Bitcoin, the world's most common and well-known cryptocurrency, has been increasing in popularity.
Bitcoin is a digital currency created in 2009 as an alternative to the banking system. Not only does it offer a payment mechanism without any centralized control, but it has also introduced the revolutionary concept of the blockchain. All Bitcoin transactions are recorded in the blockchain: a shared public ledger, organized in chronological order within blocks and made secure thanks to strong cryptography. Bitcoin users typically use services called Bitcoin exchangers, to buy and sell Bitcoin in exchange for other currencies at a price fluctuating freely.
Thanks to a growing number of merchants and services that let people use Bitcoin all over the world, Bitcoin has become a solid reality and a fascinating object of study. The possible future applications of the blockchain and of cryptocurrencies appear as very promising, even if this technology is relatively new and at the first stage of its evolution.
Bitcoin has succeeded in being a viable currency, which has elevated it in status over the years, more notably the fixed limit of bitcoin that will exist. Bitcoin will be mined with diminishing returns every four years until the maximum number of bitcoins are reached: a total of 21 million. This aspect of Bitcoin is important for its value: due to the limited amount of bitcoins, the currency will never become inflated from an overabundance of bitcoins. Also, bitcoin and other cryptocurrencies are generally regarded as being protected from inflation originating from national government changes or restrictions.
Due to the limited amount of bitcoins, the currency will never become inflated from an overabundance of them.
This creates a “safe haven” for investors to put their wealth into, as it generally does not lose value based on inflation. Bitcoin is quickly showing its strength as a refuge against inflating national currencies. However, as is the case with most commodities, the price can fluctuate wildly based on many other external factors. The combination of demand for a safe haven option and its price volatility helped Bitcoin to become the best performing currency of 2019 using the US Dollar Index.
This means that Bitcoin was the highest valued currency in the entire world at the end of 2019. This is no small feat in a global economy with powerhouses like China and the United States running the landscape.
Bitcoin has a few obstacles to clear for user acceptance to become widespread:
The value fluctuations that plague cryptocurrencies puts doubt in users, as well as investors. Value fluctuations reduce trust that a consumer's value would be retained on a day to day basis, limiting faith in the currencies overall worth. In a survey performed by PwC, 83% of those surveyed had little to no familiarity of bitcoin. The lack of central ownership of cryptocurrencies means that any attempt to remediate this marketing problem using advertisements could theoretically help the investing company's competition.
There are competitors to cryptocurrency that are attempting to provide an alternative to digital currency. Apple is one of the main competitors with their product ApplePay. Traditional credit card companies like Visa and MasterCard are happily joining ApplePay's infrastructure as are allowed to keep their fees. PayPal has also been very successful as the eBay exchanging system, and could potentially be moved into mobile payment.
Cryptocurrencies seems to haved move past the early adoption phase that new technologies experience. Bitcoin has begun to carve itself a niche market, which could help advance cryptocurrencies further into becoming mainstream; or be the main cause of it failing. Cryptocurrencies are still in their infancy, and it is difficult to see if they will ever find true mainstream presence in world markets. The Bitcoin community is striving to push into the mainstream through innovation and solving old problems. Other forms of cryptocurrency have already emerged and have gained followings of their own, and each slightly different from Bitcoin and arguably as valid.
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