In January, Bitcoin saw a flurry of positive news on a scale that had not happened since May 2011. Bitcoin’s gambling websites, including SatoshiDice, BitZino and Seals With Clubs, all reported record volumes. All three major merchant service providers either expanded their offerings in some way or lowered their fees. Bitcoin’s statistics, including number of transactions, market capitalization and trade volume, were higher than they ever were in history, and those that still remained were higher than at any point after the bubble of 2011. Many people, including myself, predicted that the onslaught of increasing media attention would not last. However, in February we were proven wrong.
Reddit and Kim Dotcom’s Mega, two of the most widely known names in the internet community, started accepting bitcoins for payment, and popular domain name registrar and webhost Namecheap followed suit in March. The Bitcoin price surged past higher than it ever did before, and positive media attention kept on coming. Even the few security crises that Bitcoin had during this time were either ignored or even treated as positive news, with journalists praising the Bitcoin community’s speed and efficiency at handling the issues as they came up.
Here is an overview of all that happened in these past two months.
All Time High!
- The Bitcoin price broke through the all-time high of $31.91 that it had set back in June 2011, and started rising even faster past that point, approaching $100 at the end of the month.
- Soon following Bitcoin’s thrust past $32, a number of popular news sites ran articles strongly in favor of Bitcoin, including The Guardian’s “Bitcoin: More Than Just the Currency of Vice”, Business Insider’s “Bitcoin Just Took a Key Step Toward Being Mainstream” and vice.com’s “Is It Time to Take Bitcoin Seriously?”.
- The weekly Google Trends volume surged past its 2011 all-time high, a rise of over 300 since January. The monthly volume for March did not quite beat that of June 2011, reaching only 98 of the high (a figure that has already been massively overshot in the beginning days of April).
- Bitcoin’s market capitalization broke through $1 billion, and the number of transactions and the growth of the blockchain size continued rising.
- Interest in Bitcoin in Spain increased massively following the crisis in Cyprus, and some download statistics for Bitcoin clients in spain have increased by a factor of ten.
- BitPay announced that it had processed a transaction volume of $5.2 million during the month of March, and now has 4,500 merchants.
- The Bitcoin Reddit community at reddit.com/r/bitcoin became the 65th largest on the site by the average number of subscribers online, surpassing many other communities including “r/relationships“, “r/humor“, “r/seduction“, “r/Drugs“, “r/baseball” and “r/food“.
Just A Little Blockchain Glitch
- The BitLC Bitcoin exchange announced that it would be closing since one of the company’s key shareholders, also the holder of the company’s cold storage wallet, disappeared with a large portion of customers’ funds.
- BitInstant had its VirWoX account hacked through a combination of social engineering and DNS spoofing, costing them $12,000.
- Because of a bug in bitcoind 0.7, the Bitcoin blockchain split into two, with bitcoind and BitcoinQt 0.7 clients on one chain and bitcoind and BitcoinQt 0.8 users, and most others, on the other. The event led to the Bitcoin price temporarily falling from $48.5 to $36.5, but the problem was quickly solved and the price recovered to $45 within a day. A number of news sources reported on the incident, but nearly all were either neutral or even positive, praising the Bitcoin community’s response and the price’s quick recovery.
- eToro, a site that describes itself as the “world’s largest social investing network”, announced that it will soon accept bitcoin deposits.
- The Malta-based financial broker Exante announced its new Bitcoin hedge fund, allowing institutional investors to easily and safely invest into the Bitcoin market.
- Reddit started accepting bitcoins for its premium Reddit Gold service, becoming the second most popular website after WordPress to accept Bitcoin, and its parent company Advance Publications became the largest company to accept Bitcoin, eclipsing Wuala‘s parent company LaCie (which no longer accepts Bitcoin, likely due to lack of interest).
- Kim Dotcom announced BitVoucher, a Mega reseller which allows users to buy Mega’s premium file sharing services for bitcoins. Although Mega was already purchasable for BTC through hosting.co.uk, BitVoucher was significant because it carried Kim Dotcom’s personal endorsement.
