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The Era’s of Bitcoin

SWAN SIGNAL MONTHLY NEWSLETTER VOL. 42

Swan Bitcoin
Drew
Swan Bitcoin and Drew
Mar 29, 2024March 29, 20247 min read7 minutes read

The history of Bitcoin can be viewed through the lens of its four-year cycles, commonly referred to as “Halving epochs.

Halving epochs last for about four years and end when the reward for mining Bitcoin is cut in half and a new epoch begins.

The end of this epoch is just a few weeks away, and the mining reward will fall from 6.25 BTC to 3.125 BTC per block.

By 2034, during the 7th epoch, over 99% of all Bitcoin to ever exist will have been mined.

Bitcoin’s fixed monetary policy and issuance rate stand in stark contrast to central banks, who print money in unpredictable quantities, ultimately robbing you of your purchasing power.

Below is a brief history lesson on what transpired during the first four epochs (over 15 years!) and what we can expect in the years to come.

Bitcoin ($BTC) Price History — Log Scale

ChartsBTC, CoinMetrics

Genesis Epoch (2009-2012)

Max: $29.02
Min: $0.00
Average: $9.53

Milestones: Bitcoin was born amidst the Great Financial Crisis. Satoshi mined the Genesis block. Bitcoin is officially priced in USD and other currencies.

The "Genesis Epoch" (2009-2012) began with the creation of the Genesis block on January 3, 2009, mined by Satoshi Nakamoto.

It would not be until May 22, 2010, that the first commercial transaction took place. That day, Laszlo Hanyecz made history by purchasing two large pizzas for 10,000 BTC.

That transaction valued each Bitcoin at roughly $.002 at the time.

Today, that same 10,000 BTC would be valued at over $690M.

This transaction established Bitcoin’s first known price and moved the nascent technology from a novelty to an actual currency.

During this epoch, Mt. Gox, an early Bitcoin exchange, emerged, providing users with a platform to trade between fiat currency and Bitcoin.

The earliest investors in Bitcoin included libertarians, cypherpunks, and tech enthusiasts looking for an alternative to traditional banking.

The Genesis epoch also established the Silk Road, a digital darknet marketplace that accepted Bitcoin for payment.

While controversial, it provided Bitcoin a testing ground to demonstrate its ability to facilitate transactions effectively.

The primary communication platform for Bitcoin then was bitcointalk.org, where most of Satoshi’s writings still reside.

Satoshi disappeared during this era; his last post was dated December 10, 2010.

The Expansion Epoch (2012-2016)

Max: $1,163
Min: $13
Average: $588

Milestones: Mt. Gox collapsed. The first ASICs hit the market.

The "Expansion Epoch" (2012-2016) was significant due to how security and trust in the network were tested.

This period was marked by the collapse of Mt. Gox in 2014 due to poor accounting and security practices, resulting in the loss of 850,000 BTC.

People with coins on Mt. Gox at the time are still awaiting (partial) settlement of their claims ten years later.

As we say in Bitcoin, "Not your keys, not your coins."

This period also marked the infamous "bear whale," who attempted to market sell a significant amount of Bitcoin in one day (30,000 BTC), exerting significant sell pressure on the price at that time.

This epoch also saw the first mining ASICs hit the market, initially mere USB sticks that delivered one Gigahash of hash power.

Thanks to ASICs, by February 2016, the Bitcoin network’s computing power surpassed one exahash per second (EH/s) for the first time.

For comparison, Swan Mining recently stood up over 7 EH/s in less than one year. In comparison, the entire network stands at well over 500 EH/s today.

We’ve come a long way…

Blockchain.com

The Blocksize Wars Epoch (2016-2020)

Max: $19,666
Min: $352
Average: $6,123

Milestones: The scaling dilemma was resolved.

The “Blocksize Wars Epoch” (2016-2020) challenged Bitcoin’s resiliency and independence.

The community debated how to scale the network to support more transactions and over who, if anyone, could control Bitcoin.

The technological debate centered on scaling Bitcoin by either developing a second layer like the Lightning Network or by only increasing block size.

However, of equal importance, the battle lines were drawn between users of Bitcoin and the largest companies and miners in the space.

Ultimately, the users were victorious, and several corporate opponents forked away from Bitcoin, creating a different coin called Bitcoin Cash — a move that cost them billions of dollars.

This epoch also saw the emergence of the ICO craze.

As Bitcoin gained popularity, various affinity scams were created in the form of pre-mined tokens that ultimately became a very bad investment.

The lure of a quick buck incentivized the creation of many companies that came under regulatory scrutiny and criminal charges, for example, FTX, Luna, and Hex

** The end of this epoch witnessed the birth of Bitcoin-only Swan Bitcoin. Bitcoin, not crypto!

The Institutional Epoch (2020-2024)

Max: $73,835 (so far)
Min: $3,850
Average: $38,842

Milestones: Public companies began acquiring Bitcoin. Nation-state adoption began. The approval of spot Bitcoin ETFs.

The fourth epoch (2020-2024) has been defined by the early stages of corporate and nation-state adoption.

In the early 2020s, corporations like MicroStrategy and Tesla announced treasury strategies to acquire and hold Bitcoin on their balance sheets.

I realized I’m on a melting ice cube of $500 million worth of money, the purchasing power is dwindling at 10% to 20% a year, I have to do something.

- Michael Saylor, Founder and Chairman of MicroStrategy

During this epoch, El Salvador transformed their country by adopting Bitcoin as legal tender and setting Bitcoin-friendly policies to drive growth.

Finally, the end of this 4th Bitcoin epoch brought the likes of BlackRock, Fidelity, and the biggest asset managers on the planet into the Bitcoin network through the approval of the first spot Bitcoin ETFs.

It’s likely only the beginning of this wave of institutional interest in the Bitcoin network.

However, the 4th epoch will be remembered as the start of this paradigm shift.

Finoa.io

The Adoption Epoch (2024-2028)

Possible Milestones (Forecast): Could Bitcoin replace gold as the world’s most valuable asset? How will institutional adoption expand? Will more G20 countries follow El Salvador’s lead? Will more corporations adopt Bitcoin?

In early 2024, Bitcoin looked to put silver in its rearview mirror and established itself as a top ten global asset by market capitalization.

It will next set its sights on gold, which has served as the best base money for millennia.

Will it happen in just four years?

Meanwhile, we enter this new epoch with Wall Street accelerating to full momentum.

BlackRock has already accumulated 1% of the total supply on behalf of investors.

Fidelity is not far behind.

Institutions and nation-states are just getting started.

Twitter

A New Era

Bitcoin is on an S-curve adoption cycle very similar to the early internet — only faster. During an era of runaway inflation, Bitcoin stands alone in its ability to protect your wealth.

"Bitcoin is the best monetary fuel cell human beings have ever invented."

- Rapha Zagury, CIO at Swan

Everything else deteriorates with time, except for Bitcoin. How will you position yourself for the upcoming 5th epoch?

Subscribe to our newsletter for more insightful essays and stay informed about all things Swan and Bitcoin. Become a Swan today!

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Drew

Drew

Drew, a class of 2013 Bitcoiner, is a Research Analyst for Swan Bitcoin.

He has worked in institutional VC/PE, FinTech, and DLT consulting for over six years. He also brings over twelve years of experience working with national nonprofits and start-ups in education and software development in several leadership roles.

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