How Cheap Bitcoin Really Was When It First Started
Now that Bitcoin is steadily trading at six-figures per coin, every investor and their dog is familiar with the O.G. of cryptocurrency. However, when Bitcoin first dropped in January 2009, it did so with a whimper rather than a bang. In fact, it took several months for a venue that tracked the value of Bitcoin to establish itself.
In October 2009, New Liberty Standard Exchange popped up online and used a simplistic approach to calculate the value of newly-minted Bitcoin. Indeed, New Liberty Standard simply formulated the cost of the electricity required by computer(s) to mine one coin and that amount was the value.
By the end of 2009, New Liberty Standard observed the first instance of a human actually trading regular currency for Bitcoin. The deal was $5.02 via PayPal in exchange for 5,050 Bitcoins. Some quick math gives us a sales price of 1/10 of one cent (actually $0.00099) per coin in the first known transaction. At the time of writing, Bitcoin closed the trading day at $104,735.30 per coin. That means the 5,050 coins purchased for a total of $5.02 in late-2009 are now worth more than $528 million. Needless to say, an investment of $100 in 2009 would have yielded even more spectacular results.
The most expensive pizza ever
By Bitcoin's second year in existence, additional exchanges began sprouting up which facilitated trading in the fledging cryptocurrency. According to the historical data available at investing.com, the flagship cryptocurrency spent most of 2010 trading at a value between $0.10 and $0.30. That's exponentially higher than the price level of the first-ever transaction in 2009, but still incredibly cheap by modern standards.
One interesting story from this era revolves around a transaction made by a Bitcoin miner named Laszlo Hanyecz. Apparently, Hanyecz was hungry, yet didn't want to leave his house. The programmers posted the following message on an online Bitcoin forum: "I'll pay 10,000 bitcoins for a couple of pizzas ... like maybe 2 large ones so I have some left over for the next day." We wonder if he used a pizza size calculator to determine the request?
Hanyecz wound up receiving two large pizzas from the Papa Johns chain worth about $25. In hindsight, those must be the world's most expensive pizzas. The value of 10,000 Bitcoins today is more than $1 billion. Yes, billion. The date of the legendary 2010 transaction, May 22, is now known as "Bitcoin Pizza Day" and the Florida store that filled the order has a plaque inside commemorating the moment.
The rise to current prices was choppy
Some other significant valuation milestones for Bitcoin include breaking the $1 barrier in 2011. The year 2013 was particularly poignant for the most well-known cryptocurrency. That's because the price eclipsed $100, then later $1,000 per coin, both in the same year.
After Bitcoin prices went vertical in 2013, investors got a taste of the cryptocurrency's famous volatility. Suddenly, the value dropped to a few hundred dollars per coin, where it stayed for years. It wasn't until January 2017 that Bitcoin recaptured a value of $1,000 per coin or more. It's incredible to consider that just eight years ago, prescient investors could have purchased the first cryptocurrency for just ~$1,000 per coin.
In the ensuing years from 2017 through today, that investment would have delivered a 100x-plus return on capital. Or to put in another way, that's a 10,300% return in 96 months. During that same eight year timeframe from January 2017 to January 2025, the benchmark S&P 500 stock market rose from 2278.87 to 6,071.17. That's a phenomenal 166% gain for stock market investors, but pales in comparison to crypto true believers who had the conviction to HODL.