The day of one billion dollars: Bitcoin's coming of age

On March 28, 2013, at 5:15 AM GMT, the total market capitalization of Bitcoin quietly surpassed $1 billion. On that day, the price of a single Bitcoin was approximately $91.25, with a circulation of about 10,958,700 coins.

The figure of $1 billion itself is not particularly shocking. When Twitter went public in 2013, its market value was around $20 billion, 20 times that. By the valuation of unicorn startups at the time, it was only enough to buy half of Snapchat, or a third of Uber. But if we translate $1 billion into another language, it is equivalent to the entire GDP of small Caribbean nations like Grenada and Saint Kitts and Nevis for a whole year. A “digital currency” that had only been born for a little over four years had already reached an economic scale comparable to that of sovereign nations.

A notable line from Bitcoin Magazine’s coverage at the time may have gone unnoticed then, but now it seems incredibly accurate: “If breaking $31 in 2011 proved that Bitcoin was not dead, then today marks its official arrival on the mainstream stage.”

March 2013: A Crazy Spring

So what happened that spring of 2013? Why did the price of Bitcoin surge from $40 to over $90 in just a few weeks, pushing its market value past the $1 billion mark? This was considered to be driven by two waves: one from panic in the Mediterranean, and the other from the green light in Washington.

The first wave came from Cyprus. As early as June 2012, this Mediterranean island nation fell into economic collapse due to an overinflated banking industry and a large holding of Greek bonds. The government was unable to rescue the banking sector and sought assistance from the EU and the International Monetary Fund. In March 2013, a rescue plan for the Eurozone was unveiled, but it came with a condition that sent chills down everyone’s spine: a one-time tax on bank deposits. Deposits under €100,000 would be taxed at about 6.75%, while the portion over €100,000 would incur a 9.9% tax. This policy sparked strong anger and panic among the public. Although the plan was eventually modified amid huge opposition, trust in fiat currency and the banking system began to crumble. Ordinary people fell into panic: If the money in banks is no longer safe, where can we put our money?

Bitcoin thus entered the view of Europeans in an unexpected way. Bloomberg’s Businessweek even stated that it could become “the last safe haven of the global economy.” The media stopped describing it with obscure technical terms and instead used more accessible words: “digital gold,” “alternative currency,” “anarcho-currency.” These terms accurately captured the anxieties of the time; as people lost faith in traditional financial institutions, a form of “money that requires no trust in anyone” suddenly became extraordinarily appealing. Hot money began to flow into cryptocurrencies, and not just in Cyprus—Spain also saw a surge in Bitcoin app downloads.

The second wave came from Washington across the ocean. In March 2013, the Financial Crimes Enforcement Network (FinCEN) in the U.S. issued a guidance stating that ordinary Bitcoin users do not need to register as “money transmitters”; only exchanges are required to. For the previous two years, legal uncertainty had been the biggest barrier to businesses adopting Bitcoin. This guidance from FinCEN was like a reassurance to the market. At least in the U.S., holding and using Bitcoin was legal.

These two events, occurring half a world apart and fueled by the media, surged toward the same beach like two waves, pushing the price of Bitcoin from $40 to $92 in just over half a month, igniting the market’s attention.

Believers’ Bet: A Prophecy of 100 Times

As early as August 2011, Roger Ver, known as “Bitcoin Jesus,” made a crazy bet on YouTube. He wagered $10,000, claiming that Bitcoin’s performance over the next two years would outperform gold, silver, and the stock market by 100 times. At that time, Ver explained: “This means that if silver goes up 100% in two years, then Bitcoin should go up 10,000%.”

Ver made this bet because the Mt. Gox hacking incident in June 2011 and its subsequent chain reaction had caused Bitcoin’s price to plummet from $31 to below $2, filling the market with doubts and criticisms of Bitcoin. As an early promoter and evangelist of Bitcoin, Ver initiated this bet to restore Bitcoin’s reputation and boost the community’s confidence.

By March 2013, the Dow Jones Industrial Average had risen from 11,372 in mid-2011 to 14,559, an increase of about 28%. According to Ver’s bet, Bitcoin needed to reach $296 to win. At that time, Bitcoin was only $92, still far from the target. However, Ver did not seem worried, as he saw what ordinary people could not: the capital pouring into Bitcoin, the engineers building ASIC miners, the programmers writing code for the community. In his eyes, this was just the beginning.

On November 27, 2013, Bitcoin finally broke the $1,000 mark, a 100-fold increase compared to the $10 price when Ver made the bet. However, he ultimately lost; it took Bitcoin two years and three months to achieve that hundredfold growth, three months past the two-year deadline of the bet. Ver did not go back on his word; he fulfilled his promise and donated 100 times his original wager, $1 million, to the Foundation for Economic Education (fee.org).

Bitcoin won, but the bet was lost; yet, the phrase “anything is possible” indeed became the most accurate caption for Bitcoin.

VC Awakens This Spring

Before March 2013, Bitcoin was still on the fringes of Silicon Valley venture capitalists’ views, rarely regarded as a serious investment asset.

