In todays blog we are going for a deep dive into the world of the most popular cryptocurrency in the world, Bitcoin.
Since its creation, Bitcoin has become to cornerstone of the cryptocurrency market. At the very beginning, Bitcoin was dismissed by many professionals in the finance space as an obscure digital experiment that would hold no long term value. Fast forward a few years and it has become a billion pound asset class, in a world of its own. The journey that Bitcoin has been on is nothing short of remarkable and it can be said, honestly that nothing in history has done what Bitcoin has done.
Understanding the history of Bitcoin, looking at what it presently offers and taking a educated guess at what the future holds for Bitcoin will help you understand the massive impact that it has had on the financial world as we know it.
The Past – The birth of Bitcoin.
This story begins back in 2008 when an unknown figure, or possibly a group known only as Satoshi Nakamoto published a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”. This report outlined a vision for a completely decentralised digital asset or currency that would operate independently of any of the known, traditional financial institutions.
Fast forward to January 2009 and the very first Bitcoin block, known as the Genesis Block was mined. Soon after the mining of this block, the first ever Bitcoin transaction was completed. After the mining, Nakamoto sent 10 Bitcoin to a computer scientist named Hal Finney. During this time, Bitcoin had no monetary value (Can you believe that?). The first “investors” in Bitcoin were mostly cryptography enthusiasts, attracted to the project by the concept of a decentralised currency.
Bitcoin’s first “famous” transaction came in 2010 when Laszlo Hanyecz paid 10,000 Bitcoin for two pizzas. This purchase, at the time was valued at $41. Today, if you were to complete the same transaction it would be worth hundreds of millions.
Jumping to 2013, Bitcoin broke $1000 for the first time in its history. It was around this time that Bitcoin started to attract more serious investors, who may have dismissed it in its younger days. With this attention came bigger problems though, including price volatility along with security and regulatory concerns.
The Present – A modern financial powerhouse.
Today, Bitcoin has rightfully earned the nickname of “Digital Gold”. Institutional investors, hedge funds and major corporations alike have all allocated part of their investment portfolio to Bitcoin, a move that was unthinkable just a few short years before.
Companies such as MicroStrategy, Tesla and Square have all added Bitcoin to their accounts. This has only pushed Bitcoin forward and further solidified its role in mainstream finance.
The introduction of Bitcoin Exchange-Traded Funds (ETF’s) has further legitimised this asset class. Due to the listing, many everyday investors were able to invest in the “digital gold” without the complications that can surround the crypto space and having to worry about managing wallets and exchanges.
Bitcoin’s biggest selling point lies in its decentralised nature, its 21 million supply and its ability to resist censorship. As the worlds economy remains uncertain, Bitcoin is quickly being seen as a safe asset, away from the influence of everyday events, very similar to gold.
Despite its growth, Bitcoin still has many challenges to face on a daily basis. Transaction fees can be high for its users, scaling Bitcoin for the growing demanding is proving challenging and environmental concerns around “Bitcoin Mining” have also been raised. However, much as it has already done, Bitcoin is ever evolving, moving forward and attempting to fix and correct any issues that come up in the process.
The Future – How far can Bitcoin go?
Glancing towards the future, it looks bright for Bitcoin but there are some hurdles to overcome in the process. There are several factors that look to shape the future of Bitcoin;
– Regulation: As the influence of Bitcoin grows worldwide, the concern for the cryptocurrency to become regulated is often mentioned. Clearer regulations will almost certainly increase confidence around Bitcoin, but at what cost? Will there be new limitations introduced? Only time will tell.
– Institutional Involvement: While this is expected to expand, there are still many institutions that are not involved in Bitcoin. While this might change sooner rather than later, until some of the big names in global finance hop onto the Bitcoin bandwagon, it will always remain hard to convince everyone that Bitcoin is here for the long-term.
– Future Developments: Innovations, like the newly released Lightening Network aims to improve Bitcoin’s usability for everyday transactions. If this continues and Bitcoin continues to improve upon itself, it could unlock Bitcoins potential for being a global payment system.
– Market Volatility: Bitcoin’s price has always been known for being unpredictable. Looking back over its history you are able to see several “Boom or Bust” patterns. Many people believe as Bitcoin’s supply lessens, so will the volatility around the asset.
Crypto Analyst‘s Final Thoughts.
Bitcoin has been on one hell of a journey already and it isn’t anywhere near its conclusion. While there are plenty of challenges ahead, Bitcoin has already come a long way and proved many people wrong along the way.
For investors looking for a way into the digital market, Bitcoin is constantly looking more and more appealing while making it easier to get a foot in the door. Bitcoin’s involvement in the global financial landscape is still waiting to be determined, but we believe that it is only going to get more popular, more powerful and change the way the world looks at digital assets.
Bitcoin’s effect on the world of finance is far from over.