- Namecheap, a popular domain registrar and seller of web hosting and VPS services, announced that it would accept bitcoins as payment.
- WinPoker, a poker site connected to the iPoker network, the largest collection of online poker sites in the world, started accepting Bitcoin deposits and withdrawals.
- The Internet Archive announced that it would start paying a portion of some of its employees’ salaries with bitcoins, and received over $1000 in donations during the day following the announcement.
- The Finnish software developer SC5 announced that it would start paying employees’ salaried in Bitcoin as well.
- Expensify, the world’s most popular application for submitting expense reports, added an option for users to ask for their expenses to be repaid in Bitcoin.
- E-Gov Link, a suite of services for local governments seeking to interact with their constituents online, announced Bitcoin integration into their products. “Now municipalities can offer their citizens another option in paying for services like permits, utilities, class or event registration, shelter reservations, or even parking tickets,” the press release reads.
Developments from the Inside
- Pizza for Coins, a site that acts as a proxy for users to order pizza at Domino’s, Pizza Hut and Papa John’s, launched in February, receiving widespread media attention.
- Soon after, Bitspend opened its doors, allowing users to buy anything available for credit card payment online for bitcoins. When the site first opened, it was overwhelmed with orders and had to close its doors within hours to keep up with the demans. The site re-launched the following week, and also received its share of media attention, although less than Pizza for Coins.
- Bitcoin Wireless ran its public beta, allowing mobile phone users to top of their phone plans with bitcoins at or in some cases even below cost.
- Coinlab announced a deal with MtGox in which it will take over transactions for US and Canada clients, allowing US and Canadian users to exchange their bitcoins through the service without paying high international banking fees.
- BitPay received another round of venture capital funding, helping to pay for its recent move to Atlanta and hiring an expanded team of new developers.
- OpenCoin made the first major release of Ripple, an alternative cryptocurrency network that would give customers the ability to hold and send any supported currency, including USD, EUR, CHF and in the future possibly even gold and silver, in a decentralized fashion.
- The BitcoinStore, a Bitcoin-only electronics retailer that offers hundreds of thousands of products often cheaper than anywhere else on the internet, sold $500,000 worth of goods in the first quarter of 2011 and managed to renew the contract providing them with top-tier discounting from their distributor, Ingram Micro.
- Tradehill, a popular Bitcoin exchange from 2011 that shut down over a year ago due to legal issues, announced their return to the Bitcoin community, releasing their first new product: Prime, a Bitcoin exchange specifically designed for high-net-worth institutional investors.
Today, Bitcoin is in that same zone of uncertainty that it was in in the late stages of the run-up to the crash in June 2011. Public interest is continuing, although the focus of media attention has, perhaps unfortunately, slowly shifted from focusing on Bitcoin’s properties to its rapidly increasing value. The price appears to be entering a full-on mania phase, so we should all be prepared for a crash; for those who have earned a small fortune from Bitcoin’s increasing balue already, taking at least once or twice one’s initial investment out is likely the right thing to do, if only to preserve one’s sanity. But in the long term, the future for Bitcoin is looking brighter than ever.
We have seen venture capital investors increasingly looking into Bitcoin, unprecedented Bitcoin adoption with reports of more adoption soon to come, and public attention is increasing on all fronts. Although few believed that this would happen in the bleak months of October and November 2011, over the past two years the Bitcoin economy has grown by a factor of over a hundred.
Just imagine what Bitcoin in the spring of 2015 will be like.
Vitalik Buterin is a co-founder of Bitcoin Magazine who has been involved in the Bitcoin community since 2011, and has contributed to Bitcoin both as a writer and the developer of a fork of bitcoinjs-lib, pybitcointools and multisig.info, as well as one of the developers behind Egora. Now, Vitalik's primary job is as the main developer of Ethereum, a project which intends to create a next-generation smart contract and decentralized application platform that allows people to create any kind of decentralized application on top of a blockchain that can be imagined.