On May 22, 2010, a programmer in Florida made history by using 10,000 Bitcoin to purchase two pizzas worth $25. This first real-world Bitcoin transaction now stands as one of the most expensive meals ever bought.
Since the beginning of December, Bitcoin's price has surged at a staggering pace. It broke through $12,000 on December 5, surpassed $14,000 the next day, and reached $15,000 on December 7. By December 12, it had climbed above $17,000. Considering it was valued at around $1,000 at the start of the year, Bitcoin has seen an incredible 17-fold increase in just under 12 months.
Major global exchanges have also begun embracing Bitcoin. The Chicago Mercantile Exchange (CME) announced on December 1 that it would launch Bitcoin futures starting December 18. Shortly after, the Chicago Board Options Exchange (CBOE) revealed its own plans to introduce Bitcoin futures. Nasdaq followed, confirming it would begin Bitcoin trading in the first half of 2018, and the Tokyo Financial Exchange also announced preparations for Bitcoin futures. These developments are expected to bring substantial liquidity to the cryptocurrency market, partly explaining its recent exponential growth.
As one of the most talked-about financial instruments of the year, Bitcoin has attracted more attention than at any time since its inception in 2009. Yet, despite the hype, many people still don’t fully understand what Bitcoin is. Even experts are deeply divided—is it a revolutionary asset or a dangerous gamble?
Understanding Bitcoin's Scarcity
Unlike traditional currencies, Bitcoin isn’t issued or controlled by any central authority. According to its mysterious creator, Satoshi Nakamoto, Bitcoin is a peer-to-peer electronic cash system. In fact, anyone can participate in the process of “mining” new Bitcoin.
Nakamoto’s true identity remains unknown. Registered on a peer-to-peer foundation website as a 37-year-old man living in Japan, Nakamoto always communicated in flawless English and never used Japanese. Many believe “Satoshi Nakamoto” is a pseudonym, possibly representing a group of people rather than an individual.
Miners use computing power to solve complex mathematical problems that maintain the consistency of Bitcoin’s distributed ledger. The network automatically adjusts the difficulty of these problems so that a solution is found approximately every 10 minutes. A certain amount of new Bitcoin is then generated as a reward. The initial reward was 50 Bitcoin per block, but this amount is periodically halved. The most recent halving occurred in July of this year. It’s estimated that by 2140, no new Bitcoin will be created, capping the total supply at just under 21 million. Currently, over 16 million are in circulation.
The Skeptics: Is Bitcoin a Scam?
Many financial experts and economists remain deeply skeptical. Eric Pichet, a professor at KEDGE Business School, cited John Maynard Keynes in a recent paper: “Markets can remain irrational longer than you can remain solvent.” Pichet concluded, “So the only thing left to do is to wait on the riverbank until the body of Bitcoin floats by.”
Chinese economist Song Qinghui likened Bitcoin to historical bubbles like the 1637 tulip mania or the dot-com bubble of 2000, calling it a typical speculative asset destined to burst.
Wall Street trader Marc Fisher pointed out similarities between Bitcoin's price movement and that of silver in the 1970s. Silver soared from around $2 per ounce to nearly $80 before collapsing back to its original levels.
JPMorgan Chase CEO Jamie Dimon has been one of Bitcoin's most vocal critics, repeatedly labeling it a “fraud.” Similarly, former Fortress hedge fund manager Michael Novogratz stated, “Cryptocurrencies like Bitcoin are likely the biggest bubble of our lifetime.”
Billionaires Made by Bitcoin
Despite the criticism, Bitcoin’s rise has created immense wealth for early adopters.
The largest holder is believed to be Satoshi Nakamoto, who reportedly owns around 980,000 Bitcoin—close to 4.7% of the total potential supply and nearly 6% of the current circulating supply. That would make Nakamoto a billionaire more than 160 times over.
Early investor Roger Ver is said to hold approximately 300,000 Bitcoin, worth nearly $5 billion at current prices.
Cameron and Tyler Winklevoss, famous for their early involvement in Facebook, owned $11 million worth of Bitcoin in 2013 when it was trading at $120. Today, that same investment is worth over $1.4 billion.
Chamath Palihapitiya, a former Facebook executive and part-owner of the Golden State Warriors, held $5 million in Bitcoin in late 2013. That stash is now valued at around $400 million.
Venture capitalist Tim Draper purchased nearly 30,000 Bitcoin at a U.S. Marshals Service auction in 2014—originally seized from the Silk Road online marketplace. Those coins would be worth at least $480 million today.
