Bitcoin

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Bitcoin

Bitcoin (BTC) is a digital asset (or cryptocurrency) and payment system run by a huge, global, decentralized peer-to-peer network of computers. Bitcoin was created in 2009 by a programmer or group of programmers under the pseudonym Satoshi Nakamoto.

Overview

Bitcoin is the world's first cryptocurrency. It is essentially a software program that slowly releases new bitcoins into a network of computers running the software. These "coins" are awarded to computers that successfully verify transactions made between users before the rest of the network. This process is referred to as "mining" bitcoin. The program is designed such that coins become more and more difficult to mine as time passes. As of February 2018, approximately 80% of all bitcoins have been mined. The limit of 21 million bitcoins is expected to be reached around 2140.

The underlying technology for bitcoin is the "blockchain," a type of distributed ledger technology. This technology uses complex mathematical algorithms in place of third-party financial institutions like banks or government agencies to verify transactions made with bitcoin or other digital tokens. Because bitcoin is not issued by any government or central authority, it is considered independent, and transactions using bitcoin are anonymous. Although it is theoretically not impossible to "crack" the blockchain, the technology was deliberately designed to be "computationally impractical to reverse," so it is unlikely that one attempting to do so would succeed - at least in theory.

Since the value of bitcoin surged in late 2013, it began to attract the attention of major media outlets as well as regulatory authorities. This led to the creation of new cryptocurrency regulation in the case of some countries (such as the U.S., Canada, and Russia), and outright bans in others (China, South Korea).

As of December 2017, about 40 percent of bitcoin was held by around 1,000 users. Holders of such large amounts of bitcoin are often called "whales."

With the volatility of bitcoin prices and values, hysteria and evangelism are not uncommon among the bitcoin community. The term "HODL" was popularized as a colloquial way of saying "Hold On for Dear Life", or simply "don't sell."

Structure

Using the NSA-developed SHA-256 cryptographic hash function as a proof-of-work function, Satoshi Nakamoto and their team created a system that could run on almost any platform to carry out anonymous, secure transactions that are extremely difficult to forge.

Of course, this process is not by any means a simple one. When a bitcoin miner attempts to add a "block" to the blockchain, they are receiving a transaction sent out into the blockchain network by someone with a "bitcoin wallet", or account containing their owned bitcoins. The computer or computers (nodes) of said miner then set out to calculate the solution to the SHA-256 problem using the wallet owner's "public key", a cryptographically-generated set of letters and numbers of varying lengths not tied to their personal identity in any way. This is used to solve a complex mathematical problem - called a hash function - in order to produce a digital address that will serve as the transaction's destination. This math problem can't be solved with simple logic, however; because of the anonymity of users and their hashes, the hash must be guessed. This creates a sort of contest between bitcoin miners to see who can guess a correct hash first. The bitcoin network increases the difficulty of this task in proportion to how many miners there are in the network, in order to keep the time between blocks created in the blockchain constant, around 10 minutes or so.

The Blockchain

Blockchain is, theoretically, a widely-adaptable concept. Experimental startup companies have begun utilizing it for everything from supply chain management to ride sharing to birth and death certificate archiving. It was originally developed by Satoshi Nakamoto in order to create a peer-to-peer system of managing and verifying all transactions made with bitcoin. The blockchain ensures that all records of transactions made with bitcoin are securely archived. This ensures that, since new blocks of data are added by the bitcoin software client (which is also the sole proprietor of newly-mined bitcions), the total number of bitcoins in circulation and the number of bitcoins possessed by each user is maintained accurately, while also maintaining total anonymity of all users.

Asmap

In June 2020, bitcoin's core protocol saw its 20th update. This update included "Asmap," an experimental software designed to protect bitcoin from a so-called “Erebus” attack, which would allow a large Internet operator - like a nationalized Internet operator or Amazon Web Services - to restrict and spoof peer-to-peer transactions.

Transactions

Transactions between bitcoin users are made with bitcoin wallets over bitcoin exchanges. Some popular exchanges include Coinbase (GDAX), Kraken, and Bitfinex. There are, however, several exchanges around the world, including several that operate on a national level.

