Bitcoin's Early Investors: Unimaginable Wealth And Opportunities

Bitcoin's rise since its launch in 2009 has created a diverse set of millionaires and billionaires. The anonymous developer of Bitcoin, Satoshi Nakamoto, is rumoured to be the richest Bitcoin owner, with a net worth of $70-$30 billion. However, the top Bitcoin investors are no longer individuals, with exchanges, brokerages, and businesses taking over as the largest holders.

Some notable early investors who have become rich from Bitcoin include John Ratcliff, who invested $15,000 in 150 bitcoin in 2013 and is now building a $1.4 million dream house; Nikki Beesetti, who invested $2,000 in 2017 and has since paid off her college tuition and car loan; and Sandra Ro, a former banker who left her job in 2017 and is now the chief executive of the Global Blockchain Business Council.

The richest early bitcoin investors

Bitcoin's rise since its launch in 2009 has created a diverse set of millionaires and billionaires. Here is a list of some of the richest early bitcoin investors:

Satoshi Nakamoto

The anonymous creator(s) of Bitcoin, Satoshi Nakamoto, is believed to be the richest of all Bitcoin investors. It is estimated that Nakamoto's net worth falls within the range of $70 to $30 billion, primarily attributed to the creation of Bitcoin and its subsequent revolutionary impact on the digital currency ecosystem. As one of the first miners of Bitcoin, Nakamoto is estimated to hold as high as 1.1 million BTC spread across 22,000 wallet addresses.

Changpeng Zhao

Changpeng Zhao, the founder and former CEO of the crypto exchange Binance, is considered the wealthiest person in the crypto ecosystem. Despite pleading guilty to US money laundering charges, Zhao's net worth is estimated to be around $33 billion, with the bulk of his fortune derived from his majority stake in Binance.

Brian Armstrong

Brian Armstrong, the co-founder and CEO of Coinbase, is one of the youngest tech billionaires, with an estimated net worth of $5.8 billion. Armstrong reportedly holds a 19% stake in Coinbase, which is North America's biggest cryptocurrency exchange by trading volume.

Michael Saylor

Michael Saylor, the CEO of MicroStrategy, is a prominent early investor in Bitcoin. Saylor's net worth is estimated to be around $4.4 billion, with his company holding about 214,246 bitcoins as of April 2024. Saylor is also a vocal advocate of Bitcoin, expressing his belief in it as a store of value and a hedge against inflation.

Winklevoss Twins

The Winklevoss twins, Tyler and Cameron, are well-known early Bitcoin investors, having acquired Bitcoin in 2013. They are believed to hold large amounts of Bitcoin, Ethereum, and Filecoin. The twins also control 75% of the crypto exchange Gemini, which they founded together. Their combined net worth is estimated to be approximately $2.8 billion.

Tim Draper

Tim Draper is a venture capitalist and early Bitcoin investor. In 2014, he purchased 29,656 bitcoins confiscated by the US Marshals from the Silk Road black market for $18.7 million. Draper's net worth is estimated to be around $2.5 billion, with his primary source of wealth associated with cryptocurrency investments.

John Ratcliff

John Ratcliff, a 59-year-old video game developer, invested $15,000 in 150 bitcoins at $100 in 2013. With the surge in Bitcoin's value, Ratcliff has been able to fund the construction of a $1.4 million "dream house" and purchase a $250,000 Tesla Roadster.

These individuals represent just a fraction of the early Bitcoin investors who have accumulated significant wealth through their strategic investments, early adoption, and belief in the potential of Bitcoin and the broader cryptocurrency ecosystem.

How to invest in Bitcoin

Bitcoin is a digital asset and payment system with a market capitalization of around $1.35 trillion as of April 10, 2024. It is considered by many to be one of the most successful digital currencies ever created.

There are many ways to invest in Bitcoin, from stockbrokers to dedicated exchanges and even in-app purchases in some crypto-linked applications. Here are some of the most common ways to invest in Bitcoin:

• Cryptocurrency exchanges: You can purchase bitcoin from cryptocurrency exchanges such as Gemini, Kraken, Coinbase and Crypto.com.
• Traditional stockbrokers: Robinhood was the first mainstream investment broker to offer Bitcoin (Robinhood Crypto is available in most, but not all, U.S. states). Other online brokers that offer access to Bitcoin or other cryptocurrencies include Webull, TradeStation and Fidelity.
• Bitcoin ATMs: These work like normal ATMs, but you can use them to buy and sell Bitcoin. They are often placed in locations where you might find normal ATMs, such as convenience stores.
• Bitcoin exchange-traded funds (ETFs): In January 2024, the Securities and Exchange Commission opened the door for spot Bitcoin ETFs, which track the price of Bitcoin and trade over major exchanges.
• Peer-to-peer money transfer apps: Cash transfer services like PayPal, Venmo, or Cash App allow their users to purchase Bitcoin using the apps.

If you're purchasing Bitcoin, you'll need to store it in a digital wallet. Bitcoin can be stored in two kinds of digital wallets: a hot wallet or a cold wallet. With a hot wallet, transactions are generally faster, while a cold wallet often incorporates extra security steps that help to keep your assets safe but also make transactions take longer.

