Imagine buying a cryptocurrency valued at less than 1 cent. The year is 2010 and blockchain is the new digital asset for all. Technology is pervasive. No sector is left untouched. However, conventional transaction processes have not changed much. The attitude of the masses suggested that it won’t for some time to come. And then Bitcoin arrives. Valued at less than 1 cent, this cryptocurrency is a precursor an entire industry, that it helps spawn. Today it’s valued at $16000. The rise of Bitcoin (BTC) has been spectacular. Once suspected to be the choice for nerds and drug dealers, it is today the favourite for investors, attracting millions of dollars from hedge funds.
Just how did it turn around?
Before we answer that, let us first find out what is Bitcoin.
Bitcoin is a decentralized network, that allows users to make transacts directly, peer to peer, without a middle man or a third party like a bank to manage the exchange of funds. That would mean unbridled freedom and quick turnaround time.
So where do we use it?
Bitcoin is a digital asset. It is used like other assets in exchange for goods and services. Unlike traditional currencies and assets, bitcoin is easily portable, divisible, and irreversible. Also, it is not physical. You won’t be able to hold it.
How does it help the financial ecosystem?
Since it’s a direct peer to peer transaction, there is no middle payment or taxes levied. As a result of which the cost of financial services drastically comes down. Also, since it is outside the purview of the usual regulatory bureaucracy, the turnaround time is much less.
Bitcoin had the record of touching $20000 in 2018 before it crashed, wiping off 75% of its value. It has returned hence but is yet to breach the 2018 value.
The entire premise of cryptocurrency stands on the technology of blockchain, which allows every transaction to be extremely secured and with a universal ledger. This allows multiple records to be created. This was one of the main reasons why it could attract millions of dollars. The ease of movement and relative security gave Bitcoin and later Altcoins, a dedicated clientele.
However, with regulations coming into place, cryptocurrencies will no longer enjoy the liberty it enjoyed. Bitcoin would also be a part of this exercise. One of the advantages that Bitcoin provided was interoperability across oceans. That could change in the future.