On May 6, 2019 Bluewallet, a bitcoin wallet provider, launched wallet software allowing users to send bitcoin payments over the Lightning Network using Apple Watches. The software is available for download in the Apple iTunes Store. Nuno Coehlo, Head of product development for Bluewallet, noted that both the implementation of bitcoin payments in a smart watch as well as the lightning network are both highly expermimental. Coelho told CoinDesk, “It’s a very early stage industry so we’re trying to figure out how to build this stuff properly.”

Fees

Executing a bitcoin transaction involves paying fees of varying size. These are meant to incentivize miners to prioritize transactions offering nonzero fee rates first. The miner who solves the transaction and adds the resulting block to the blockchain receives the fee, like a waiter receiving a tip at a restaurant. Though bitcoin fees are meant to be optional gratuities, the act of assigning fees to a transaction has become commonplace; as a result, users who do not utilize fees can expect to wait much longer for their transactions to be verified. The time it takes for a transaction to become verified also depends on the volume of users making requests to alter the blockchain; in mid-December of 2017, the average wait time for transaction verification was around 78 minutes, but on Sunday the 17th, the average was closer to 1,188 minutes. At this time, the average fee needed to make a bitcoin transaction was approximately $28. By March 1st of 2018, that average had plummeted to $2.37.

Fees are often calculated using algorithmic software built into a cryptocurrency exchange, but they can also be entered manually. The rates for fees and the manner in which they are collected varies depending on the exchange; for example, the transaction fees of Kraken involve taking into account a rebate disbursed to its user's wallets, depending on when they are processed and what the rates relative to market volume are at the time the transaction is made.

Privacy

One of the major functions of bitcoin is its ability to allow users to transact with one another with greater privacy than can be conferred (legally) by the traditional financial system.

At the Bitcoin 2019 conference in June 2019, Edward Snowden - a former NSA operative known for whistleblowing his former employer's mass surveillance efforts - spoke about how bitcoin allowed him to pay journalists in 2013 while on the run from the U.S. government. He said that "lack of privacy is an existential threat to bitcoin," and that privacy is "the only protection users have from political change." He also said that it is imperative for cryptocurrency exchanges not to give out client data, fearing that if one exchange did so, many others would follow.

Bitcoin Exchanges

Some of the more prominent bitcoin exchange entities are listed below:

• Binance - International (not serving U.S. customers)
• Bittrex - International
• BitMEX - International ("officially" not serving U.S. customers)
• bitFlyer - International
• Bitfinex - International
• Bitstamp - International
• Kraken - International, U.S.-based
• GDAX/Coinbase - U.S. based; also supports transactions in Canada, the U.K., Australia, Singapore, and certain countries in the E.U.
• itBit - U.S. based
• Gemini (or Gemini Trust) - U.S. based

Bitcoin Derivatives

In 2016, the Chicago Mercantile Exchange (CME) launched bitcoin price indexes for the first time, seeking to bring institutional-grade resources to the bitcoin trading markets.

In 2017, the Chicago Mercantile Exchange and the Cboe Futures Exchange (CFE) self-certified new contracts for bitcoin futures products, and the Cantor Exchange self-certified a new contract for bitcoin binary options.

LedgerX, a trading and clearing platform for digital assets, received approval for its platform from the CFTC in July of 2017 and began listing physically settled one- to six-month options contracts for bitcoin in October 2017. Other digital currency contracts such as Ethereum options are expected to follow.

The CFE launched trading in Cboe bitcoin futures on December 10, 2017 under the ticker symbol "XBT". The CME launched its own bitcoin futures contract a week later (Dec. 17) under the ticker "BTC." The Cboe settled its futures against a daily price auction from Gemini, while the CME uses its own bitcoin reference rate which tracks several cryptocurrency exchanges.

