Towards the end of 2019, Bitcoin has continuously been named the greatest success story of the previous decade. Bitcoin and other cryptocurrencies of its kind are often conveyed as revolutionary technology that will alter the structure of global finance. At the same time, there are plenty of skeptics who still question cryptocurrencies – Bitcoin itself has been proclaimed dead multiple times and governments all around the world have attempted to ban it in multiple ways. It has been repeatedly associated with the currency of the black market.
“This is the first time that there’s a real separation — just like church and state — you have a separation of money and state,” says Alex Mashinsky, founder of the Celsius Network. “That’s the innovation, that’s the excitement.”
Bloomberg recently published data that Bitcoin’s ROI grew by 9,000,000% in the last decade; Bitcoin enthusiasts call it digital gold. At the time of writing, one Bitcoin is worth $7114, but throughout the decade we have seen it jump to $20,000 per Bitcoin in 2017 and then rapidly plummet to below $3000 per Bitcoin. Despite the ups and downs in the worth, Bitcoin continues to be the “decade’s best performing asset’’.
Bitcoin has produced a new class of crypto millionaires – a recent study by Bank of America Merrill Lynch suggests that those who invested just $1 into Bitcoin in 2019 would have an astonishing return on their investment of $90,026 by the end of the decade.
However, the cryptocurrency was not always a promising success story; instead, Bitcoin had a slow start – its first transaction was made by Laszlo Hanyecz to buy pizza and took place 2 years after the cryptocurrency was created. 10,000 BTC were traded for two Dominos pizza – at the time, they were worth almost nothing. Now, those pizzas are worth over $800 million.
Bitcoin remains an ‘Investor’s currency’ since it has not been commonly used as an exchange for products. Instead, Bitcoin fans and speculators prefer to invest and watch the currency thrive.
Despite its thrive and a 105% gain in 2019, Bitcoin’s start in 2020 is disappointing. The cryptocurrency dropped 4% in just two days and fell below $7000 for the first time in a decade. Immediately, critics threw in their two cents on how Bitcoin is nothing more than a trendy hoax and definitely not the asset of the decade
2020 will be an interesting year for Bitcoin; in May 2020 a process called “halving” will happen. This means, that the production of Bitcoin will be cut in half, so the number of new coins awarded to bitcoin miners will be slashed by 50%. This a process that no one has control of – it is a fundamental rule written into Bitcoin’s code by its creator Satoshi Nakamoto.
The purpose of this process is to safeguard Bitcoin’s scarcity and to prevent price inflation – it occurs every four years. Crypto traders and miners are sure that there will be both gains and losses from the halving process. Theoretically, prices are expected to rise due to the fact that demand remains stable while supply is reduced drastically. During the previous periods of halving, Bitcoin grew drastically, however, there could be many reasons behind this, not just halving. High volatility is a threat to miners who hold large inventories of Bitcoin; price stability is certainly a more predictable, secure route.
A question that is often asked by Bitcoin enthusiasts is where the cryptocurrency is currently nested on the ‘Adoption Curve’. There is an ongoing debate in the cryptocurrency community that Bitcoin is currency at the ‘Early Adoption’ stage, which means that there is still a lot of room for growth. Questions arise if and when mainstream adoption of the cryptocurrency will take place, and if it does, is currently the right time to invest?
Earlier investors in Bitcoin have already received the rewards from their investment in the cryptocurrency, with Bitcoin’s powerful growth, and experts are certain that that cryptocurrency’s value will only increase in the future.
The most recent news on Bitcoin has been the currency’s price jump (15% in just 8 days into the New Year) after the U.S. killing of the Iranian top general, Qassem Soleimani. We saw a jump in crude prices right after the killing and similar thing happened to Bitcoin – in fear of the political turmoil turning into a war that will create inflation. Characteristically this is a normal fluctuation for the cryptocurrency. The cryptocurrency has continuously outshone its competitors – while Bitcoin’s price double in 2019, it’s competitors like Ripple XRP, Ethereum and Litecoin saw large declines.
When Bitcoin’s whitepaper was published around eleven years ago, the relationship between technology, finance, and politics changed forever. The cryptocurrency has revolutionized our relationship with money and handling. Interest in Bitcoin grew as people started understanding what blockchain technology is.
What is the future for Bitcoin? Well, no one can predict for sure but if the past reflects the future then Bitcoin’s path to success is paved in the people who believe in its potential as the replacement of fiat currencies and liberation from centralized banking.