If you are a huge pizza fan, you already know that you can celebrate with your cheese-pepperoni doughy friend twice a year! “Twice?” you ask. “How’s that?”
Well, as well as Pizza Day (9th February), where foodies worldwide glorify the Italian delicacy, May 22nd is celebrated as Bitcoin Pizza Day. You see, on this day in 2010, a programmer from Florida successfully traded 10,000 bitcoins for two Papa John’s Pizzas.
Fast-forward to the future, Bitcoin (or BTC) is the world’s first-born digital currency. Launched in 2009, it has paved the way for the crypto (r)evolution. However, there is still a cloak of secrecy over the identity of its creator(s), Satoshi Nakamoto (most likely a pseudonym).
Today, Bitcoin is the most popular cryptocurrency. In many countries and online, you can use Bitcoin to buy products and services as you would with traditional currencies.
By design, Bitcoin’s supply limit is $21 million, meaning the currency cannot be devalued in the same way a conventional currency can. Bitcoin has asserted its dominance over other cryptocurrencies, collectively named altcoins (i.e., bitcoin alternatives).
Cryptocurrencies are highly volatile as they are backed by peer-to-peer technology and not controlled by any central authority, government or organisation. As a result, almost anything can move their price.
So what causes Bitcoin's rise and falls?
A series of unfortunate events can cause a huge crash for Bitcoin’s price. But, also, a series of fortunate events can make it soar. Let’s explore some of the events fuelling Bitcoin’s ups and downs.
Supply and demand
Cryptocurrencies are subject to cycles of high public interest, and when demand for crypto is high, its price dramatically increases. Bitcoin’s supply is limited, marking its deflationary character and providing one more reason for its growth.
When conventional currencies face a crisis, cryptocurrencies come to the fore as they are decentralised – especially bitcoin. When investors lose interest in a fiat currency, they resort to bitcoin or its rivals, pushing up the price.
Regulation or market manipulation
Government bans, and even regulation or taxation discussions over cryptocurrencies, decrease their value. Restrictions make potential buyers considerably reluctant to buy, and thus the demand goes down.
Crisis of confidence due to bad publicity
Cryptocurrencies’ prices are sensitive to both good and bad news, mainly because they are not regulated. Media plays a massive part in people’s perception of crypto – any story about a real-world application that goes viral drives Bitcoin’s price.
The digital and unregulated nature of cryptocurrencies makes them vulnerable to hackers. Each time a hackers’ attack occurs, it undermines the reliability of the cryptocurrency. For example, Bitcoin’s value dropped immediately and dramatically in 2014 when hackers attacked Mt. Gox (a Japanese BTC exchange) and stole plenty of coins.
A timeline of Bitcoin’s peaks of fame (not so glorious days included as well)
2008 – A white paper called Bitcoin – A Peer to Peer Electronic Cash System was posted under the name Satoshi Nakamoto, describing how Bitcoin would work.
2009 – The Bitcoin software is made available to the public for the first time. Mining – the process by which new bitcoins are created and entered into circulation – begins too.
2010 – Bitcoin is valued for the first time: two pizzas for 10,000 BTC (reminder for pizza lovers: you can celebrate Bitcoin Pizza Day on May 22nd!). This purchase is the first known bitcoin transaction offline and in the real world. Following its popularisation, its first correction takes place. It lasted more than 23 days.
2011 – Altcoins emerge as the logical consequence of Bitcoin’s popularity. Today, there are over 4,000 cryptocurrencies in circulation, with new ones frequently appearing among dedicated communities of backers and investors.
April 2011 – Time and Forbes discuss Bitcoin for the first time, and its popularity grows. In June, a little bit later, Bitcoin’s price jumped from $1 in April to a peak of $32, a gain of 3,200%.
2013 – While at the end of 2013, the US Senate had recognised Bitcoin’s potential, China started to impose restrictions on its use. Shortly after reaching $1,000 per Bitcoin for the first time, the price soon began to decline and finally crashed by 87%.
2014 – The world’s largest Bitcoin exchange, Mt.Gox, went offline, and 850,000 Bitcoins disappeared. It was one of the biggest hacks in the history of Bitcoin.
2016 – There are trends towards a revival of the crypto industry following Bitcoin’s correction in 2015.
2017 – Bitcoin grows 1950% from $974 to $20,000. Its growth was credited to its continued growth in popularity and the emergence of more and more uses. Banks began to investigate ways they might be able to work with Bitcoin.
2018 – Oh my! A terrible year for Bitcoin. From an all-time high (ATH), Bitcoin lost 83% of its value. Its price moved sideways for the next two years.
2020 – The world economy shuts down due to the pandemic, and Bitcoin comes back to life – a total recall. Bitcoin’s price reached just under $24,000 (a record price) in December 2020, increasing by 224% from the start of 2020 when it was $7,200.
2021 – Bitcoin had its best day in April when it smashed all previous price records and reached more than $64,000.
We’re guessing that now, you might have an appetite for high volatility and speculative trading? Great! We’re here to support you and empower you to trade up. If you need some more information on how to trade cryptocurrencies, our intro to crypto trading is an excellent place to start.