Next up is to explore the factors that influence trading and affect prices. These have changed over time from Bitcoin’s beginning. In 2009, Bitcoin was an extremely niche asset with low liquidity. Trades were made Over-the-Counter (OTC) between users on BitcoinTalk and other forums who saw Bitcoin’s value as a decentralized currency. The speculation that we see today played much less of a role.

Satoshi Nakamoto mined the first block on January 03, 2009, with a reward of 50 bitcoins. He then sent 10 BTC to Hal Finney nine days later in the first-ever Bitcoin transaction. On May 22, 2010, Bitcoin still had a price of less than $0.01. That day also saw the first commercial Bitcoin transaction with Laszlo Hanyecz purchasing two pizzas for 10,000 BTC. At the time, users on the Bitcointalk forums saw the purchase as a novelty. This trade contrasts with current use, where you can purchase everyday goods easily with a Binance Visa Card.

As Bitcoin’s price and popularity rose, a small, unregulated industry became increasingly involved in facilitating transactions and trading. These included cryptocurrency exchanges and deep web markets. Bitcoin’s price was often significantly affected as these markets and exchanges were hacked, closed, or regulated. Some hacked exchanges held substantial Bitcoin supplies, causing significant price shocks and a lack of market confidence. We’ll explore this topic further later on.