Back in early 2011, Bitcoin reached $1 per coin for the first time. It was a huge milestone, and people who were “in the know” about crypto were ecstatic. Everyone else…well, they had no idea what was going on.
If you were someone who jumped on the bandwagon back then and dropped $100 on Bitcoin, do you know how much you would have today? Approximately $5.7 million.
That sounds pretty amazing, right? But, there is a little more that you have to know about it.
You May Not Have Even Been Able to Buy Bitcoins
First, you may not have even been able to buy $1000 in Bitcoin back then. Today, you could buy $100 in Bitcoin in only a few minutes on a trading app or even invest with a trading robot, but back then, these just didn’t exist.
The only way to reliably get a Bitcoin back then was to literally mine it yourself. There was, however, one exchange at the time, Bitcoin Market, but thanks to PayPal stopping the transactions due to fraud allegations, the vast majority of people had to mine.
Most People Back in 2011 Wouldn’t Even See Bitcoin as an Investment
There is also the fact that back in the early days of Bitcoin, it wasn’t really seen as an investment. Today, most people invest into it with the hope that it will increase, but it was designed as an actual currency, something that you could use to buy and sell goods and services.
There were also just not a lot of things to spend any Bitcoin on, so most people wouldn’t even give it the time of day back then. Really, it would be a huge struggle for Bitcoin to even hold its own in 2011 and the infrastructure would quickly get bogged down.
Even today there are some issues surrounding Bitcoin and it being used as an actual currency. There is talk of an upgrade to the infrastructure, however, which could help, but people just don’t seem very interested to use Bitcoin as a currency. These days, it’s all about the crypto being an investment, so people who have them are really just holding them.
Even crypto mining companies like Riot Blockchain and Marathon Digital Holdings have been mining this year, and they have more than 10,000 coins that they have mined in total…but they aren’t selling them.
Investors are doing the same with the expectation that Bitcoin will raise in value over the next several months and even years.
What Does This Mean for the Price of Bitcoin?
Really, we have to take a look at the supply and demand of Bitcoin…basic economics. When we look at Bitcoin, first we have to consider the mining process. This “creates” new Bitcoins and releases them into the supply. However, right now, miners are not releasing the coins once they are mined, which means the supply of Bitcoins is not increasing. On top of that, investors are also holding onto their Bitcoins instead of spending them, so there are not a ton out there to be had.
However, there still seems to be a demand for Bitcoin, and that demand keeps growing. It’s not coming from investors totally, though. Governments and companies are buying up Bitcoins as well. Some of these companies, like a software company called MicroStrategy, are holding Bitcoins in the tens of thousands, and others are following suit.
Even countries, like El Salvador, are hopping in, and it has made Bitcoin a legal currency in the country. In order to do this, the El Salvador government bought a ton of Bitcoins with the intention of holding them, at least in the short term. Brazil is also in talks to make Bitcoin a legal currency, so we may see the Brazilian government do the same and hold any Bitcoins that it buys.
So, right now with so many people holding Bitcoin instead of actually using it as it was intended, the price of the cryptocurrency is only expected to rise in the months and years to come.