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Bitcoin's Incredible Year

Dec 31 2013, 4:31pm CST | by

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Bitcoin's Incredible Year
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Bitcoin's Incredible Year

Last year at this time, valued at just $13.50 , one Bitcoin could get you a movie ticket if you could find a theater that had 1) heard of Bitcoin and 2) accepted it. Fat chance. Luckily, Bitcoin owners had a different form of entertainment: the fiscal version of She’s All That . “Last year’s nerd money fad has become this year’s most talked about product,” writes Patrick Young .

Disclosure: Author owns Bitcoin that remain from her week of living on them .

Here’s a timeline of Bitcoin’s dramatic year, which may give you a sense of why Bitcoin shot up from $13 to over $700 in its fourth year of existence . (I’ll be documenting Bitcoin’s rise at longer length in an e-book coming out soon.)

JANUARY
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– Bloomberg notes the that price of Bitcoin tripled in 2012.

– Bitcoin has a $13,000 booth at the Consumer Electronics Show, paid for by Bitpay (the Paypal of Bitcoin) and Butterfly Labs, a mining hardware company. The Verge says the “underground currency is going mainstream at the biggest tech show in the nation.” It may have gotten more attention if it had featured a booth babe in a Bitcoin bikini.

Price at beginning of January: $13.55. End of January: $21.40.

FEBRUARY

– Bitcoin’s value hits an all-time high , surpassing the highpoint the preceded a huge crash in 2011.
Hits all time high, surpassing the highpoint that preceded a huge crash in 2011:/>

– The front page of the Internet starts taking the currency of the Internet. Reddit lets users buy “gold” with Bitcoin .

– Kim Dotcom announces that he too is down with Bitcoin, will accept it as payment on encrypted storage site Mega.

Price at beginning of February: $20.60. End of February: $33.

MARCH

– Bitcoin “officially becomes a crazy idea that’s actually working.” The decentralized currency achieves a billion dollar market cap .

– The U.S. Department of Treasury issues guidance on Bitcoin, letting exchangers know that they need to register with FinCEN or face consequences . Bitcoin advocates cheer a federal agency signaling that the currency is legal, but the enhanced regulation scares banks off from working with Bitcoin businesses .

– Cyprus announces a “bail-in” for its banks , meaning portions of people’s accounts will be seized to pay off debts. Bitcoin soars in response, with many speculating that Cypriots (and other scared Europeans ) are buying Bitcoin to get their money into a digital safety box out of reach of their governments.

Despite Bitcoin’s famed use as a currency to buy illicit goods, it’s only pseudonymous not anonymous. Unlike a credit card, it doesn’t have your name on it, but every transaction is seen by the whole network. Researchers at Johns Hopkins University introduce Zerocoin to make it more difficult to match who sent a Bitcoin with the person they send it to.

Price at beginning of March: $33.50. End of March: $93.

APRIL

– Remember the villains of that Facebook movie? They announce that they own 1% of Bitcoin . Tyler and Cameron Winklevoss collected it when it was in single digits. “We could be totally wrong, but we are curious to see this play out a lot more,” Tyler Winklevoss told the NYT .

– Venture capitalists start putting money into Bitcoin start-ups. Bitpay landed half a million in 2012. The Winklevii give BitInstant, a place to buy Bitcoin $1.5 million. OpenCoin — which is an exchange for all kinds of digital currency — lands $2 million in VC funding . The next month, Bitcoin wallet Coinbase will announce that it got $5 million . Whether Bitcoin lives or dies, all of these companies are making money by charging low transaction fees for exchanging the digital coin for real world dollars. Their making that easier helps fuel the Bitcoin boom.

– Prominent journalists start getting in on the Bitcoin speculation . “I made $152,” brags Farhad Manjoo, then of Slate . (He shouldn’t have sold.)

Price at beginning of April: $94. End of April: $145.

MAY

– Some crazy person decides to live on Bitcoin for a week in San Francisco .

