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Bitcoin History Part 8: When 1,500 BTC Cost Less Than $ 1

Bitcoin History Part 8: When 1,500 BTC Cost Less Than $ 1

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How much is one bitcoin worth? In fiat currency terms, that's been constantly shifting, but as the beginning has been held: one bitcoin is worth as much as the buyer is willing to pay. Today, I think I can buy several thousand bitcoins.

Also read: Bitcoin History Part 7: The First Major Hack

Calculating Bitcoin's Exchange Rate

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Situation at the moment, "We are in a sort of" Noted Bitcointalk forum member The Madhatter. "I mean, why would you like to buy and buy bitcoins? They are going to just blow out their float of dollars and fold. "A couple of months prior, the first rudimentary exchange rate for BTC had been calculated by influential forum user" NewLibertyStandard "(aka NLS). Their pricing system was based on the amount of energy required to be met by BTC – or "BC" as it was still referred to at the time.

A Simple Model to Get the Ball Rolling

"Set the ball rolling", "New Liberty Standard is doing fantastic and logical work to help" praised forum user "BitcoinFX" on Feb. 5, 2010, adding: "I'm currently compiling to Neural Network that takes into account other factors such as the finite number of Bitcoins, daily Gold and Silver fixings, other currency pairs and daily exchange Rates and the average number of Bitcoin users etc. Factoring in the New Liberty Standard. It will be a very adaptable model to help calculate and predict future exchange rates. "

Bitcoin broke away from its power pegged price and attained to the value of an array of external forces.

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Bitcoin prices, as quoted on the New Liberty Standard website in 2009

While NLS's methodology has been long since been retired, an archived web page reveals the BTC prices their system set back in 2009, explaining:

Our exchange rate is calculated by $ 1.991 by the average amount of electricity required to run with a high-end CPU for a year, 1331.5 kWh, multiplied by the the average residential cost of electricity in the United States for the previous year, $ 0.1136, divided by 12 months divided by the number of bitcoins.

In Dec. 28, 2009, according to NLS, $ 1 would have gotten you 1,578.77 BTC. Not bad.

Bitcoin History is a multipart series from news.bitcoin.com charting pivotal moments in the evolution of the world's first and finest cryptocurrency. Read part seven here.


Images courtesy of Shutterstock.


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