On October 3, 2018, ErisX announced its formation as the successor to Eris Exchange, a designated contract market that listed interest rate swap futures products. The company said it planned to trade and clear cryptocurrency futures contracts at some point. The exchange also said that it would offer spot trading. According to ErisX, its investors include DRW Venture Capital, Valor Equity Partners, TD Ameritrade, Virtu Financial, NEX Opportunities, Cboe Global Markets, CTC Group Investments, Digital Currency Group, Nico Trading, Pantera Capital, Third Stone Partners, CMT Digital, Susquehanna International Group, XR Trading, C2 Capital Management and ED&F Man Capital Markets Inc.

In March 2019, Cboe made a surprise decision to delist its bitcoin futures contract, with the final settlement of the contract on June 19, 2019. It had steadily lost market share to CME Group and open interest volume at CME was almost six times higher than Cboe's contract. CME posted record volumes in its bitcoin futures contract in 2019.

In February 2019, the CME Group announced that in the first quarter of 2019, it set a new record for total bitcoin futures contracts traded. The record high for total contracts traded in Q1 of 2019 was 18,338 contracts as of February 19th, the equivalent of 91,960 BTC or $360 million based on the price of bitcoin at the time. The previous record was set on November 20, 2018. On April 4, 2018, the CME Group Tweeted that the firm had experienced a "record trading day" on bitcoin futures; according to a chart accompanying the Tweet, 22,542 bitcoin futures had traded on April 4 alone, which is equivalent to 112,710 bitcoins.

ErisX announced on April 30, 2019, that it had closed another $20 million in funding from investors and that it was launching its spot market as well as related clearing services that day. Bitcoin was one of the initial cryptocurrencies that could be traded with its new services, as well as Bitcoin Cash, Litecoin, and Ethereum traded against the U.S. dollar and against each other. In an interview with CoinDesk, Chief Strategy Officer Matt Trudeau said that ErisX continues to build out its technology, raise funds, and apply for futures and futures clearing licenses.

The CME Group saw a record high number of bitcoin futures contracts traded, as well as the highest number of customer accounts trading bitcoin futures in its history in May 2019. The company released a statement saying, "the number of unique accounts continues to grow showing that the marketplace is increasingly using BTC futures to hedge bitcoin risk and/or access exposure." This trend would continue into the Summer of 2019; on June 17, the CME Group's open interest for bitcoin futures grew by a record 643 contracts in a day, reaching an all-time high of 5,311 contracts. Based on bitcoin's price at the time, this equated to over $250 million worth of contracts. Coinciding with this, the price of bitcoin reached $9,300, its highest point since May 2018. Around the same time, the Japanese Consumer Affairs Association (CAA) released a report saying that an increase in queries to Japanese exchanges related to bitcoin trading indicated increased interest in cryptocurrency trading.

By late 2019, bitcoin derivatives accounted for $5-10 billion worth of trade volume per day - more than 10 times the volume created by bitcoin spot trading. The top three exchanges trading bitcoin derivatives by volume at the time were BitMEX, Huobi, bitFlyer.

Legality

Bitcoin is, by design, not backed by any government or financial institution. This means that it is not insured or well-regulated, so those who suffer losses as a result of investing in bitcoin, such as victims of fraud or theft, do not have the options for recourse that investors in the traditional financial system do. Originally, the United States Securities and Exchange Commission (SEC) released an Investor Alert document that described bitcoin as a "ponzi scheme" in 2013. As bitcoin and other cryptocurrencies have grown in popularity and steps toward greater regulation of the crypto space have been taken, the SEC's take on bitcoin has tentatively become more agreeable.

The IRS treats Bitcoin as property, for taxation purposes. Employees paid in bitcoin or other cryptocurrencies must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.

Regulation

United States federal law does not provide for direct, comprehensive oversight of underlying Bitcoin or virtual currency spot markets. As a result, U.S. regulation of virtual currencies has evolved into a multifaceted, multi-regulatory approach. State banking regulators, the Internal Revenue Service (IRS), the United States Treasury's Financial Crimes Enforcement Network (FinCEN), and the Securities and Exchange Commission (SEC) monitor bitcoin and cryptocurrency trading to enforce state money transfer, tax, anti-money laundering, and fraud protection laws.

