Bitcoin, The Road To Adoption

“The Best Marketing for Bitcoin is Fiat Currency.” The concept of money can be said to be our civilization’s best and the worst invention. It’s a tool for trading human time. We spend our whole lives working to earn a share of it. There’s no doubt the human civilization took a long route to arrive at the concept of fiat money. In the past, we’ve traded aggry beads, salt, precious stones, gold, and what not?

However, we humans, in our nature, are always resistant to change. It makes us uncomfortable. We’ve witnessed that resistance throughout the course of history. Whether it was Galileo for bursting the myth around the center of the universe, the invention of automobiles, space exploration, etc., we’re always skeptical of new things, that may impact or change the way we live. But as a greek philosopher once said, “The only thing that is constant is change.”

Let’s jump to the year 2008. This time, the concept of money was about to change forever. On 31st October 2008, Satoshi Nakamoto released a paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. Hence, the world’s first cryptocurrency, Bitcoin, was born powered by blockchain technology. For the first time, a digital currency was created, replacing the need for a middleman or central authority—and making the world’s first truly decentralized currency.

Since then, Bitcoin has seen a lot of ups and downs. Starting with a price of just $0.3 per Bitcoin, the currency has been trading at $15,000 as we speak. In the last decade, Bitcoin has grown exponentially in popularity. From being called a Ponzi scheme by Paypal CEO to getting accepted on the world’s largest online payment platform, we’ve seen all. 

So, let’s have a look at this journey of Bitcoin’s road to adoption. 

The Best Performing Asset on the Planet 

Since the digital currency launch twelve years ago, bitcoin has been adjudged the best performing asset on the planet. 

As a result, not only small-time investors, even institutional investors are showing an increased interest in the cryptocurrency. Subsequently, the number of “Buy Bitcoin” Apps has skyrocketed over the last three years, while a host of many financial companies have launched several Bitcoin-based financial products to address the surging demand for digital asset investments. The latest research by Grayscale Investment reveals that more than a third of USA investors are interested in Bitcoin, showcasing the level of popularity that the coin has garnered over the years.

Store of Value with Zero Point of Failure

One of the significant reasons behind Bitcoin’s popularity is its decentralized, censorship-resistant store of value that allows anyone to truly own their funds. Because of its decentralized nature, there is a wide belief that it is a “Digital Gold” due to the similar features with the precious metal. 

In light of the current global pandemic and the political and economic uncertainty surrounding the globe, the Bitcoin as a store of value is attracting even more investors. Even though it suffers from high volatility, it still offers better security and long term returns than gold. At the same time, detaching your investment from any censorship, inflation, or bank failure.

Fiat Inflation Solution

The rise of the inflationary monetary economics and liquidity traps occasioned by the Covid 19 has made many consider Bitcoin as an inflationary hedge or protection against inflation. So far, the pandemic has led to zero percent interest rates or even negative interest rates.

The Covid-19 pandemic can be seen as a catalyst for the governments’ massive inflationary monetary policies worldwide. It can be attributed to the pandemic’s supply shocks, with the lockdown making many business ventures to shut down or go bankrupt. For example, the US government has been printing trillions of dollars as we speak. It will further devalue the US dollar resulting in a dent in common men’s saving. If analysts at Goldman are to be believed, the US dollar is further expected to lose up to 20% of its value over the next few years. 

M2 yearly change

Whereas, Bitcoin is turning out to be a hedge to this scenario with its fixed supply. Since the supply of Bitcoin is set, the price will continuously rise with the demand. Bitcoin’s total supply is capped at 21 million, out of which approx 18 million is already in circulation.

It can also be said that the currency was designed in a manner to inspire a deflationary altitude and an open stable store of value. Therefore partially connecting to the “gold standard.” In this way, the community will play a role where investors and community users can rise against the inflationary consensus. It is through this avenue that Bitcoin will serve as a hedge against inflation. Hence, Bitcoin could play the role of inflationary hedge in this 21st century just as gold did in the 20th

Bitcoin in Retail

There’s no doubt Bitcoin has scalability issues. On the one hand, Visa processes around 1,700 transactions per second, whereas the Bitcoin network can only handle seven transactions per second. However, a second layer solution, Lightning Network, is trying to solve the Bitcoin network’s scalability issue. Thus, making the reality of Bitcoins in daily-life usage.

With its second-layer solution, Lightning Network makes it possible to transaction micro-payments in Bitcoin in real-time without any transaction fees. With its recent launch of Lightning Pool, the network also enables the users to earn a yield on their underlying Bitcoin assets. Hopefully, we’ll see more development aiming towards solving Bitcoin scalability issues in the coming period. 

The Future of Bitcoin

Recently, Bitcoin has made another big win with one of the prominent payment processing companies, PayPal, now adopting Bitcoin as a payment means. It is the first time that the payment processing company is embracing digital currency. This single announcement opened the door to Bitcoin for 425 million users around the globe. 

To conclude, the future of Bitcoins looks bright. A small-time investor in Nigeria or Venezuela to NASDAQ-listed Fortune-500 companies like Microstrategy Inc., everyone is investing in Bitcoin. It wouldn’t be wrong to say this is just a start; Bitcoin will definitely go a long way. So, let’s just all HODL Bitcoin – Hold On for your Dear Life.

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Written by Narender Charan

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