– As the price of Bitcoin surges, some business relationships break down . Seattle-based Coinlab, which had planned to act as the American arm for the world’s largest Bitcoin exchange, Japan-based Mt. Gox, sues for $75 million claiming breach of contract.

– More bad news for Mt. Gox: The feds seize its American bank accounts , saying it’s operating as a money services business in the U.S. without being licensed with FinCEN.

– The Bitcoin 2013 conference attracts a diverse crowd. Digital currency lawyer Jacob Farber of Perkins Coie said the conference was Bitcoin putting on its “big boy pants.” “There’s been a changing of guard from a small circle of early adopters to serious business people with funding, who see Bitcoin as a payment system and a way of building a business and are not just in it for purely philosophical reasons,” he told me.

– A $6 billion money laundering operation gets crushed. Liberty Reserve, a centralized online payment system, gets taken down by the feds , who said it was being used to finance drug trading, child pornography and terrorism. Commenters suggest Bitcoiners should be wary .

– Bitcoiners are wary. Mt. Gox felt the sting of enforcement last month and announces that it will require users to provide government id , allowing it to comply with federal guidelines and making money laundering through Bitcoin harder.

– Guesses as to the identity of mysterious Bitcoin creator Satoshi Nakamoto continue .

Price at beginning of May: $137. End of May: $129.

JUNE

– The tax man cometh . Congressional watchdog GAO tells the IRS it needs to pay attention to — and tax — Bitcoin .

– Married… With Bitcoin. Austin and Beccy Craig, soon-to-be newlyweds in Utah one-up me , and announce they will live on Bitcoin alone for three months .

– State regulators start taking notice of Bitcoin. The Bitcoin Foundation gets a cease-and-desist order from California, saying it needs to be licensed as a money exchanger in the state. It denies being a money exchanger.

– A baby is bought with Bitcoins. Seriously .

Survey shows that a quarter of people have heard of Bitcoin .

Price at beginning of June: $129.50. End of June: $95.

JULY

– The Winklevii announce they’re seeking SEC approval for a Bitcoin exchange traded fund, so that Wall Street can more easily sink its dollars into the digital currency.

Thailand reportedly bans Bitcoin , based on one exchange ceasing trading per a warning from the Bank of Thailand. However, the rumors of Bitcoins death in Thailand turn out to be greatly exaggerated .

– The SEC charges a Texas man with running a Bitcoin Ponzi scheme , which is funny because critics say Bitcoin itself is a Ponzi scheme. The case will lead a judge to rule the next month that Bitcoin is real money , and that the Texas dude can be prosecuted for bilking people out of it.

– A gamble pays off. SatoshiDice, a Bitcoin gambling site, sells for 126,315 bitcoin (or $11.4 million at the time) to an anonymous buyer

Price at beginning of July: $97.50. End of July: $110.

AUGUST

– Another warning that Bitcoin is an excellent place to put money to avoid paying taxes on it, this time from a University of Florida professor , is splashed across Politico’s front page.

– Germany, home to the famed Bitcoin neighborhood in Berlin , gives Bitcoin a thumbs up, and says it will indeed tax it .

– New York’s state financial regulator subpoenas every important person in Bitcoin and later announces that it may start requiring virtual currency companies to get “Bitlicenses .”

Stories of Bitcoin crimes start popping up. An Android flaw leads to Bitcoin thefts.

– XBT is born. The Bitcoin ticker shows up on Bloomberg terminals , which means currency traders may be getting serious about Bitcoin.

Price at beginning of August: $106. End of August: $147.

SEPTEMBER

– Bitcoin crime spotter: Bitfloor, the 4th largest Bitcoin exchange, gets hacked and loses 24,000 Bitcoin, or $250,000 at the time .

– The Winklevii get beat to the punch. SecondMarket, which was the go-to place to trade Facebook and Twitter shares before they went public, announces that it will let investors bet on Bitcoin .