On March 25, 2014 the Internal Revenue Service announced that bitcoin should be viewed and taxed as property and not as currency. This meant that employers who pay wages in bitcoins would have to report those wages like any other payment made with property, and that bitcoin income will be subject to federal income withholding and payroll taxes. The agency's official statement declared, “it does not have legal tender status in any jurisdiction."

In May 2014 the U.S. Federal Election Commission voted to allow political committees to accept bitcoin donations.

In March of 2017 the SEC refused to grant an exemption that would have let the Winklevoss Bitcoin Trust ETF trade on the Bats BZX Exchange.

Bitcoin as a commodity

Bitcoin is classified by the Commodity Futures Trading Commission (CFTC) as a commodity, under the Commodity Exchange Act (CEA). The CFTC enforces all bitcoin derivatives contacts in the U.S., as well as all fraud and manipulation protection laws.

In September 2014 the CFTC permitted TeraExchange, a swap execution facility, to certify to the commission that its bitcoin swap complied with the requirements of the Commodity Exchange Act, a statement which implied that bitcoin is a commodity under the CFTC's authority. That December, Chairman Tim Massad stated his view during Congressional testimony that bitcoin was a commodity and acknowledged that the CFTC defined the term "commodity" broadly. In 2015 the CFTC settled a complaint against a company called Coinflip for providing, during 2014, a marketplace called Derivbit, which listed bitcoin options without being registered as a swap execution facility - the only permissible venue for commodity options trading. The CFTC settled its case against Bitfinex, wherein the CFTC accused Bitfinex of trading off-exchange Bitcoin futures and failing to register as a futures commission merchant, in June 2016. The view that bitcoin can be regulated as a commodity received support on March 6, 2018 when U.S. District Judge Jack Weinstein ordered that the CFTC could sue Patrick McDonnell and his company, CabbageTech, for fraud under the Commodity Exchange Act. CabbageTech solicited funds from investors for providing cryptocurrency advisory services, which the CFTC alleged were never forthcoming.

Fraud

Because much of the bitcoin and cryptocurrency trading that occurs happens via cash markets, the dark web, or other online methods which may not be totally secure or regulated, potential investors or traders of such should be highly vigilant of fraud. Buyers can verify whether a party offering bitcoin or other cryptocurrency options or futures services are registered with the CFTC using SmartCheck.gov, a consumer protection website owned and operated by the United States federal government.

As with regular brokers and investment professionals, consumers can use the CFTC's website Smartcheck.gov to look up investment professionals to see if they are registered and accredited by the CFTC.

Bitcoin was named as the currency of choice for the Russian intelligence officers indicted by the U.S. Government for spying on the Democratic National Committee - including hacking into their computers - during the 2016 presidential campaign. The indictment indicated that in addition to using bitcoin for payments, the intelligence officers mined new bitcoin. Along with the other complaints against them, the officers were charged with money laundering connected to their bitcoin use.

In October 2018 Nouriel Roubini, an economist and New York University professor famous for correctly predicting the popping of the U.S. housing bubble in 2007, called cryptocurrency and bitcoin "the mother or father of all scams and bubbles" while testifying at a congressional hearing on Capitol Hill. He said that everyone he knew that was actively involved in cryptocurrency trading was "financially illiterate," and "could not tell the difference between stocks and bonds."

Pump-and-dump schemes

Similar to "boiler room" fraud schemes, which aggressively pushed penny stocks on investors by misleading them about their potential future value, some individuals or organizations have used social media to mislead victims into investing their money in altcoins, or alternative cryptocurrencies. These "pump-and-dump" ICO scams use misinformation to trick large numbers of people into investing in a new digital asset with the promise of huge returns, then sell all of their shares once its price reaches a certain point, causing a significant price drop, leaving investors with essentially worthless digital tokens. Some use false news reports, testimony from fake "experts," and other unscrupulous means to accomplish their goals. The CFTC warns potential investors that they should be especially wary of very new cryptocurrencies, and that extensive research on a particular company or coin is imperative for potential investors. Fraudulent digital asset scams can be reported at Whistleblower.gov.

