Bitcoin’s Value History and its Network Effects
https://www.investopedia.com/articles/forex/121815/bitcoins-price-history.asp
The article discusses how Bitcoin is the world’s first and most successful blockchain-based cryptocurrency, whose price reached a peak of nearly $20,000 each late 2017. When it was first created in 2009, the bitcoin initially traded for close to nothing. The first real price increase occurred around July 2010, when each coin was worth between $.0008 and $.08. Since its peak, its price has settled, hovering around $10,000 as of recently. The rise and fall of the bitcoin price can be attributed to network effects.
For years at its beginning, the bitcoin was essentially worth nothing, and had a lower equilibrium. That is because nobody really saw its purpose or value, and since nobody believed in it, it did not do well. However, when bitcoin mining became more popular years later, it became viewed as more valuable and useful, as it could be used to make people money through investment. Thus, as more people valued it greater, its value increased, more and more people bought it, and its value increased even more, ultimately moving from the first equilibrium to the second. Then, we can see how the market overhot its price beyond the second equilibrium in 2017, and is now going back down. We can thus estimate that its value will remain around 10,000 for the time being since the second equilibrium is known to be stable.