The only constant in the world is change, as the old saying goes. This also applies to the way money is handled. Once the sole domain of banks and other orthodox financial institutions, money matters have spread their wings to diverse sectors.
One of those sectors is fintech, a word fit for the 21st century that simply means technology advances in financial transactions. Cryptocurrencies are a great example of fintech. These monies are digitally made and regulated without governmental interference.
Bitcoin is a cryptocurrency with romantic origins, a meteoric rise to industry dominance, and a healthy prognosis for future integration into society.
Rave and rise of bitcoin
Historically, bitcoin was regarded by financial institutions as fairly worthless. Banks with long memories claimed that bitcoin hype was simply a modern version of tulip mania.
But now a different tune is being sung, especially as bitcoin has the potential to empower individuals and to serve as a stable currency. Bitcoin levels the playing field allowing untold numbers of people around the world to participate in the financial arena. Where before anyone from grandparents to plumbers would have been intimidated by fusty, old, traditional banks, now through bitcoin they can have an active role in determining their financial prospects.
Bitcoin functions as a stable currency by providing protection from inflation. It seems that prices are always rising. A basket of groceries that cost this much last week is two to three units higher in price this week. Nowadays, inflation is almost taken for granted aspect of modern life. Bitcoin is as steady as gold. Investors treat it like gold. When bitcoin is added to an investors’ portfolio, unlike with other currencies, there is a well-placed hope that the cryptocurrency will increase in value.
And bitcoin’s valuation does go up. In the last six months, the price of bitcoin has skyrocketed by 200%. As of the first quarter of 2021, the price of one bitcoin is roughly $50,000. Market movements have shaved about $10,000 off its price. Nevertheless, the overall increase in bitcoin’s price is more than 460% in the last 12 months. In the past, bitcoin has been known to aggressively increase in value. 2017, for example, was a banner year in which its value doubled in less than 60 days.
The integration of bitcoin in everyday life
Bitcoin has become such a ubiquitous part of daily life that it is featured in listicles about ways to earn money from home. Since it has a high scarcity value, mining bitcoin has become a new side-hustle, ranking considerably higher on the list than ‘selling your hair’. Liberal-minded merchants in sectors as diverse as hospitality and home décor accept bitcoin as payment for their goods and services. Avid gamers can also make use of bitcoin to buy more games and gaming accessories.
The hesitation of some financial institutions to accept bitcoin has presented opportunities in fintech. E-wallet apps designed specifically for cryptocurrency meet a need that these institutions cannot fill. Namely, the ability to buy, sell and keep bitcoin safely.
Less hesitant banks are starting to open up to the idea of letting their customers pay for mortgages with bitcoin-generated profits, provided, of course, that due diligence is done in terms of tracing the source of the profit. Bitcoin owners in the United Kingdom can trade with the cryptocurrency, using it to diversify their isa stocks shares investment portfolios.
Skepticism around bitcoin
Price is a double-edged sword for bitcoin. On the one hand, it soars fantastically. This year alone it has hit a high of $58,354.14. But on the other, its prices are profoundly unstable. Though a valuable asset, bitcoin is also an incredibly volatile asset. Its volatility has been credited, in part, to changes in public opinion. Such changes can cause its price to rise and fall very quickly in a very short space of time.
A fundamental design feature of bitcoin is that it operates in the public eye. This kind of transparency means the financial movements of bitcoin users are plain for anyone to see. Privacy is ensured by using blockchain analysis prevention measures, like bitcoin blenders. However, these blenders can be abused and do raise valid concerns about legality from old-fashioned financial institutions.
Future of bitcoin
The outlook for bitcoin is a mixed bag. If investors are looking to diversify their portfolios, quite frankly bitcoin are the croutons on the wealth salad. That volatility issue is difficult to shake, making it unwise to only lean on bitcoin for investments.
Bitcoin is still dominant in the cryptocurrency game, but it is undeniably being followed quite closely by Ethereum and LiteCoin – competitors that provide similar, and in some cases more varied, products and services.
Mining bitcoin is kind of a wasteful process and not that great for the environment. If an investor is climate-conscious, they would be better off using already accepted monies in their transactions.
On the upside, bitcoin enjoys a healthy non-sovereign status. This means the cryptocurrency is not regulated by any world government. Consumers in locales where there might be insane inflation rates could find bitcoin very attractive.
Bitcoin shines the brightest in such arenas by providing a stable currency that empowers people to take charge of their financial futures.