"IRS-approved" Digital Asset IRA's

Some frauds have advertised "IRS-approved" IRA funds and similar services involving digital assets. These typically rely on misinforming potential investors (for one thing, the IRS never endorses investments). Because self-directed IRA's can hold unregistered investments and are not taxed until withdrawn from an IRA account, they make for attractive, if false, potential investments to the unwary consumer.

Twitter Hack 2020

In July 2020, the Twitter accounts of several high-profile public figures - including Barack Obama, Elon Musk, and Bill Gates - were apparently hacked in a massive cryptocurrency giveaway scam involving an organization named, "Crypto For Health." The Twitter handles of exchanges like Gemini, Coinbase, and Binance, as well as prominent figures in the digital asset world like Justin Sun, were also hijacked. Many of the hacked accounts posted the same announcement: “I am giving back to my fans. All Bitcoin sent to my address below will be sent back doubled.” Others, like the account of Presidential hopeful Joe Biden, posted messages that said more or less the same thing worded differently. The scam was successful, netting the hacker or hackers 13 BTC, worth roughly $120,000 at the time.

Samourai Wallet’s research arm, OXT Research later discovered that the hacker had an active BitMEX account. The day after the attack, Chainalysis told Coindesk that the BTC amassed during this scam was "on the move." Chainalysis said it had identified and was monitoring four wallets into which the stolen BTC was transferred. Chainalysis and Ciphertrace later told Coindesk that the FBI had reached out to them and that they were engaged in an investigation to find the hacker. Twitter's creator Jack Dorsey received a letter from U.S. Senator Josh Hawley, asking for an explanation for the attack, what Twitter plans to do to prevent similar attacks from happening again, and if President Donald Trump's Twitter account was at risk. After the attack, changes were made to Twitter's platform that made users unable to share bitcoin addresses, or any other long string of letters and numbers.

$3.6 Billion Bitcoin Bust

On February 8, 2022, the Justice Department said it had seized nearly 120,000 bitcoins stolen in 2016 and valued at $3.6 billion. This is the largest financial seizure in US history. Ilya Lichtenstein, 34 years old, and his wife, Heather Morgan, 31, were arrested after trying to launder the proceeds.

History

Bitcoin was invented by a programmer or programmers using the name Satoshi Nakamoto. In 2008, Satoshi published a whitepaper entitled, "Bitcoin: A Peer-to-Peer Electronic Cash System" on the Cryptography Mailing List Metzdowd.com. In this paper, Satoshi proposed an alternative to traditional fiat currency in favor of "a purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution." In 2009, Satoshi released the first bitcoin software client, as well as the first mined bitcoins, marking the launch of bitcoin.

The very first blockchain component, or "Genesis Block," was recorded on January 3, 2009. This coincided with the release of the original software client. The first recorded cryptocurrency transaction occurred nine days later, on January 12, 2009.

On May 22, 2010, Florida resident Laszlo Hanyecz traded 10,000 BTC for two pizzas from a Papa John's franchise. This is widely believed to be the first instance in which bitcoin was directly used to purchase something tangible. Since then, this occasion has been celebrated every May 22nd by bitcoin enthusiasts as "Bitcoin Pizza Day."

For the first several years after its creation, bitcoin held limited appeal. By 2011, multiple prominent Internet-based institutions began accepting donations through Bitcoin, including WikiLeaks, FreeNet, the Internet Archive, and the Free Software Fondation. By 2012, the Orlando-based bitcoin payment processing company BitPay announced that over 1,000 merchants had signed up for its service within the previous year. In 2013 the value of the virtual currency exploded, with prices moving from $13 to over $1200. By 2017, a number of extremely high-profile companies, including Microsoft, Expedia, Subway, and Newegg.com had begun accepting Bitcoin payments.

The CME Group, in collaboration with Crypto Facilities Ltd., a digital assets trading platform, launched CME CF Bitcoin Reference Rate (BRR) and CME CF Bitcoin Real Time Index (BRTI) on November 14, 2016. BRR provides a final settlement price in U.S. dollars at 4 PM London time on each trading day, and RTI gives users real-time access to bitcoin prices.

In March of 2017 Bitcoin's price plunged briefly and then recovered after the SEC refused to grant an exemption that would have let the Winklevoss Bitcoin Trust ETF trade on the Bats BZX Exchange.

