The Bitcoin network was created by the mysterious Satoshi Nakamoto, with the first, ‘genesis block’ being mined on January 3rd 2009. Over 11 years later, bitcoin has a market cap of $128,727,068,115 and the market cap for all cryptocurrencies combined is $201,429,797,778 at the time of writing this article.
It is fair to say that both bitcoin and other cryptocurrencies have far outperformed many predictions made by financial industry experts over the last decade and whilst some believe that the growth of the cryptocurrency market as a whole is slowing, here is why they may be wrong;
History often repeats itself
Despite the recent coronavirus disaster, bitcoin has increased in value by over 30% in the last month. To add to this, bitcoin outperformed all other reputable investments in the last decade, with the value of the coin increasing over 8,900,000% in just 10 years.
Had you invested just $10 in bitcoin on January 1st 2011, your investment would have been worth $591,971.65 on December 16th 2017, under 7 years later. Whilst one should not blindly expect the same gains when investing in bitcoin and other cryptocurrencies this next decade, the price of bitcoin remains volatile and as the old adage goes; high risk equals high reward. The growing interest in cryptocurrency from individuals and from government institutions means that bitcoin and other cryptocurrencies are likely here to stay.
The beginning of 2020 has been very difficult for many financial markets and many individuals, with the global coronavirus crisis causing a large crash in the global economy.
Additionally, the United States has seen unemployment figures in the country rise, with over 30 million people seeking unemployment aid since the coronavirus pandemic began; some decades of improvement in unemployment figures has been wiped out within the space of a month. What is the response of most governments? To print more money.
History has shown how this can turn out, with a kilo of chicken costing 15 million Zimbabwean dollars in 2008 and inflation in Venezuela going from 9.2% in 2018 to 10,000,000% in 2019.
Bitcoin is fast approaching the next halving in May 2020, where the reward per mined block will be cut in half. Whilst many governments are printing more money around the world; gradually decreasing the value of each dollar, bitcoin will become even more scarce. It is worth remembering that only 21 million Bitcoin can ever exist, meaning 1 bitcoin will remain 1 of 21 million.
International currency and zero fee transfers
Every year it feels like the world comes closer together, with impressive advancements in technology meaning you can speak with a friend on the other side of the globe using a video call as if you are standing right next to them. So why can’t you pay them or send them money as if they are standing right next to you?
Using traditional banks and companies, it can cost you up to $50 dollars to send $1000 dollars across the world to a friend and it can take over a day to reach them. If you used bitcoin or other cryptocurrencies, it would take less than 10 minutes on average and cost you less than $1.
Imagine a world in which you only need one currency no matter where you travel to. There is no need to exchange your dollars at a currency exchange when you go on holiday and no need to worry about having enough cash to pay for the taxi when you land at the airport. Instead, everyone throughout the world would accept bitcoin or another cryptocurrency of your choice, meaning you can relax and save money on those frustrating currency exchange fees. Just think on this day in 2010, the iPhone 3GS was ‘all the rage’, no one had even purchased anything with bitcoin yet and Instagram and Tinder didn’t even exist. Who knows what the world will look like in 2030?
Banks and financial companies are showing a lot of interest in cryptocurrencies too, with Santander, Money Gram, American Express, Interbank and many more signing agreements with a company called Ripple, who use the cryptocurrency XRP in order to transfer money across borders in under 10 seconds for the cost of usually less than a dollar.
The UN themselves have recently stated ‘Countries have already committed to reduce remittance fees to 3 percent, much below the current average levels. The (coronavirus) crisis requires us to go further, getting as close to zero as possible.’ and it seems ever more likely that cryptocurrencies will be used in order to allow countries and financial institutions to achieve this as we move further into the next decade.
Banking the Unbanked
It is estimated that some 1.7 billion adults do not have a bank account. With more and more people having access to smartphones and the internet throughout the world, cryptocurrency will likely bring a lot of people out of poverty. You only need to own a mobile phone in order to hold and spend bitcoin and the more people who own bitcoin, the more scarce it becomes.
The future is looking more and more digital; with China testing a digital version of their currency and the rapper, Akon looking to build a large city in Senegal which will use his cryptocurrency, ‘Akoin’ as its central currency – no bank account required. Cryptocurrencies are helping companies access 1.7 billion customers they previously could not and they are helping 1.7 billion people access new, sometimes essential products.
It is worth remembering that cryptocurrencies have been used and can be used by people who are avoiding political sanctions and who are under oppression from their government. Bitcoin and some other cryptocurrencies are uncensorable and whilst it may not feel this way to some cryptocurrency enthusiasts, the cryptocurrency market is only just beginning; with an estimated 0.5% of the global population owning or having owned cryptocurrency to date.
Investment in cryptocurrency does carry many risks and that there are multiple threats to cryptocurrencies and blockchain technology. This article is not financial advice, but rather a piece of writing aimed at bringing positivity to the world during this difficult global crisis.
If you would like to learn more about bitcoin and cryptocurrencies, check out the rest of our blog. Additionally, if you don’t understand how bitcoin works and would like a basic explanation, check out this post, A Basic Explanation of Bitcoin.