Today, it seems like you can buy Bitcoin anywhere and everywhere, from ATM machines to buying Bitcoin with a bank account, and beyond. But this hasn’t always been the case. In only a few short years, Bitcoin has gone from an underground and largely unknown market to a worldwide phenomenon. Through this evolution it has become easier than ever to buy Bitcoin.
The days of Satoshi
In the earliest days of Bitcoin there was actually no way to buy the cryptocurrency like there is today on exchanges like eToro. Instead, you only had two options if you wanted to obtain this new digital asset:
- Mine Bitcoin – The early days of mining Bitcoin weren’t so difficult. In fact, you could mine Bitcoin from any personal computer, giving any individual the ability to earn Bitcoin from their own home. Satoshi Nakamoto mined the first 50 bitcoin himself before others got involved in the act.
- Get sent Bitcoin – If you were in contact with a friend or acquaintance who was a part of the early Bitcoin community you might have been lucky enough to be sent some Bitcoin. Early adopters were looking to spread the word about this new phenomenon, and in order to do so, they needed to get Bitcoin into the hands of more people. For instance, Satoshi Nakamoto sent 10 bitcoin to programmer Hal Finney in the first recorded Bitcoin transaction in 2009.
The p2p market is born
Once there was a baseline level of interest in Bitcoin, peer-to-peer (p2p) markets started to arise for cryptocurrency holders to transact directly with one another. One of the first p2p exchanges was LocalBitcoins, which was founded in 2012 to provide anyone the opportunity to buy and sell Bitcoin directly by way of an escrow system.
The p2p network was a major step up at the time and allowed those interested an outlet to buy Bitcoin for the first time. However, this p2p market model was clunky. It had longer trade times and were harder to use for the uninitiated investor. Also, p2p exchanges couldn’t provide the liquidity necessary to fulfill the needs of the influx of traders that was to come. For that, centralized exchanges were the next logical solution.
The rise and fall of Mt Gox
As Bitcoin grew in popularity so did the need for a centralized exchange to take buy and sell orders directly and help facilitate trading liquidity for the public. In 2010 Mt. Gox launched as the world’s leading Bitcoin exchange. In only four years it was handling more than 70% of all Bitcoin transactions around the world, proving that exchanges were the next evolution for Bitcoin transactions. However, Mt Gox was an early exchange with unknown vulnerabilities. Ultimately, Mt Gox suffered what would be the biggest Bitcoin scandal in the cryptocurrency’s history at the time, when 740,000 bitcoin were stolen from the exchange, representing 6% of the entire Bitcoin supply. This theft rocked the Bitcoin world and left many wondering how exchanges would ever recover.
Even after the Mt Gox debacle, it was clear that exchanges were still necessary to facilitate the flow of Bitcoin around the world. As a result, over the next several years hundreds of exchanges were born out of this need. T hese exchanges democratized Bitcoin in a way that was never seen before. With better security measures, customers could now buy Bitcoin with ACH, bank transfer, credit card, or any number of other deposit methods. To date, the daily Bitcoin trading volume on exchanges exceeds $50 billion on a regular basis.
These exchanges are constantly evolving and introducing new features, making them the next evolution of buying Bitcoin for the masses.