTC in exchange for two pizzas to be delivered to him. At the time, that was worth around $30 since Bitcoins were worth cents. Right now, the same amount of Bitcoins would be worth hundreds of millions. That’s a pretty expensive couple of pizzas! It was Papa John’s pizza, if you were wondering, so we’ll at least say that it wasn’t terrible pizza.
Losing A Password = Big Losses
It’s pretty annoying to get locked out of your Facebook account because you can’t remember your password. But at least once you jump through a few hoops, you’ll be back in. The complexities of Bitcoin mean that you can’t just reset your password to get back into your account: you have to know what it is. A recent story highlighted just how expensive this could be. A man using IronKey lost the piece of paper where he wrote down his password. IronKey gives you ten guesses, and if you don’t get it, then you’re lost — you’ll never get in there. The wallet contains more than 7,000 BTCs, which today would be worth hundreds of millions. He’s tried eight passwords, to no avail, which means he’s got two tries left. It’s estimated that around 20% of BTCs are stranded in wallets that can’t be accessed. If that happens, you’ll just have to chalk it up to bad luck or wait for technology to advance enough where these passwords can be cracked.
It’s a Money-Making Machine
The primary reason for so much interest in Bitcoin in recent years is that it has provided the most consistent — and dramatic — return on investment. Since being founded in 2008, it has experienced year on year growth for all but one year, and that was all because of a security hack (that actually had nothing to do with blockchain). In 2020 alone, the value of the cryptocurrency jumped by some 400%, which is, of course, off the charts. You can make money by investing in Bitcoin and just waiting for the value to increase, and you can also keep it in a Bitcoin interest account, which brings an even greater return on your investment. The growth of the cryptocurrency shows no signs of slowing down (and likely won’t for years), which means there’s plenty of scope for padding your bank account!
It’s Pretty Hard to Ban
It seems like the only thing that can prevent Bitcoin from continuing to grow and grow and grow is if it’s banned by governments. And certainly, many governments do want to ban it — a host of them have tried. The problem, from their point of view, is that it’s virtually impossible to ban Bitcoin. It would be like banning the internet: at this stage, there’s nothing that can be done.
The motivation for banning Bitcoin comes from the disruptive nature of the technology. It quite obviously challenges the existing financial network! In the future, it’s likely that there will be some regulation, and that will have an impact on the price (for better or worse), but in terms of outright banning it, it’s not possible. There’ll always be a day when BTC exists from here on out.
What Can You Buy With Bitcoin?
The real measure of the long-term value of Bitcoin will depend on whether people use the currency, rather than just keeping it in their wallets. You’ll know that Bitcoin is the currency of the future when people are buying their weekly groceries with it. Part of the problem, so far, is that there haven’t been too many things that you can buy with BTC. But that’s beginning to change. For one, you can buy a Tesla car and pay through Bitcoin, but there are plenty of other things, too. For instance, you can buy sporting tickets, beer, and even hamburgers using the currency. In Japan, you can buy virtually everything using Bitcoin.
But whether you should is another matter; we’d say that it’s best to wait for the price to stabilize before paying in Bitcoin. When the price can jump from $10,000 to $30,000 in a single year, you might end up paying much more than you ever intended to pay!
The FBI Have A Lot Of Bitcoins
The history of Bitcoin is marred by its connection to illegal operations. While cryptocurrency is still used for that purpose, things have been moved on, and now it’s more widely adopted. Still, the illegal connections have made one governmental agency pretty rich. Way back in 2013, when Silk Road was shut down, the FBI confiscated a wallet that contained 144,000 Bitcoins, which is worth billions today. We wonder what they’ll use it for?!
It Has Some Famous Backers
It takes time for new technology to be adopted by the masses. Celebrities have always played a role — think of all those adverts in the early days for iPhones, for example. The same principle applies to BTC; it’s just that there’s no company paying celebrities to talk in glowing terms about the currency (though, of course, they get paid by seeing a return on their investment in Bitcoin). So who’s been waxing lyrical about the value and merits of Bitcoin? Elon Musk is one of the biggest names to lend their weight behind the project. Jay Z and John McAfee also have their own Bitcoin projects underway.
It’s Not The Only One Out There
Bitcoin gets a lot of headlines for obvious reasons, but it’s not the only cryptocurrency out there. It’s just the one with the highest value. Once you dig into cryptos, you’ll find that there are a lot of options out there — recent estimates suggest that there are somewhere in the region of 4,000 digital currencies in circulation. Of course, the vast, vast majority have no following and are completely worthless — and will likely never develop into anything meaningful. But there are a few that could challenge Bitcoin in the future.
It’s a bit like with all technology. Bitcoin got a lot of things right, but there’s a chance that a new currency irons out some of the problems with BTC. But of course, we’ll only know that many years down the line (though the opposite could also be true, if the price drops).
As we’ve seen in this article, there are plenty of fascinating aspects to Bitcoin. It’s not just got value in real terms, but there’s also an interesting story — and plenty of intrigue — surrounding the currency. It has captured the public’s imagination, and once that happens, some pretty magical things can happen. Of course, the story isn’t over — in fact, it’s just getting started!