What do bitcoin, Paddington Bear and the Queen have in common? Thanks to various quirks in their creation, backstory or family history, all three have two birthdays.
For bitcoin, these two anniversaries fall on 31 October, which marks the publication of a paper describing a revolutionary electronic cash system, and 3 January, the date the first block of bitcoins was mined.
Its birth came as a reaction to the 2008 financial crisis, with bitcoin’s pseudonymous creator Satoshi Nakamoto alluding to this in a line of text placed in the first block of bitcoin’s to be produced.
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The text read: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
Bitcoin was meant to offer a solution to such economic chaos, not reliant on banks, governments or any other centralised institutions to operate. But in the decade since its inception, bitcoin’s promise to turn the traditional financial system on its head clearly hasn’t come to pass, and opinion is divided over whether it ever will.
Its remarkable price gains in 2017 helped it to gain mainstream attention but it is still a long way before bitcoin or any other spin-off cryptocurrencies ever replace traditional currencies.
Some experts believe recent industry movements suggest that they can, at least in some ways. The introduction of the state-backed Petro cryptocurrency in Venezuela and rumours that Facebook is working on a blockchain-based form of digital cash are perhaps the first rumblings of this happening.
One popular idea is that regardless of bitcoin’s utility as a means of financial transaction, it can and will continue to act as a store of value, like a form of digital gold.
So what do the next 10 years, or 20 birthdays, hold for bitcoin? One thing many cryptocurrency analysts agree upon is that price volatility will steadily decrease, thanks to a combination of its finite supply and regulation designed to help the market stabilise and mature.
“Whilst some critics still argue, for varying reasons, as to the longevity of bitcoin, the next 10 years should at the very least provide many more talking points and events to document its life,” David Thomas, director of Mayfair-based cryptocurrency broker GlobalBlock, told The Independent.
“If, as expected, increased regulation enters the market then bitcoin will be opened up to a broader investor base, and with increased adoption, we expect to see volatility reduce and stability increase both of which will establish bitcoin and cryptocurrencies further as an asset class in their own right.”
Bitcoin’s underlying blockchain technology is also expected to continue to drive an entire industry of new applications. Vladislav Dramaliev, head of digital marketing at aeternity, believes this is where bitcoin’s real promise lies.
Mr Dramaliev describes bitcoin’s inception as starting a “curious revolution”, but believes the word “evolution” will be more appropriate to describe the next decade of bitcoin and blockchain’s growth.
“One of the most incredible developments is that, 10 years after that first block was mined, there is actually a whole industry based around this fantastic technology. Today we have a mind-bogglingly diverse range of individuals and companies in the sphere, covering every possible spectrum of opinion, vision for the future, and agenda,” he said.
“The public blockchain infrastructure is getting better and better, more developers are getting interested in blockchain applications, more entrepreneurs are looking for the next killer app, and more users are playing with digital assets on a blockchain. I don’t expect this process to slow down. Everyone looks at Bitcoin and sees something different, depending on their own background.”