2022 was a spectacular year for Bitcoin , where cryptocurrency reached new heights, both in price and technology.
Among several important points, the community embraced new updates and even one country adopted the BTC as its official currency .
The quote has never gone below pre-2022 levels, meaning that all bitcoin purchases made in 2020 or earlier years, if insured by any time in 2022, were profitable. But that doesn't mean we didn't have volatility: as usual, this year was a real roller coaster and you possibly missed out on excellent buying opportunities.
If you've been following bitcoin news for a while, you may be familiar with the term “FUD” (fear uncertainty and doubt); fear, uncertainty and doubt. Information or events that, when widely publicized, bring down the price of an asset that actually has not lost its fundamentals, creating an opportunity for those who have more information.
These opportunities are the result of information asymmetry , you know something that the rest of the market does not know. If you're deep in the bubble of crypto enthusiasts, you may not realize how much the general public still doesn't understand cryptocurrencies.
This will become clearer when you read the following list, times when you should have taken the opportunity to increase your bitcoin exposure in 2022.
1) The Bitcoin Double Spending Problem
The first notable information asymmetry of 2022 happened as early as January, when BitMex Research announced that Bitcoin block 666,833 had attempted a double spend .
At this point in the blockchain, two conflicting blocks have been encountered at the same time, which can happen quite often. The resolution for this is simple, wait a while and see which block chain will be chosen by most of the computational power of the network, this is literally the consensus model chosen for Bitcoin.
As explained earlier, this can be quite frequent and the block that is left behind is called an “orphan”. See the illustration below where “Block B2” is orphaned after the network chooses to continue with 'Block B' and 'C'.
What happened especially in block 666,833 was that both in "Block B" and in "Block B2" of the real case, there were transactions from a certain wallet spending the same bitcoins, but in B the coins went to an address and in B2 they went to another.
This was interpreted as a double-spending attempt . Traditional media, of course, were sensationalized and publicized the case as the discovery of a “critical flaw” in Bitcoin . However, nothing new has been discovered, Bitcoin is like that by design , the resolution of the double spend problem is explained in the whitepaper .
The irreversibility of transactions is due to the number of confirmations, and bitcoiners knew this from the beginning. But newer and still lay investors were caught by the FUD and sold their coins. One example was the Canadian company NexTech AR Solutions, which sold its 130 bitcoins after the news .
Buyers got along well, did you understand the asymmetry of information?
2) Tesla no longer accepts Bitcoin, so what?
Despite being at a higher price, the second big bitcoin buying opportunity this year came when Elon Musk tweeted that Tesla would no longer accept BTC as payment for its electric cars.
As we announced on the day, the BTC fell 11% shortly after the news. Considering that very few people were actually using bitcoin to buy Tesla cars , let's look at why the suspension of acceptance affected cryptocurrency.
First, many people could be riding the Bitcoin wave just because of the influence of Elon Musk, one of the richest men in the world. If he suddenly said today that he no longer liked Dogecoin, the meme coin would surely plummet in price.
The second factor, more relevant and widely discussed after the event, was the mention of environmental concerns. "The trend in energy use in recent months is insane," tweeted Musk when releasing the following graph:
“ The rise of Bitcoin thermodynamic security in recent months is insane! tweeted Jameson Lopp shortly thereafter, a software engineer and former Bitcoin developer. Definitely consider following him on Twitter.
As for Bitcoin's energy expenditure, the truth is that the economic dynamics of cryptocurrency encourage the use of renewable energy, and Elon Musk has previously shown that he agrees with this. To this day it is uncertain whether his opinion has changed or whether he has just given in to media pressure to stop adopting the BTC.
But in any case, Elon Musk's opinion is irrelevant to Bitcoin in the long run, it just keeps expending more energy as more people embrace hard currency technology. Bitcoiners who understood this bought it cheaper.
3) China and the “thousandth” ban on Bitcoin
Right after Tesla stepped back and brought down the price of bitcoin, the Chinese government did it with more impact. Because of cheap energy, China has always been the top country of choice for bitcoin miners, but that had to change in 2022.
On May 21, China's Finance Committee issued a statement stating that the government was considering a ban on bitcoin mining in the country, which followed shortly thereafter.
If we take the BTC from top to bottom after this news, bitcoin has shown a discount of more than 55%. Better opportunity than this just creating a time machine to buy bitcoin in the beginning.
The consequences were disastrous, but mostly for the price, as the network only suffered temporary congestion as Chinese miners had to migrate to other countries , but it soon returned to normal. This is because Bitcoin relies on a mining difficulty adjustment algorithm.
The less computing power on the network, the easier it is to find a bitcoin block and vice versa. This is already programmed so that in any case of a drop in hashrate or even a sudden increase, it doesn't significantly change the 10-minute average for creating each block.
With game theory in play, Bitcoin's computing power soon recovered fully and the Chinese economy is slowing down.
China was already known in the cryptocurrency community for announcing numerous bans on Bitcoin, often leading to a slight dip but then a rebound. But, by far, this ban was the most impactful and also generated one of the best buying opportunities.
At the time, as the price of bitcoin was falling, we shared another genius tweet by Lopp: "Imagine selling an asset because an authoritarian regime doesn't like it."
Liked the list Hope you stay tuned to Cointimes in 2022 so you understand what's really troubling news and what doesn't change the fundamentals of Bitcoin. Value the HODL .
Best times to buy bitcoin you lost in 2022 content first appeared in Cointimes .