In June 2017, the market cap for all cryptocurrencies surpassed $100 billion, due to a 300% increase that occurred in just over 2 months.

Since bitcoin launched in 2009, thousands of cryptocurrencies have been created, many of which have since failed. In fact, a report by Chris Skinner in 2018 revealed that only 8% of ICOs that launch survive, and that 50% that had launched in 2017 had already failed. At time of writing (February 28, 2018), there are currently 2943 in-market cryptocurrencies worldwide, including bitcoin, Ethereum, and Ripple.

In 2018, U.S. Federal investigators discovered that bitcoin was the currency of choice for the Russian hackers charged with influencing the 2016 U.S. Presidential election. The hackers allegedly used bitcoin to launder approximately $95,000 to pay companies such as the Romanian company dcleaks.com in their efforts. This was done in order to avoid direct relationships with financial institutions by utilizing the anonymity of bitcoin's transactions.

On Halloween 2018, the ten-year anniversary of bitcoin's whitepaper being published, bitcoin was trading at around $6,250 per coin.

On September 7th, 2021, The Republic of El Salvador became the first country to officially adopted Bitcoin as legal tenure along with the US dollar. As a part of the launch, the government has offered $30 dollars worth of Bitcoin through its own digital wallet, Chivo, to citizens who sign up with a Salvadoran national ID number. The date of this adoption has been unofficially titled "Bitcoin Day."

BitInstant

On January 27, 2014, BitInstant founder Charlie Shrem was arrested at JFK International airport returning from a conference in Amsterdam. His company, which allowed users to digitally exchange bitcoins for fiat currency, had knowingly transferred money for criminals trading on the Silk Road website. Although Shrem had been aware of this, and sent an email to the user telling them, "you better stop," Shrem did not inform Federal authorities. This led to BitInstant closing its doors for good, and Shrem sentenced to two years in prison. Shrem became the first high-profile cryptocurrency luminary to be convicted on felony charges.

Mt. Gox

In 2014 Mt. Gox, one of the world's first-ever bitcoin exchanges, ceased operations indefinitely following a series of hacking attacks that caused its customers to lose millions of dollars worth of crypto. Mark Karpelès, the CEO of Mt. Gox, faced several lawsuits and criminal charges as a result. In 2016, a Russian hacker named Alexander Vinnik was arrested in Greece after numerous law enforcement agencies from the U.S., as well as independent investigators, traced some of the bitcoins stolen from Mt. Gox to a wallet owned by Vinnik. Vinnik was charged with helping criminals launder money through BTC-e, an exchange he allegedly ran.

Bitcoin Cash hard fork

Bitcoin made the most significant change in its 9-year history in July of 2017 when it split into two currencies after a splinter group launched a newer version of the currency with a different configuration. The two competing currencies are known as Bitcoin and Bitcoin Cash. The group behind Bitcoin Cash copied bitcoin’s software, added a couple of new features, and released it to the public. It will be an almost identical copy, and anybody who has a bitcoin balance can automatically hold the exact same amount of Bitcoin Cash. The main difference between the two is how fast they trade and how many trades can happen in a short amount of time.

The great bitcoin bubble

In mid-December 2017, bitcoin's price hit a high of nearly $20,000 per BTC. Over the course of 2018, its price slowly but steadily declined. In September, Galaxy Digital's Michael Novogratz declared bitcoin had hit its new "bottom" at just over $6,400 per coin; the price of bitcoin remained relatively stable until mid-November when bitcoin saw an additional price decrease of almost 50 percent. By mid-December 2018, bitcoin's price had decreased by more than 80 percent compared to the highest price in December 2017. Some declared this to be the popping of the bitcoin "bubble."

As of December 2017, the total value of all bitcoin tokens outstanding was estimated to be around $326.5 billion. During that month, bitcoin's price skyrocketed to almost $20K per BTC.