Ben Davenport was one of the first to change his perspective. He invested in BitPay, a Bitcoin payment processing company, at the beginning of 2013. His reasoning was simple: if Bitcoin could really become a method of payment, there would need to be someone to help merchants process these payments. This was an infrastructure-level opportunity. However, what truly excited him was not BitPay itself, but the logic behind the $1 billion figure. He explained in an interview: “Previously, VCs looked at Bitcoin businesses and saw only a market with a total value of $150 million, which was too small to justify an investment. But now it’s different; the market cap has reached the billion level, and investing in a great team becomes very meaningful. I predict that within 12 to 18 months, the floodgates for VC funding will open.”

This prediction later proved to be quite accurate. From 2014 to 2015, VC investment in Bitcoin and blockchain experienced its first wave of highs. Coinbase, Circle, and blockchain.com—names now well-known—secured their first rounds of financing during that period.

The Growth Path of an Asset Class

Looking back today, with a market cap that has surpassed $2 trillion, the figure of $1 billion seems somewhat insignificant. But the importance lies not in the scale itself, but in the macro-level shift in perception regarding Bitcoin.

Prior to this, Bitcoin was more often viewed as a marginal experiment, a technical toy within a geek community, a highly volatile and risky speculative asset. In the eyes of most people, it could hardly be regarded as an asset. However, once its growth crossed this threshold for the first time, it entered a range large enough to be analyzed and “seen” by the mainstream capital system. A long-standing question since Bitcoin’s inception—“Can a currency without a central bank and national backing truly possess real value?”—was once again brought to the forefront after that spring.

Regulators began to contemplate how to regulate it, mainstream financial institutions began to study it seriously, and the media began to describe it using terms like “digital gold.” In August 2013, the German Ministry of Finance became the first national government in the world to recognize Bitcoin as a “unit of account.” Three months later, the U.S. Senate held its first hearing on virtual currencies, and Bitcoin officially entered the policy and regulatory agenda. Then-Federal Reserve Chairman Ben Bernanke acknowledged in a letter that Bitcoin “has a long-term future.” It was also at that time that the Winklevoss twins (now co-founders of Gemini) submitted the first Bitcoin ETF application to the U.S. SEC. Although this application was ultimately rejected, it opened the door to a decade-long battle over ETFs.

The evolution of technology, the influx of capital, the growth of users, the spread of narratives, and the gradual involvement of regulation transformed the entire ecosystem from a loose experiment into a structured market. These small steps that were sufficient to cover thousands of miles and small streams that could form rivers and seas all trace back to that spring.

The Leap in Computing Power

If the $1 billion market cap is a milestone in Bitcoin’s value system, then on the hardware level, March 2013 was also a turning point of an era.

In the three years prior, Bitcoin mining underwent a rapid evolution: in 2009, anyone could mine Bitcoin using their ordinary laptop (CPU); by 2010, it was discovered that AMD’s graphics cards (GPU) were dozens of times faster at Bitcoin hashing than CPUs, causing the price of graphics cards to soar; starting in 2011, FPGA mining emerged, which was more efficient than GPUs but also had a higher barrier to entry.

In early 2013, the first commercially available ASIC miner, Avalon, was born. The hash rate of the first-generation Avalon miner was about 60–70 GH/s, which, although insignificant by today’s standards, was equivalent to the total of dozens of graphics cards at that time. Its power consumption was only 600W, far lower than that of an equivalent hash rate GPU array.

However, the advent of ASICs brought not only a technological revolution but also a wave of rampant speculation. When the Avalon miner was released in January 2013, it was priced at about 8,000 yuan. By April, when the price of Bitcoin surged, this miner was being traded on the black market for around 300,000 yuan, an increase of nearly 40 times, even more than Bitcoin’s own price increase during the same period. Despite this, miners were still sold out.

Computational power was also being driven to new heights in this hardware race. In March 2013, the total network hash rate was still in the range of 20 to 30 TH/s. By the end of the year, this figure had increased by over a hundredfold, reaching the PH/s level.

Behind this incredible iteration speed was the beginning of Bitcoin assets breaking out of their niche, as more people began to believe in the Bitcoin narrative. Although some might see it as an asset, others as technology, and still others as a speculative tool, regardless of the reason, money came in, and people followed. As the number of people increased, competition arose; with competition, some began to ponder how to mine faster and more efficiently. Thus, CPU became GPU, GPU became FPGA, and FPGA turned into ASIC.

The rising market cap attracted more entrants, and the influx of more people led to fiercer competition, which in turn spurred faster technological iterations. These faster iterations made the network more secure and harder to attack. When the network became secure enough, larger capital dared to enter, laying the foundation for the next round of market cap growth. The $1 billion threshold was the starting point for this accelerated cycle.

The Fruits of Time, the Unchanging Core

On March 28, 2013, the editors of Bitcoin Magazine wrote a passage when reporting on Bitcoin’s market capitalization surpassing $1 billion. This passage remains moving today: “Whether Bitcoin is $30 or $300 four months from now, its core value has never changed: it allows you to send digital payments instantly, securely, and anonymously anywhere in the world, without the need for any government, company, or bank, with negligible fees. This is the promise that Satoshi Nakamoto has strived to deliver to us, and it is the promise that the entire community has been working to realize. Now that Bitcoin has reached $1 billion, our task is simple: do not forget our true goal, and keep moving forward.”

More than a decade has passed; Bitcoin’s price has risen and fallen, fallen and risen, been declared dead countless times, and has risen from the ashes again and again. Yet, amidst these cycles, its core value has remained unchanged. What the future holds is unknown, but the belief in Bitcoin continues to this day.

Just like today in 2013.