The currency started to gain popularity early in the year 2013 as a result of the Cyprus banking crisis. In March 2013, the Cyprus government announced a bail-in for banks. This meant that the financial institutions would have to impose losses on their shareholders, depositors and debt holders.
After the bail-in announcement people rushed to their banks to withdraw funds and a lot of them ended up putting the money into Bitcoins, where governments could not touch it.
The following figure is the graph of the Market Capitalization of the Bitcoin during the period of February 2013 – January 2014:
Only this graph can tell the story of the year 2013 for Bitcoins. The Market Capitalization has increased exponentially throughout the year and tripled in the last three months. The rise pattern towards the end of the year is very erratic and sudden. This shows the volatility of the Bitcoin market that is a favorite talking point of mainstream news media outlets
Dr. Krištoufek, an economist from the Charles University in Prague says this volatile nature of the Bitcoins is the outcome of a mad chasing of assets with no intrinsic value. Thus, he concludes that the market seems to be predominantly controlled by the momentary investors and the trend chasers also known as speculation.
The year 2013 was also termed as the “Year of Bitcoins,” by the Forbes magazine. Bitcoin made headlines on November 29, 2013 as the price of a single coin hit an all-time high. One Bitcoin was valued at a high of $1,242 on the Mt.Gox, the Tokyo based largest Bitcoin exchange, reaching parity with gold that was valued at $1,240 per ounce. The year 2013 also saw a number of companies accepting Bitcoins as a mode of payment, after realizing their advantages. Here are some such companies:
1. Overstock.com: According to a tweet published by its CEO Patrick M. Byrne, the online retailer added an additional $130,000 in sales on the first full day of accepting the Bitcoin. Those sales were the result of 840 orders, roughly averaging over $150 per order.
2. WordPress: It’s a website that offers free blogs managed by the developers of the WordPress software. Some keys features of WordPress are custom design templates, automatic spam protection and integrated statistics.
3. Namecheap: The domain name registrar offers affordable domain name registration, parking, e-mail, URL forwarding, and SSL certificates. It began accepting Bitcoins in March 2013.
4. The Pirate Bay: It is a large directory of Bit Torrents for music, movies and software. It started accepting the Bitcoin for donations in April 2013.
5. Reddit: It is a social news and entertainment website that focuses on user-generated news links with votes. This helps in promoting top stories to the front page. Reddit started accepting the Bitcoin for the purchase of Reddit gold in February 2013.
The following graphs show the interest people had in Bitcoin in the year 2013.
Figure 3 shows the interest in Bitcoins by region, according to Google Trends. This shows that people in financial hubs in the developing countries, where any cut in transactional costs would benefit the low-end consumers, are increasingly interested in Bitcoins. Moreover, these developing economies are technological hubs as well, so the Bitcoin (an advanced technological digital currency) is readily being accepted here.
Clearly Bitcoin grew in the mainstream consciousness in 2013. It was a roller coaster ride on the exchanges that faced hacking and performance issues. Bitcoin has shown extreme resilience despite each and every set back and 2014 is set to be another year of firsts for Bitcoin.