Bitcoin is down 70% since its December 2017 high, with many pundits this week describing the “Bitcoin bloodbath”.
Publications like Bloomberg have even compared its drop to the Nasdaq Composite Index’s 78% “peak-to-trough plunge after the US dot-com bubble burst”.
Many other cryptocurrencies have fallen hard as a result, and are now essentially worthless.
As the world’s first, and biggest, decentralised cryptocurrency built on distributed ledger technology, however, Bitcoin’s overall value is far from just its US dollar price.
The Bitcoin blockchain and its public ledger have created a global network without a centralised administrator, providing insight into new and powerful technologies.
The digital currency was invented by Satoshi Nakamoto in late 2008 and the first block in the Bitcoin blockchain was mined in early 2009.
At the time, Bitcoin was envisioned as a peer-to-peer electronic cash system which could facilitate payments between parties while being immune to censorship.
Bitcoin has evolved over time according to the consensus of its community and has been labelled many things, including a “store of value”, “speculative investment”, and even “digital gold”.
The major changes to the Bitcoin blockchain since inception, including the traffic on the network as well as changes made to the blockchain itself, have often been overlooked by many, however – particularly in the past year, where most attention was on how much its price tag was.
Despite Bitcoin’s huge popularity today, its initial adoption was slow – with the digital currency mostly used by cryptography enthusiasts to experiment with blockchain technology.
The number of active users on the Bitcoin blockchain began to grow at an increasing rate from 2013, with the total number of wallet users more than doubling each year.
This surge in interest also caused an increase in transaction volume and the price. As Bitcoin has a fixed supply, an exponential increase in users and demand for the token naturally caused the market value to increase.
The price of Bitcoin peaked at the beginning of 2018, at just over $19,000, before plummeting back down to around $6,000 in six months.
Bitcoin’s average transaction fee has also decreased following the drop in value and now rests at less than $1 – after peaking at over $50 in January 2018.
Despite the fluctuations in its market value, the Bitcoin blockchain continues to see improved adoption worldwide, with over 25 million wallet users registered.
Graphs demonstrating its journey so far – from Bitcoin blockchain explorer blockchain.info – are posted below.
Like most popular cryptocurrencies, Bitcoin has struggled to find a solution to its scaling problem as the number of transactions increased.
Conflict surrounding possible solutions to this problem peaked in 2017, with the community split between increasing block sizes and a solution called Segregated Witness (SegWit).
This resulted in a hard fork of the blockchain, with the community and ledger splitting into two chains – Bitcoin and Bitcoin Cash.
The core Bitcoin chain implemented SegWit to improve transaction times and fees, while the Bitcoin Cash blockchain opted to increase block sizes.
Both cryptocurrencies have seen improved adoption, market value, and developer interest since then, and the communities of both continue to develop their respective blockchain technologies.
Bitcoin has also started implementing its latest scaling solution, a second-layer platform built on the blockchain called Lightning Network.
Using payment channels which offer instant transactions, Lightning Network could solve the problem of paying for everyday micro-purchases with Bitcoin – while maintaining the decentralised core of the cryptocurrency.
There have been numerous other Bitcoin forks throughout the cryptocurrency’s lifetime, including Bitcoin Gold, Bitcoin Private, and many more, but have largely not affected the Bitcoin token most people know.
While its dollar price has dropped and its path in 2018 has been likened to huge market crashes, the adoption of the Bitcoin blockchain and the development of its technology continues.
Cryptocurrencies like Bitcoin are built on emerging technology and will continue to see new developments and changes as they develop, meaning that Bitcoin may experience further drastic price or structural movements in the future – it just comes with the territory.