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Some boring facts about Bitcoin, and why you should remember them

It has been around ten years since the first time that Bitcoin came into existence. With this amount of time passing, we should do a quick review of some of the more boring facts about Bitcoin, which all determine, in one way or another, what Bitcoin is to us today. These facts need the occasional review, simply because they are important to the history of the currency. Although, the importance of these facts lies not just with the curiosity of their validity, but also to what they can tell us about our own attitude towards the currency today. They tell us where the currency came from and what it means to toe society in general. They are a way to contextualize Bitcoin and cryptocurrencies in general for us so that we can be self-aware of how we use them in our day to day lives and why we use them in those specific ways. In a way, they are a mirror to the cryptocurrency enthusiast of today, just one more opportunity to stop and consider where we stand after ten years with Bitcoin and now with other ryptos. 

Value of Bitcoin at its launch

The first thing that I want to discuss is the value of the very first Bitcoin. The history of the currency starts very humbly, being worth so much less than it is today, that it is even funny to consider how it could have gotten from there to here. It is also not surprising that so many people hesitated, at the time, to in any way invest in cryptocurrencies or anything that was related to them. At the very beginning of its history, Bitcoin sat at the modest price of $0.003. Compared to today, that is nothing. The change that the value of Bitcoin has seen since is astronomical, with the decimal point moving 9 times to get to where it is now. It makes sense now why the first purchase ever made with Bitcoin was of Pizza, using about 5000 Bitcoins at the time. That is also when the real history of Bitcoin got started, May 22nd, the date that started the crazy journey that brought us to where we are now. 

The growth of the value of Bitcoin has not been an accident, or the result of speculation. It is simply a sign of the times changing. The people are losing the trust they had in traditional payment systems, currencies and financial assets fast, and are demanding an alternative to the well established. Cryptocurrencies are offering users a chance to invest in an asset that can be an alternative in a world where everything is either controlled, tracked or even at the risk of failing. The modern global economy is not inspiring a lot of trust among the general population, and the demand for alternative ways of exchanging money is becoming high. Bitcoin is just one of the many, and the most popular, ways to keep yourself not bankrupt in a situation where the world is no longer able to guarantee your future to you. 

The value of 1 Satoshi

If you know what Bitcoin is and have ever tried to pay for anything with it, you are aware of Satoshi. Yes, Satoshi Nakamoto is the name of the enigmatic creator of Bitcoin, the person who started the world that we live in today. The honour of being the person who created the currency has been further emphasized by the fact that one-millionth of a Bitcoin is now called a Satoshi. Satoshi has a relationship to Bitcoin similar to that of what cents have to the Dollar. Except, instead of being 1/100th of a Bitcoin, it is 1/1000000, making it a much smaller fraction. The initial reason for this is pretty simple - after reaching a certain value, it became hard to keep referring to fractions of Bitcoin as such, and the quantitative of Satoshi was introduced. But, anticipating that the value of a Bitcoin is going to keep growing, people decided to create a unit of Bitcoin that would hedge against that in the future. 

So why is it important that one Satoshi is a millionth of a Bitcoin? Because it tells us of what the world and the cryptocurrency community is expecting the currency to achieve in the future. Many people are expecting that someday, Bitcoin will be valuable enough that one Satoshi will be a viable sum of money for everyday use. It tells us that the community is extremely optimistic about the value of Bitcoin and it also tells us that it has set itself a goal that is beyond the simple valuation and use of Bitcoin that we have today. The goal is to have the value be higher, yes, but it is also to keep the value steady so that it can be used for everyday applications without any kind of issue or fear. 

Bitcoin Network computing power

When you take the top 500 supercomputers in the world, combine their computing powers and compare them to that of the computing power of the network that is currently mining Bitcoin, you will discover that the Bitcoin network is 7468 times more powerful, and getting more powerful every day. This information might be a little scary, after all, dedicating this much of our computing power to Bitcoin might not necessarily be the most responsible thing to do. But it is also information that can tell you a lot about what it means to be a Bitcoin society and a Bitcoin miner. Specifically, it is extremely hard to contribute to the community significantly. The amount of computational power that it takes to mine a single block, nowadays, is extremely high and extremely expensive to achieve. So, many miners working in the industry today, face issues such as not being able to make ends meet or have to quit, simply because they cannot afford to participate in the activity anymore. 