By the summer of 2019, bitcoin began making a comeback. Bitcoin hit a new yearly high of $13,563.76 on June 27, 2019, before settling down around $11,500 on June 28. Many speculated that these huge gains were due to increased trading activity by institutional investors; Arthur Hayes, CEO of BitMEX, told Forbes earlier that week that daily trading volumes on his bitcoin margin trading platform surpassed $11 billion and were rapidly approaching $12 billion. Others speculated that the gains could be explained by Indian traders’ increased activity following the government’s recent proposed blanket ban on cryptocurrencies despite rising demand in the country. Whatever the reason, bitcoin’s price increased more than 300 percent since the start of the year.

Bitcoin's price crashed in March 2020, when a panic selloff caused by the coronavirus pandemic caused similar selloffs in just about every market - including so-called "safe haven" markets like gold. After the selloff, its price gradually began to climb throughout the rest of the year. In November, bitcoin's market price surpassed $19,834.93, beating its 2017 record.

Some attributed this to growing mainstream interest in bitcoin; fintech giants like PayPal had recently announced upcoming support for cryptocurrency trading. Billionaire investors like Ricardo Salinas Pliego, Mexico's third-richest man, had also recently posted on Twitter that he had ten percent of his liquid portfolio invested in bitcoin. Billionaire Ray Dalio, who previously expressed a negative attitude towards bitcoin, said that he "might be missing something about Bitcoin," and that he would "love to be corrected." Others argued that since the majority of bitcoin in circulation at the time was held by a relatively small number of people, known as "whales," and because the bitcoin market was still highly illiquid, any major price movement was likely due to whale activity in the cryptocurrency markets.

In December 2020, bitcoin's price exceeded $28K/BTC for the first time, resulting in its total market capitalization exceeding $500 billion.

Amid speculation that major commercial financial institutions like JPMorganChase and Morgan Stanley were about to buy bitcoin, the price of the digital asset rose above $50,000 on February 16, 2021. In April 2021, it reached as high as $61,742.

In May 2021, bitcoin once again saw a major crash - this time falling 30 percent. There was a myriad of factors that likely caused it; the week of May 12, Tesla announced that the company would not be accepting bitcoin anymore. The week of May 19, the People's Bank of China announced a blanket ban on all financial services companies in China from participating in transactions involving cryptocurrencies in any way. In the bitcoin options market, options market makers sold a large amount of bitcoin on spot and futures markets to offset short gamma exposure, driving the price further down. For these and likely other reasons, over 800,000 cryptocurrency traders in exchanges around the world liquidated their holdings the week of May 19, 2021.

Bitcoin "toxic" culture debate

In May 2019, cryptocurrency users on Twitter became engaged in a broad debate about the nature of the bitcoin community. Specifically, the debate questioned whether the culture within the bitcoin community was "toxic" - that it encourages those involved with it to think and behave in ways that are overly cynical and non-constructive. Certain Ethereum developers even said that they had chosen to leave the bitcoin community and begin programming for Ethereum due to the toxicity of bitcoin's community. Blockstream's Marketing Director Neil Woodfine said over Twitter that bitcoin "deals with money" - specifically, "separating money from the state." He said that it involves managing people's livelihoods, but that the "vast majority" bitcoin's community has seen many fraudsters and scammers, and has grown to be "necessarily one of extreme skepticism, cynicism, rigorous review, and forthright language," and that bitcoin "is better for it." He also said that those who disagree with this stance are "not good under pressure," "too sensitive," and "lack conviction." While many praised his argument, some like the director of MIT's Digital Currency Initiative Neha Narula accused Woodfine of gaslighting critics of bitcoin's culture, saying, "Always question, never settle, and know that there are lots of us who try to debate, criticize, learn, and improve without being jerks." Chaincode developer John Newbery made similar criticisms, saying that bitcoin's culture is still developing, is not set in stone, and can and should be improved.

John Lothian News Special Report, December 2013

On December 7, 2013, John Lothian News published a special report, "A Bitcoin for Your Thoughts" featuring:

• a column from JLN publisher John Lothian about his thoughts on bitcoin,
• a short primer on the aspects of bitcoin, by John Lothian News Chief Information Officer Jeff Bergstrom and
• a selection of the best articles on bitcoin we found at the time of the report.

To view the report, click HERE.