When investing in Bitcoin, it's important to keep in mind that it is a risky investment. The prices of cryptocurrencies, even the most established ones, are much more volatile than the prices of other assets like stocks. Therefore, it's crucial not to invest more money than you can afford to lose.

Risks of investing in Bitcoin

Investing in Bitcoin and other cryptocurrencies can be highly risky and speculative. Here are some of the key risks that investors should be aware of:

Volatility and Fluctuations

The cryptocurrency market is highly volatile and unpredictable. Bitcoin prices fluctuate constantly due to various factors, including sentiment, speculation, and market manipulation. This makes it challenging for investors to build confidence and secure gains. Small investments made over time are often recommended as a more beneficial long-term strategy.

Cyber Attacks and Security Risks

The digital nature of Bitcoin makes it susceptible to cyber attacks and hacking. Investors risk losing their investments through exchanges or mining losses. Additionally, if an investor loses or misplaces their private key, there is rarely a way to retrieve their coins. The lack of central authority backing Bitcoin also means there is limited recourse in the event of theft or fraud.

Fraud and Scams

The Bitcoin market is not immune to fraud, with fake exchanges and scams contributing to a lack of security. Investors need to be vigilant and carefully research their cryptocurrency wallets and exchanges to minimise the risk of losing their investments.

Regulatory Uncertainty

The relatively new and evolving nature of Bitcoin and other cryptocurrencies means that the regulatory landscape is complex and inconsistent across different jurisdictions. The lack of major regulations can create uncertainty for investors, especially regarding tax obligations and record-keeping. Regulatory changes could significantly impact the value of cryptocurrencies or even lead to restrictions or bans.

Technology Reliance

Bitcoin is entirely reliant on technology, and any disruptions or failures could impact its value. The digital nature of Bitcoin means it is vulnerable to cyber threats and online fraud. Additionally, the lack of physical collateral backing Bitcoin means investors could lose everything with no recourse for recovery.

Peer-to-Peer Transaction Risks

Digital currencies can be traded on various online platforms and through peer-to-peer transactions. However, many marketplaces provide little to no intermediary services or regulatory oversight. In such cases, all risks, such as double-selling, lie solely with the transacting parties.

Loss of Confidence

Bitcoin and other cryptocurrencies are part of a new and rapidly evolving digital assets industry. Their value is determined solely by market participants' perceived value, which means that a loss of confidence could lead to a collapse in trading activities and a sharp drop in value.

Bitcoin millionaires and billionaires

Bitcoin's rise since its launch in 2009 has created a diverse set of millionaires and billionaires. The anonymous developer of Bitcoin, Satoshi Nakamoto, is rumoured to be the richest Bitcoin owner, with a net worth of $68 billion as of May 2024, and holdings of more than 1 million bitcoins. However, this cannot be proven due to the pseudonymous nature of cryptocurrency.

Changpeng Zhao, the founder of the cryptocurrency exchange Binance, is estimated to be worth $33 billion, making him the wealthiest person in cryptocurrencies. Brian Armstrong, the co-founder of Coinbase, North America's biggest cryptocurrency exchange by trading volume, was estimated to be worth $11.4 billion in June 2024. Michael Saylor, the chairman of MicroStrategy, a prominent business intelligence company, is estimated to be worth $1.6 billion.

Other notable Bitcoin millionaires and billionaires include the Winklevoss twins, Tim Draper, Roger Ver, and Vitalik Buterin.

Many Bitcoin millionaires and billionaires have made their wealth by creating products and services to grow the cryptocurrency ecosystem. For example, some have created exchanges for trading cryptocurrency and its derivatives.

Bitcoin as a store of value

Bitcoin has proven to be a highly successful investment for many early adopters. Its price has skyrocketed since its launch in 2009, with a historic high of $77,000 in June 2024. This has created a diverse set of millionaires and billionaires.

Bitcoin's performance as a store of value has been a topic of debate. On the one hand, Bitcoin has demonstrated an impressive annualized return of 230% over the last decade, outperforming the Nasdaq 100 by a significant margin. Its digital scarcity and decentralised nature have made it an attractive investment option. Bitcoin is also highly divisible, easily portable, and has strong liquidity and utility, with an increasing number of businesses and countries accepting it as legal tender.

However, Bitcoin has also experienced extreme volatility. For example, in 2014, it lost 58% of its value, and in 2018, it dropped by 73%. From its peak in November 2021 to its bottom in November 2022, Bitcoin lost over 75% of its value. This volatility has led some, like Jim O'Neill, President of the British think tank Chatham House, to argue that Bitcoin's high volatility makes it "almost impossible to imagine that it will become a store of value or a reliable medium of exchange".

Despite the volatility, Bitcoin's overall price increase has created significant wealth for those who bought and held onto their investments. Its decentralised nature, scarcity, and global accessibility continue to make it an attractive option for those seeking an alternative to traditional assets.

Frequently asked questions