But, on the other hand, it also shows how far the Bitcoin mining community has come. Once upon a time, the community was small, and the number of coins mined day today was pretty small as well. As the numbers of miners increased and the numbers of people participating in the industry increased, we have achieved a level of dedication that has not been seen before. Now, the Bitcoin community is one of the largest in the world, and that is something to be proud of and to be considerate of. 

Limit on the number of Bitcoins 

There are those who think the Bitcoin is an unlimited resource, but the fact of the matter is, they are not. The number of Bitcoins in circulation at one time is limited to 21 million at the same time. The reasons for this are many, some of them relating to the stress on the Blockchain Network in terms of the computational power needed in order to conduct transactions with more Bitcoins than that, and the others being related to the fact that the value of cryptocurrencies needs to be kept at a certain level of stability, and this is one of the many ways to do so. The fact that there are only 21 million Bitcoins allowed for circulation has many effects on the international cryptocurrency economy, some of them positive, others rather annoying. But one thing is for certain, there have been attempts to breach this limitation. 

Specifically, in the starting days of cryptocurrency, a hack took place that allowed for a transaction of trillions worth of Bitcoins in a single transaction. While the Bug was quickly mitigated and fixed, so that it could never be exploited again, the system stress at the time was immense. The Blockchain network and the miners suffered quite a lot through that transaction, and the value of Bitcoin saw quite a bit of a drop because of that single occurrence. But, thankfully, the value of Bitcoin was already pretty low at the time, so the currency got a chance to rebound. 

Ghost Bitcoins

This is something that is often forgotten, which is a little more than appropriate when speaking of Ghost Bitcoins. You see, a significant number of Bitcoins that have been mined and given to users are now inaccessible, either because the keys to the wallets they are store in have been lost, or the wallets themselves have been lost. When I say significant, I mean that 64% of all Bitcoins that have ever existed have been lost and become Ghost bitcoins, not being able to contribute to the crypto industry economy in any other way than just existing as a nonexistent resource. These are the coins that are keeping the value of Bitcoin pretty high, by making the resource as scarce as it is, it provides certain stability. The knowledge that a significant part of cryptos will always be inaccessible leaves Bitcoin being pretty stable in its value. 

But it acts as an important lesson as well - many people forget to do the very basic thing when dealing with Bitcoin - keep track of it. Without the keys to wallets, you have no access to the Bitcoins, meaning that the Bitcoin is no longer yours. So, making sure that you don’t accidentally make ghost Bitcoins is important, more so than even buying them in the first place. Creating new Ghost Bitcoins is equivalent to creating additional issues for the industry. After all, Bitcoin is a finite resource, and getting rid of a significant part of it is only going to cause issues at some point in the future. 

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Comments: (5)

Melvin Haskins
Melvin Haskins - Haston International Limited - 09 August, 2019, 08:41Be the first to give this comment the thumbs up 0 likes

The most important fact in this Blog is that 64% of all Bitcoin that have ever existed have been lost.

I can think of no reason why anyone, other than criminals, porn watchers or tax evaders, would want to invest in a currency with the risk of losing two thirds of their investment, particularly one that has such a roller coast ride of value.

Dirk Kinvig
Dirk Kinvig - Finextra - London 09 August, 2019, 08:55Be the first to give this comment the thumbs up 0 likes

64% and it's not like you can check behind the sofa!

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 12 August, 2019, 14:31Be the first to give this comment the thumbs up 0 likes

Criminals and Porn Watchers have been doing fine with fiat. Now that IRS has sent notices to millions of Americans with Bitcoin / Altcoin, Bitcoin's compelling value for Tax Evaders is also diminishing. OTOH, Bakkt, Libra and other cryptocurrency ventures from mainstream companies has pushed up the allure for Bitcoin. Anything that sells for $11,348.30 can't be *that* worthless. Let's see what happens in the future.

Melvin Haskins
Melvin Haskins - Haston International Limited - 12 August, 2019, 16:33Be the first to give this comment the thumbs up 0 likes

At $11,348.30 you would be sitting on a loss of $6,200 if you bought in December 2017. The yo-yoing price of Bitcoin is greater than almost any investment available.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 12 August, 2019, 17:07Be the first to give this comment the thumbs up 0 likes

Well, if you bought BTC in Dec 2016, you'd be sitting on a massive profit. I think it was you that pointed out in another comment that everything changes if you change the start date:)