Figure 1 Bitcoin could become stronger in the coming years
If you have spent any time on this site at all, you will have noticed that we are broadly supportive of the use of cryptocurrency – and in particular Bitcoin. As the figurehead of the digital currency movement, Bitcoin is the most well-known, and most recognizable, form of crypto in the world.
After an explosion of interest and investment in Bitcoin, and other cryptocurrencies, a few years ago, there has been something of a backlash recently. Some of this has come from a mainstream media that was never too keen for a decentralized currency to become so successful in the first place. But there have also been some high-profile examples of how volatile the Bitcoin market can be.
Any honest investor would tell you that risk is good and is the reason why people are attracted to these kinds of currencies in the first place. There is no escaping the fact that crypto has become more mainstream than ever, with more retailers accepting digital currency payment, and the popularity of Bitcoin betting sites. But there is an argument that Bitcoin should and could become even more important in the years ahead.
The Initial Boom is Over
It doesn’t seem that long ago that everyone and their mom was talking about their crypto wallets and investments. The incredible profits to be made had been discovered by the general public and Bitcoin and other cryptocurrencies were no longer just a thing for those in the know.
With many more people looking to make a quick buck, the exchange rate was obviously affected and suddenly these newcomers were complaining that their crypto investments were not bringing in the untold riches that they had read about. Now everything has calmed down a little, those with a little more patience and understanding of Bitcoin can look to build it back up again.
Investors are Buying Up Bitcoin
One sign that Bitcoin is becoming more important is that investors are starting to buy again. High net worth individuals are looking to get involved with crypto again and Bitcoin is the most recognizable – and attractive – option. If these kinds of people are getting back on board, Bitcoin is moving in the right direction.
With the price of Bitcoin dropping, these investors have recognized that now would be the perfect time to get in. With the decentralized nature of cryptocurrency, along with the fact that it is relatively volatile (yes, this is a positive), now is the time to invest in Bitcoin again.
Decentralization is Good
One of the central attractions of cryptocurrency is its decentralized nature. The fact that there is no government control is a big plus for many. This is especially true for potential investors looking to move away from more traditional portfolios. An independent form of currency is a way of circumventing central control.
Even with the likelihood of greater regulation in the future, a more decentralized way of doing things can bring advantages and that is something that will benefit Bitcoin users. As governments and regulating banking institutions create more uncertainty, an alternative will become even more desirable.
More Institutional Adoption
Even with a decentralized model, it is very interesting to see that there has been more adoption of crypto by established institutions over the last few years. As with the move by Bitcoin into the mainstream of society, if governments and institutions are happy to use crypto, then it lends even greater credibility.
In what is considered a volatile market, the backing of respected institutions can really help Bitcoin. El Salvador making Bitcoin legal tender in 2021 was the headline story in this area, but a general move by governments and banks to accept crypto shows that it will only become more important.
The State of the World
Part of the reason why institutions are beginning to move towards using Bitcoin and cryptocurrency is, ironically, the instability – or perceived instability – of the wider world. Much like the US dollar is considered a de facto currency in many places around the world, crypto is increasingly being seen as something to be trusted.
Part of this may be down to the lack of confidence in governments and the establishment by the public. The old centralized ways of doing things have been unsuccessful, in the eyes of the people, so a move to a decentralized future is worth a try for many.
Figure 2 Exchange rates can go down as well as up
Better Payment Systems
It may feel as though it is going against some of the original aims of creating Bitcoin in the first place. However, the public and private sectors have been working towards improving payment systems involving cryptocurrency – and that has fuelled more interest in its use.
Cross-border payments with minimal fees and quicker transactions are a mainstay of crypto use and if these can be improved still further, with enough regulation to protect all sides of a transaction, then there will be more faith in the use of crypto overall. More confidence means more use, and that will ultimately mean more acceptance.
From the outside, it is very easy to see Bitcoin’s evolution as a rise and then a fall. But any investor would look at the larger picture and recognize that a downward trend does not mean that it is all over for anyone interested in making cryptocurrency use more widespread.
The first crypto boom experienced by the general public at large may be over – and some people may have been burnt in the process. But there is a way that crypto, especially Bitcoin, can come back even stronger and important than before. The potential could end up being as limitless as mainstream society allows it to be.