Happy Belated Birthday, Bitcoin!

Jan 10

It’s been a tumultuous 12 years of existence in this weary world for the first mover of all blockchain projects, the first cryptocurrency in history, the most spectacularly profitable, outrageously volatile asset in modern times, Bitcoin. Otherwise, lovingly referred by its ticker symbol by friends and colleagues BTC for short.

Let’s take a trip down memory lane and peek into the future of our now more-mature distributed ledger of world finance, from humble beginnings, just a glimmer in daddy’s eye; the famously, anonymously appointed “Satoshi Nakamoto,” the mysterious entity of one or more individuals of unknown origin, sex, race or inclination, except of course for one intention: to decentralize and disrupt the global financial system for all time.

What is most clear about Satoshi Nakamoto is that this creator saw the global financial meltdown of 2008, the massive bank bailouts after unquestioned trust in these old-world institutions, the folly of governments, and the abuse of the individual. How the rich got richer and the poor got poorer—the epic injustice of it all.

And Satoshi Nakamoto saw a way out. A way that did not involve them. A way that did not rely on the fickle whims and the frail morality of man. A way determined, tallied, and rewarded solely by the unerring precision of mathematics and code. This way was christened the Blockchain.

BTC’s first formative years were spent mostly among Cheeto-chomping, video-gaming, basement-dwelling types who doted on him incessantly, whispering his name as they eagerly adapted their mining rigs to help the youngster grow.

BTC’s first trip out of the safety of the basement into the real world was to purchase pizza. This momentous and celebrated event -- BTC’s first transaction -- occurred in 2010 at the home of Laszlo Hanyecz, who carefully set up the event through bitcointalk forum. Lazlo paid 10,000 Bitcoins for two delivered Papa John’s pizzas. At the time, the pizza provider was already getting a pretty good deal since he paid about $25 for the pizzas, and the BTC was worth about $41. Today with the price of BTC currently around $38,700 -- the price paid for two pizzas comes out to around $387 million.

Bitcoin experienced growth spurts and suffering through an “awkward period” as all revolutionary peer-to-peer digital payment systems invariably do.

More retailers opened up to Bitcoin in 2012 and 2013. In October 2012, BitPay reported over 1,000 merchants accepting BTC under its payment processing service. In November 2012, WordPress started accepting Bitcoin.

After all of this newfound popularity, BTC went through an obligatory “bad boy” phase, speeding along the infamous Silk Road where the rebel cryptocurrency was used for black market transactions.

With age often comes a thicker skin, and BTC had to develop a Clint Eastwood-like steeliness that comes from weathering plenty of slings and arrows in the form of nearly insane insults. Mostly from -- surprise! -- rich old guys who don’t understand the technology and don’t care.

Jamie Dimon spoke at a conference in September 2018 about BTC, calling it a “fraud” and threatening to fire anyone working for him if he found them buying the cryptocurrency. He added, “It’s just not a real thing. Eventually, it will be closed.”

“Bitcoin and other cryptocurrencies are kinds of a pure ‘greater fool theory’ type of investment,” founder of Microsoft Bill Gates sagely proclaimed to CNBC. “I would short it if there was an easy way to do it.”

The Microsoft billionaire maybe just a tad lazy or just unaware that there was and still is a way to short Bitcoin. Tyler Winklevoss of the cryptocurrency exchange Gemini offered Bill this handy tip in a tweet.

During an interview with Yahoo Finance, Charles Munger, Berkshire Hathaway’s vice chairman, called Bitcoin “anti-social,” “stupid,” and “immoral.” Not to be outdone, Warren Buffet then hurled his own cryptic yet somehow biting insult at BTC, calling it “rat poison squared” (without explaining how to mathematically “square” a chemical such as a rat poison).

In the “strong, silent type” style, ala Clint Eastwood, BTC, did not respond but stood taller, rising higher again in value.

In the second half of 2020, BTC proved a favorite even among family offices and institutions, finally keeping company with respectable -- if still a bit maverick -- publicly-listed Square in the form of a $50 million investment, and MicroStrategy to the tune of a hefty $650 million in BTC added to its books.

Bitcoin even kind of got into sports. The highest-paid Carolina Panthers football player, offensive lineman “Russell Okung” is now receiving half his $13-million salary in BTC. Okung was a Bitcoin fan for years and had asked to be paid in BTC since May 2019. Dreams do come true.

What might the future hold for Bitcoin? To say it looks bright and shiny may be an understatement. Skybridge Bitcoin Fund sees it largely undervalued, even in today’s bull market. According to Skybridge Founder A. Scaramucci, “Gold currently has a $10 trillion market cap, which would make a single bitcoin worth $535,000 if it were to be valued the same way.” The Winklevoss twins of Gemini made a similar case for BTC’s value reaching $500,000.

Some believe BTC might be the future of money. Period. As in “literally.” Financial analyst Bill Miller agreed with Oracle of Omaha Mr. Buffett’s description of the asset, adding:

“Warren Buffett famously called Bitcoin’ rat poison’...and the rat could be cash.”

Bitcoin has been dismissively declared dead about 390 times since 2010. Yet in 2020, the grossly exaggerated reports came in much less frequently at a mere 11 times. Miracles never cease.

Perhaps somewhere in a basement far, far away, Satoshi Nakamoto, the creator of Bitcoin, smiles ever so slightly, yet proudly, for how far his/her/their creation has come.

Or perhaps blowing a kiss to his/her/their significant other from the rolled down the window of one of many yellow Lamborghinis, Satoshi Nakamoto speeds off into the night.