14 Years Since the White Paper: Can Bitcoin Keep Growing?

Fourteen years to the day after Satoshi Nakamoto published the famous Bitcoin white paper, the first cryptocurrency’s once-meteoric growth is showing signs of slowing.

In June 2011, Bitcoin reached 25,000 unique wallet addresses active each day. By February 2015, it had 250,000. Bitcoin hovered a little under 600,000 unique daily addresses for most of 2017 — and had 668,000 unique addresses by the end of February 2022.

The number of bitcoins unspent for the past year reached an all-time high in September of 12.5 million bitcoins, or 65% of total circulating supply, per crypto analytics firm Glassnode. So, it may be that investors viewing bitcoin as digital gold that holds value despite a hawkish Fed, or retail traders giving up trading during a bear market, are contributing to a slowdown in active addresses per day.

Yet, the total number of Bitcoin addresses continues to grow, exceeding one billion in July 2022, according to Glassnode.

Bitcoin boomed with Big Tech

Bitcoin — which often trades like a tech stock — had an adoption rate exceeded by only, well, tech stocks. Facebook boosted users from 20 million to 200 million in two years. Twitter developed at a similar pace, from 200,000 to 200 million active users in four years.

The trajectory of Twitter’s growth has dipped in recent years, from 330 million monthly active users in 2017 to 345 million in 2022.

Over the same period, Facebook grew from 2.1 billion to 2.9 billion by the same metric.

As the tech boom of the past several years cools off, Bitcoin may be seeing its exponential growth weaken, too.

Proof instead of trust

“What is needed is an electronic payment system based on cryptographic proof instead of trust,” reads the Bitcoin white paper’s opening page.

Satoshi penned the Bitcoin white paper in late 2008, amid a financial crisis caused in part by bank negligence. The message of a trustless financial system hit home.

“The more people that saw bitcoin as an alternative to gold or other base money, the more likely it became that other people would think the same. Eventually if enough people believe it, maybe the central banks believe it too, and then it’s real,” Greg di Prisco, partner at the blockchain venture fund Distributed Capital Partners, said in a Telegram message.

Bitcoin after the Merge

The white paper popularized proof-of-work, Satoshi’s blockchain validation mechanism that caused miners around the world to fill warehouses with GPU rigs.

But with Ethereum’s successful Merge to the more energy efficient proof-of-stake, crypto’s rising star left proof-of-work behind — though Satoshi’s white paper was key to its development.

“If there was no proof-of-work, we wouldn’t have ended up at proof-of-stake,” said Harsh Rajat, founder of the Ethereum-native Push Protocol.

Ethereum, with its army of developers implementing a multistep roadmap, seems to have captured much of crypto’s imagination — and has steadily gained on bitcoin’s market share since at least 2020.

By making the Ethereum blockchain far more energy-efficient, the Merge created “long term existential risks for Bitcoin,” Imran Khan, core contributor to Alliance DAO, told Blockworks via Telegram.

Not to be outdone, bitcoin’s hash rate has actually increased since the Merge.

“I don’t see any compelling reasons to think that people are going to switch en masse away from proof-of-work to proof-of-stake,” said Patrick Scott, adviser to the DeFi platform Clip Finance.

With crypto still in its relative infancy, reading too much into Bitcoin’s future would be a fool’s errand.

Consider that there are developers today who were infants when Bitcoin began.

“Technology has a way of surprising us,” Rajat said of crypto’s future. “[But] the idea that was projected by Satoshi will remain in soul and spirit.”

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