With the launch of Bitcoin in 2009, cryptocurrency went from being a theoretical notion to (virtual) reality. 1 While Bitcoin Investment grew in popularity throughout the years, it drew substantial investor and media interest in April 2013, when it reached a new high of $266 per bitcoin after soaring 10-fold in the previous two months. At its height, Bitcoin had a market value of almost $2 billion, but a 50% drop soon after triggered a heated discussion over the future of cryptocurrencies in general and Bitcoin in particular.
How Has Crypto Been?
The bitcoin market has changed dramatically in the previous 18 months. For a long time, the number of cryptocurrency investors has been slowly expanding throughout the world, but it has recently exploded. It has grown at a quicker rate than ever before, yet its future has never been more uncertain. In comparison to 2018, older customers have started to invest in cryptocurrency at a considerably higher rate. With so much free time and so few things to do with it, many people have turned to crypto trading for the first time during the epidemic. Several analysts predict a dramatic change in crypto when institutional money enters the market.
Furthermore, there is a likelihood that crypto may be listed on the Nasdaq, giving blockchain and its use as a replacement for existing currencies respectability. Some people assume that all cryptocurrencies require is a verified exchange-traded fund (ETF). Although an ETF would make it easier for people to invest in Bitcoin, there must still be a demand for cryptocurrencies, which may not be met by a fund on its own.
Bitcoin is a decentralized currency that uses peer-to-peer technology, allowing the network to perform all operations such as money issuance, transaction processing, and verification collectively. While denationalization protects Bitcoin against government manipulation and meddling, it also means that there is no central authority to ensure that things function smoothly or to guarantee the value of a Bitcoin. Bitcoins are produced digitally through a process known as “mine,” which necessitates the use of powerful computers to solve complicated algorithms and crunch data. They are now minted at a pace of 25 Bitcoins every 10 minutes and will be capped at 21 million in 2140, according to predictions.
These attributes distinguish Bitcoin from fiat currencies, which are backed by the government’s full faith and credit. The issue of fiat money is a highly centralized process overseen by a country’s central bank.
A Bitcoin’s worth is entirely determined by what investors are prepared to pay for it at any one time. Clients with Bitcoin balances also have no recourse if a Bitcoin exchange or bitcoin trading software goes out of business.
Bitcoin’s Future Prospects
Bitcoin’s future prospects are a hot topic of discussion. While so-called crypto evangelists abound in the financial media, Kenneth Rogoff, a Harvard University professor of economics and public policy, claims that the overwhelming sentiment among crypto advocates is that the total market capitalization of cryptocurrencies could explode over the next five years, rising to $5-10 trillion.
The development of Bitcoin has spurred a discussion regarding its and other cryptocurrencies’ futures. Despite recent challenges, Bitcoin’s popularity since its introduction in 2009 has sparked the development of rival cryptocurrencies such as Ethereum, Litecoin, and Ripple. A cryptocurrency that aims to join the mainstream financial system would have to meet a variety of requirements.
Some of the current restrictions of cryptocurrencies, such as the fact that one’s digital wealth may be wiped by a computer crash or a virtual vault might be looted by a hacker, may be addressed in the future thanks to technical advancements.
Despite the fact that the number of shops accepting cryptocurrency has continuously expanded, they remain in the minority. In order for cryptocurrencies to become more extensively utilized, they must first earn consumer approval. Except for the technologically savvy, their greater complexity compared to traditional currencies will likely repel most consumers.
If you’re thinking about investing in cryptocurrencies, you should approach your investment, in the same manner, as you would any other extremely speculative business. In other words, accept the possibility of losing the majority, if not all, of your investment.