From Virtual Concept to Real-World Use
What began as a niche interest among tech enthusiasts has gradually gained real-world legitimacy.
One of Bitcoin’s most touted features is its decentralization. Without a central issuing authority, it operates beyond government control—immune to inflationary monetary policy, geopolitical instability, and traditionally high transaction fees.
Bitcoin’s security is maintained by a distributed network of miners. The system relies on cryptographic keys, making counterfeiting and theft extremely difficult. To successfully attack the network, a bad actor would need control over 51% of its computing power—a feat that is currently both technically and economically unfeasible.
Adoption is growing rapidly. During Thanksgiving week this year, U.S. exchange Coinbase added 100,000 new users, bringing its total to 13.1 million—more than double the number from a year earlier.
Real-world use cases are also emerging. In September 2017, a home in Austin, Texas, became the first U.S. property purchased with Bitcoin. The buyer used BitPay to convert Bitcoin into U.S. dollars for the transaction.
Governments are taking notice too. Australia removed double taxation on Bitcoin, Japan recognized it as a legal payment method, and South Korea is considering formal regulation. Even the Pacific island nation of Vanuatu now accepts Bitcoin for investment immigration applications.
However, regulatory attention also brings challenges. The U.S. Internal Revenue Service issued guidelines in 2014 stating that Bitcoin used for goods or services may be subject to capital gains tax.
Risks Behind the Rally
Early miners expended significant electricity and computing resources when Bitcoin was practically worthless. Their bet has paid off handsomely—Bitcoin has surged over 1000% in 2017 alone.
But such rapid growth comes with risks. High volatility remains a major concern. As Goldman Sachs CEO Lloyd Blankfein recently noted, “A currency that fluctuates 20% in a day doesn’t feel like a currency. It feels more like a tool for fraud.”
The history of financial markets is filled with assets that soared on speculation and then collapsed. Some analysts worry that Bitcoin could eventually harm traditional markets and the broader economy.
Most Bitcoin trading occurs in three types of off-exchange settings: peer-to-peer platforms (similar to Craigslist or Taobao), wallet-based over-the-counter trading, and hybrid models that combine exchange and OTC trading.
Each of these carries risks. Without third-party oversight, participants are exposed to default risk, fraud, and limited legal recourse. Very few countries have implemented robust regulatory frameworks for cryptocurrency trading, leaving investors vulnerable.
Moreover, the market’s relatively low liquidity and decentralization make it susceptible to price manipulation by large holders.
Conclusion
Bitcoin’s market capitalization now exceeds $250 billion—equivalent to five times the value of JD.com.
The biggest debate continues to center around Bitcoin’s intrinsic value. Critics argue it’s like “buying air,” with no fundamental worth beyond collective belief. Supporters see it as digital gold and a hedge against traditional financial systems.
What’s undeniable is that Bitcoin has popularized blockchain technology—a decentralized ledger system with applications far beyond cryptocurrency. From supply chain management to digital identity verification, blockchain is already reshaping business and technology.
Whether Bitcoin itself endures or eventually declines, its legacy is secure. The underlying technology is poised to transform countless industries, and forward-thinking businesses are already exploring new use cases. Blockchain adoption is likely to experience explosive growth in the coming years.
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Frequently Asked Questions
What is Bitcoin?
Bitcoin is a decentralized digital currency that enables peer-to-peer transactions without intermediaries like banks. It operates on a technology called blockchain, which records all transactions in a public ledger.
How can I buy Bitcoin?
You can purchase Bitcoin through cryptocurrency exchanges, peer-to-peer platforms, or Bitcoin ATMs. Always use reputable services and ensure you have a secure digital wallet for storage.
Is Bitcoin legal?
The legality of Bitcoin varies by country. Some nations, like Japan and Australia, have embraced it with clear regulations. Others have restrictions or outright bans. Always check your local laws before investing.
Why is Bitcoin so volatile?
Bitcoin's price is influenced by factors like regulatory news, market demand, investor sentiment, and technological developments. Its relatively small market size compared to traditional assets also contributes to sharp price swings.
What is blockchain?
Blockchain is the underlying technology of Bitcoin. It’s a distributed ledger that records transactions across many computers, ensuring transparency and security without a central authority.
Can Bitcoin be hacked?
While the Bitcoin network itself has never been hacked, individual exchanges and wallets have been compromised. It’s crucial to use strong security practices, such as two-factor authentication and cold storage for large amounts.