Bitcoin has had quite the year so far in 2017, with the price up by 320% since Jan. 1. However, this type of move pales in comparison with the digital currency's climb in its early years. In fact, you might be shocked to discover just how much a few dollars' worth of bitcoin in the early days would be worth today.
The price history of bitcoin
Bitcoin began trading in 2010, as the first bitcoin exchange opened in March 2010 with a per-coin value of $0.003. The first real-world transaction took place in May 2010, when 10,000 bitcoins were exchanged for two pizzas in Jacksonville, Florida. Since that time, the price of bitcoin has been on quite the roller-coaster ride.
- The first spike in the price of bitcoin occurred in July 2010, when the price jumped tenfold in a five-day period, from $0.008 to $0.08.
- Bitcoin first grew in value to $1.00 in early 2011.
- The first bitcoin "bubble" saw prices jump as high as $31 in July 2011, before crashing to a low of $2 later in the year.
- From December 2011 through April 2013, bitcoin experienced a major price surge, from $2 to a high of $266, before stabilizing in the $130 range.
- Bitcoin spiked once again in November 2013, topping out at $1,242.
- From December 2013 through much of 2014, the price of bitcoin stayed between $340 and $1,000.
- Bitcoin fell to a low of about $200 in March 2015, before beginning a long bull run, which is still continuing.
- On Aug. 1, 2017, bitcoin split into two digital currencies, bitcoin and "bitcoin cash." If you owned one bitcoin before the split, you owned one of each afterward.
- In early September 2017, bitcoin reached $5,000 for the first time. As I write in September 2017, one bitcoin is worth just over $3,722 and one "bitcoin cash" is worth about $445.
$10 worth of bitcoin in 2010
To illustrate just how impressive this rally has been, let's say you had the foresight (or good luck) to purchase $10 worth of bitcoin at the time the first bitcoin exchange opened in March 2010. Based on the $0.003 per-coin price at the time, your $10 would have purchased 3,333 bitcoins.
Now, using the $3,722 current value of a bitcoin and the $445 value of one bitcoin cash, your original investment would be worth a total of nearly $13.9 million. That translates to a 655% annualized gain over a roughly seven-year period.
What's more, keep in mind that someone paid 10,000 bitcoin, or three times this amount, for just two pizzas earlier that same year.
Where could bitcoin be heading
It's difficult to say where bitcoin could be headed, just because there are so many conflicting viewpoints from industry experts, as well as lots of variables that could move the price in one direction or another. I've written before that a bitcoin value of $1 million could certainly be possible if the right things happen over the coming years, but there's also a solid case to be made that bitcoin is worth significantly less than its current price, or could eventually be worth nothing at all.
One thing I do know is that bitcoin's performance over the next seven years isn't likely to be close to that of the previous seven. After all, if bitcoin continues to grow at a 665% annualized rate for another seven years, it would translate to a price of more than $4.6 billion per bitcoin. Even the most bullish cryptocurrency advocates realize this would be quite impossible.