Tuesday was Bitcoin’s 15th birthday. Some lucky people have reason to celebrate. Since it first started trading on an exchange, the token is up 3,449,989,839%.
Few people, of course, would have guessed that Bitcoin would go on to become the beating heart of a $1.3 trillion crypto industry. Today,
Bitcoin
is worth more than $670 billion, and it remains the most popular and widely traded crypto—among a field teeming with rivals from
Ethereum
to alt-coins like
Solana.
But don’t beat yourself up if you missed it—the odds of picking Bitcoin as such a big winner 15 years ago were probably on par with winning the lottery. And returns of that magnitude are largely illusory, though a few early adopters are sitting on massive gains.
The token got its start in a white paper published by a pseudonymous developer, “Satoshi Nakamoto,” on Oct. 31, 2008.
The vision was for a “peer-to-peer version of electronic cash” that would allow for payments without going through a bank or other financial institution. The network running the system would be dispersed among independent computer operators who would collectively verify and record transactions in blocks (hence the idea of a “blockchain.”). In return for their work, called “mining,” the miners would receive Bitcoin doled out at a pre-set rate.
Developers launched the Bitcoin network in January 2009. The first recorded transaction on an exchange came in October 2009, when someone sent 5,050 Bitcoins to a new site called New Liberty Standard, receiving $5.02 in return.
Its rise since then has been staggering. Using that starting price of about a tenth of a cent, the crypto has returned more than 3.4 billion percent. That’s compares to a roughly 300% increase for the
S&P 500
since October 2009, before dividends. At Bitcoin’s recent price of $34,290, that initial $5 investment would be worth just over $173 million.
Even if you’d started trading a few years after its launch, it has hardly been a smooth ride. The most rapid price increase occurred in its first few years of existence, when it was barely known and rarely traded. Over the course of its existence, investors have had to stomach gut-wrenching declines, including drawdowns of 77% in 2014, 72% in 2018, and 65% last year.
Bitcoin owners have also had to survive countless thefts and frauds to hold onto their tokens. Tokyo-based Mt. Gox was the first major Bitcoin exchange, handling nearly three-quarters of trades. It shuttered abruptly in 2014 after disclosing it had lost Bitcoins worth around $500 million. Its former customers are still fighting to get some of their funds back in bankruptcy court.
Most recently, customers of FTX.com lost billions of dollars in Bitcoin and other cryptocurrencies in an alleged fraud perpetrated by founder Sam Bankman-Fried, who is fighting the charges in court.
Bitcoin remains well below its 2021 high of more than $60,000.
Crypto investors have lately argued that the likely launch of a Bitcoin exchange-traded fund will bring in billions of dollars in assets to the market. Others think the next “halving event,” in 2024, will provide another lift. That’s when the Bitcoin blockchain network is scheduled to cut the number of new Bitcoins awarded for validating each block in half, from 6.25 to 3.125.
As enthusiasts see it, the token will keep rising, eventually becoming a store of value impregnable to the forces of inflation, geopolitical shocks, and global currency collapses. Of course, things could go the other way as other cryptos gain traction or some governments try to stamp it out.
Either way, the days of 3.4 billion percentage gains seem gone for good.
Write to Joe Light at joe.light@barrons.com
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