Opinion- Bitcoin turned 16 years old, here is where it stands
Published: 04:01 PM,Jan 04,2025 | EDITED : 05:01 PM,Jan 05,2025
Bitcoin, the world's first and largest cryptocurrency, celebrated its 16th birthday this week. On January 3, 2009, in the midst of the global financial crisis, a pseudonymous programmer (or group of programmers) going by the name Satoshi Nakamoto mined the genesis block of the Bitcoin blockchain, kickstarting a technological and financial revolution that continues to reverberate across the globe today.
Sixteen years later, Bitcoin has matured from an obscure experiment to a trillion dollar asset class, with a current market capitalisation approaching $1.9 trillion and a price hovering around $100,000 per coin. The cryptocurrency has weathered multiple boom and bust cycles, overcoming skepticism, regulatory challenges and occasional scandal to cement its position as 'digital gold' and a viable alternative to traditional fiat currencies.
However, Bitcoin's 16th anniversary comes at a time of mixed signals for the cryptocurrency market. While the Bitcoin network itself continues to set records for security and resilience - mining difficulty reached an all-time high this week - institutional inflows have slowed in some areas.
BlackRock's iShares Bitcoin Trust, a bellwether for institutional crypto adoption, recorded its largest ever single-day outflow of $333 million on January 2. Overall outflows from Bitcoin ETFs totalled $242 million that day, reversing inflows from the prior week. Analysts attribute the shift to jitters over the regulatory environment and a more hawkish stance from the US Federal Reserve, which has been tightening monetary policy to combat inflation.
Despite these headwinds, optimism remains high in some corners of the crypto industry. Community-driven 'memecoins', which often feature cartoon mascots like Dogecoin's Shiba Inu dog or the DeFi protocol Olympus DAO's cartoon Zeus character, delivered eye-popping returns of over 300 per cent in 2024, reflecting a shift in market dynamics and the growing influence and engagement of retail investors.
MicroStrategy, the business intelligence software firm led by vocal Bitcoin advocate Michael Saylor, also made headlines this week with the announcement of plans to raise an additional $2 billion through a preferred stock offering to purchase more Bitcoin. The company already holds over 145,000 Bitcoins, currently valued at around $14 billion, which it began acquiring in 2020. MicroStrategy's '21/21 plan' aims to raise a total of $42 billion over the next three years to invest in Bitcoin, highlighting the conviction of some institutional players even in volatile market conditions.
In regulatory news, there was a potential light at the end of the tunnel for users of FTX, the multi-billion dollar cryptocurrency exchange that collapsed in late 2022 amid allegations of fraud and misuse of customer funds. A reorganisation plan approved by a US bankruptcy court took effect this week, paving the way for certain account holders to start receiving reimbursements. According to the plan, users claiming $50,000 or less, which comprise approximately 98 per cent of all FTX accounts, could see repayment within 60 days. While far from a full recovery, it represents a step forward for impacted users, even as former FTX executives face ongoing criminal charges.
Meanwhile, on the technology front, the blockchain platform Solana took a major step towards 'future-proofing' with the implementation of new cryptographic techniques aimed at securing the network against potential threats from quantum computers. Although still in the experimental stages, quantum computing has made impressive strides in recent years, with tech giants like Google and IBM claiming their latest prototypes can perform complex calculations orders of magnitude faster than the most advanced traditional supercomputers.
Some cryptography experts have warned that sufficiently powerful quantum computers could one day crack the encryption that secures most blockchains, including the elliptic curve digital signature algorithm (ECDSA) used by Bitcoin. This has prompted a race to develop and implement 'post-quantum' cryptography that can withstand potential quantum attacks.
STEFANO VIRGILLI
The author is a member of the International Press Association.
Sixteen years later, Bitcoin has matured from an obscure experiment to a trillion dollar asset class, with a current market capitalisation approaching $1.9 trillion and a price hovering around $100,000 per coin. The cryptocurrency has weathered multiple boom and bust cycles, overcoming skepticism, regulatory challenges and occasional scandal to cement its position as 'digital gold' and a viable alternative to traditional fiat currencies.
However, Bitcoin's 16th anniversary comes at a time of mixed signals for the cryptocurrency market. While the Bitcoin network itself continues to set records for security and resilience - mining difficulty reached an all-time high this week - institutional inflows have slowed in some areas.
BlackRock's iShares Bitcoin Trust, a bellwether for institutional crypto adoption, recorded its largest ever single-day outflow of $333 million on January 2. Overall outflows from Bitcoin ETFs totalled $242 million that day, reversing inflows from the prior week. Analysts attribute the shift to jitters over the regulatory environment and a more hawkish stance from the US Federal Reserve, which has been tightening monetary policy to combat inflation.
Despite these headwinds, optimism remains high in some corners of the crypto industry. Community-driven 'memecoins', which often feature cartoon mascots like Dogecoin's Shiba Inu dog or the DeFi protocol Olympus DAO's cartoon Zeus character, delivered eye-popping returns of over 300 per cent in 2024, reflecting a shift in market dynamics and the growing influence and engagement of retail investors.
MicroStrategy, the business intelligence software firm led by vocal Bitcoin advocate Michael Saylor, also made headlines this week with the announcement of plans to raise an additional $2 billion through a preferred stock offering to purchase more Bitcoin. The company already holds over 145,000 Bitcoins, currently valued at around $14 billion, which it began acquiring in 2020. MicroStrategy's '21/21 plan' aims to raise a total of $42 billion over the next three years to invest in Bitcoin, highlighting the conviction of some institutional players even in volatile market conditions.
In regulatory news, there was a potential light at the end of the tunnel for users of FTX, the multi-billion dollar cryptocurrency exchange that collapsed in late 2022 amid allegations of fraud and misuse of customer funds. A reorganisation plan approved by a US bankruptcy court took effect this week, paving the way for certain account holders to start receiving reimbursements. According to the plan, users claiming $50,000 or less, which comprise approximately 98 per cent of all FTX accounts, could see repayment within 60 days. While far from a full recovery, it represents a step forward for impacted users, even as former FTX executives face ongoing criminal charges.
Meanwhile, on the technology front, the blockchain platform Solana took a major step towards 'future-proofing' with the implementation of new cryptographic techniques aimed at securing the network against potential threats from quantum computers. Although still in the experimental stages, quantum computing has made impressive strides in recent years, with tech giants like Google and IBM claiming their latest prototypes can perform complex calculations orders of magnitude faster than the most advanced traditional supercomputers.
Some cryptography experts have warned that sufficiently powerful quantum computers could one day crack the encryption that secures most blockchains, including the elliptic curve digital signature algorithm (ECDSA) used by Bitcoin. This has prompted a race to develop and implement 'post-quantum' cryptography that can withstand potential quantum attacks.
STEFANO VIRGILLI
The author is a member of the International Press Association.