– China starts getting interested in Bitcoin , mining many of the coins, and increasingly trading them. Shanghai-based exchange BTC China secretly lands $5 million in venture funding from Lightspeed and eliminates its trading fee. Within two months, it will become the biggest exchange in the world .

– Will do sex work for Bitcoin: An escort service in the UK announces it will accept BTC. Though judging from their public Bitcoin address , they’ve been Bit-blueballed thus far.

Price at beginning of September: $141. End of September: $144.

OCTOBER

– Online drug bazaar Silk Road, which was a famous use case for Bitcoin, gets taken down by the feds. The FBI amasses the world’s largest Bitcoin wallet , seizing over 26,000 coins from the site and 144,000 coins (or $20 million) from its creator Dread Pirate Roberts . It says it plans to sell them after legal proceedings are over . The price of Bitcoin falls briefly but quickly recovers; apparently, investors are happy to a huge and illegal use of Bitcoin wiped out.

– Mainstream bounce: China’s Google, Baidu, starts accepting Bitcoin for its security services .

– Bitcoin’s dark side: Cody “3-d gun printing” Wilson announces that anonymity-enhancing Dark Wallet is seeking crowd-funding via Indiegogo for launch in 2014 to make it harder to trace Bitcoin transactions.

– Bitcoin’s silly side: the first Bitcoin ATM opens in Vancouver .

– The Bitcoin newlyweds take a trip around the world , paying for everything in Bitcoin.

Price at beginning of October: $144. End of October: $209.

NOVEMBER

–  The Federal Reserve issues a Bitcoin primer.

– Crime spotter: As the value of Bitcoin climbs, the crime rate climbs too . $1.2 million stolen from wallet service Inputs.io .

– The U.S. Senate holds its first Bitcoin hearings to determine threats and regulatory needs. The Washington Post descibes them as “lovefests .” The FBI reveals that it formed a “Virtual Currency Emerging Threats Working Group” in 2012, which includes the full alphabet soup of federal agencies, but all the agencies tells Congress that they’ve basically got Bitcoin under control. Federal Reserve chairman Ben Bernanke writes in saying that Bitcoin holds “long term promise .” Months earlier, when Liberty Reserve was being taken down, the Bitcoin community was worrying that Bitcoin could be ruled illegal. This is a huge turnabout. Bitcoin surges in response, hits $1000.

Everyone’s favorite billionaire Richard Branson announces that people can pay to go to space with Bitcoin .

– Roger “Bitcoin Jesus” Ver “loses” a 1,000 BTC/$1 million bet when Bitcoin outperforms gold sooner than he predicted it would, donates to nonprofit.

– Hong Kong Bitcoin exchange closes down taking over $4 million of investors’ funds with it . Judging from China’s Bitcoin moves the next month, this was sufficient to “wake the dragon.”

– UK tech guy supposedly pitched a fortune in the trash .

– Stockholm-based KnC Miner sells $8 million worth of high-powered mining machines within 24 hours .

Price at beginning of November: $144. End of November: $1,220.

DECEMBER

– Coinbase gets $25 million real world dollars from Andreessen Horowitz, becoming the highest venture-funded start-up in Bitcoin.

– Bank of America puts a price target on Bitcoin . Wall Street analysts increasingly covering it.

– China essentially wipes out real world use, saying that Bitcoin isn’t real money . People are still allowed to trade it, but China makes it harder by discouraging payment companies from helping exchanges trade Bitcoin for yuan. This causes the price to fall dramatically.

– Bitcoin crime spotter: Drug bazaar Sheep Marketplace has $220 million worth of Bitcoin stolen . (Note to self: beware of companies that refer to customers as farm animals.)

– Mainstream acceptance: Overstock’s CEO says his company will accept Bitcoin in 2014 .

– Paul Krugman declares Bitcoin “evil.

– Thanks to the crazy events this year, 42% of people now know what Bitcoin is .

Price at beginning of December: $1200. End of December: $730.

What did I miss? Tell me in the comments or via email.

The Naughty And Nice Places To Spend Your Bitcoin

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Source: Forbes

 

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