Bitcoin launched towards the end of 2008. At the beginning only a small select group of individuals mined and collected Bitcoin. It may be surprising now, but no one wanted Bitcoin. For this reason it had barely any value.
In fact the 22nd May is known as Bitcoin Pizza Day. It marks the anniversary of when Laszlo Hanyecz from Florida paid for 2 pizzas with 10,000 Bitcoin back in 2010.
By the beginning of 2011 Bitcoin was already worth $0.29. It went from no one wanting the currency to having an interest in owning Bitcoin. Bitcoin started to accumulate Bitcoin yearly returns.
Today it is doing phenomenally well. So far Bitcoin is the best performing asset in history. Here is why:
Bitcoin yearly returns
Source CoinsKid Twitter
Bitcoin has a 230% annualised return as stated on Yahoo Finance. Bitcoin’s price is so volatile that Bitcoin does what gold does in 10 years.
The reason why the bitcoin yearly returns have been so great is because it has built-in economic incentives.
Bitcoin is not simply money. Otherwise it would have been like the fiat system we have now. In other words there would not be any added value. Since miners are able to mine Bitcoin from the blockchain and then sell it, it makes it worthwhile.
It encourages more people to come onboard and mine. Additionally since it is decentralised anyone can join in to mine. Moreover Bitcoin has a cap of 21 million coins. It is a form of hard money that makes it attractive to own. Unlike fiat Bitcoin keeps going up even though it may have some bad down months or years.
There is no guarantee that these sort of Bitcoin yearly returns are going to continue performing this way. It could be that other cryptos will become more popular than Bitcoin. Time will tell. All we can do is congratulate those who had the foresight to buy Bitcoin at the very beginning.