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Why You Can't Afford To Be Off Bitcoin
Bitcoin is the best performing currency of 2016, gaining 1,500% in value. Bitcoin has outperformed both gold and the S&P 500. Is it time to jump onboard?
The Bitcoin⚡️ Energy Standard
October 31, 2022
Table Of Content
Content
Introduction
Conclusion
FAQ
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External Links
When Bitcoin was first distributed globally, more than a decade ago, there were high hopes that it would usher in a paradigm shift inside the global financial system. However, that revolution has not even come close to taking place as of yet. The first decade of the cryptocurrency's existence has been turbulent, defined by scandals, errors, and extreme price fluctuations. As of the end of October 2022, the price of one bitcoin was around $19,500, which is a decline of over 69% from its all-time high of over $63,000 in April 2021.
However, investors and aficionados of the cryptocurrency have increased the amount of hope they have for the future of the asset. As a result, the next decade may prove to be a watershed moment for Bitcoin and cryptocurrencies in general.
A Compromised Vision
As stated by its pseudonymous creator, Satoshi Nakamoto, in a foundational paper published on October 31, 2008, the day of its introduction, Bitcoin was intended to be a borderless and decentralized alternative to government- and central bank-controlled fiat currencies.Within the Bitcoin network, reaching consensus over a transaction does not rely on the participation of any third-party intermediaries. In its place, the verification and authentication of a transaction is carried out with the assistance of the blockchain, which is a peer-to-peer network of systems that includes electronic ledgers.
In order to make his case for eliminating mediation and replacing it with a peer-to-peer network, Nakamoto wrote, "The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small and casual transactions." This was done to argue in favor of the removal of mediation and the implementation of the peer-to-peer network.
After fourteen years, though, it feels as if that initial idea has been watered down. The centralization movement has replaced the decentralization movement. Investors with significant cryptocurrency holdings are referred to as "whales," and it is thought that they influence the price of bitcoin in the markets. Because of the increased productivity of vast mining farms, the democratization of the process of producing money via mining has been sacrificed. Scalability problems with Bitcoin's underlying technology have led to a long history of splits and new cryptocurrencies.
But the development of a flourishing and active ecosystem for cryptocurrencies more than makes up for these drawbacks. Even though cryptocurrencies didn't exist ten years ago, the market for them is now worth a staggering $937.5 billion.
Since Bitcoin came out, more than 20,000 other digital currencies have been made and are now being traded on different platforms.
Blockchain, which has just become a common phrase, is now being promoted as a solution to difficult issues. After some initial reluctance, institutional investors are also making a beeline for crypto-assets as a form of investment. [Cryptocurrency]
Evaluating the Next Decade
The next 10 years might end up being of critical significance to the development of Bitcoin. Aside from the revolutions happening in the financial ecosystem, there are a handful of other areas of Bitcoin's ecosystem that investors should focus their attention on.
At the moment, Bitcoin is in a transitional state between functioning as a store of value and a medium for conducting day-to-day transactions. Even though governments all over the world, including Japan's, have accepted bitcoin as a valid way to pay for goods, institutional investors are eager to get in on the action and profit from the volatile price of bitcoin.
Both of these incidents, however, have been stopped from taking place due to issues with scale and security. According to Chakib Bouda, Chief Technology Officer of Rambus, a company that specializes in payments, "[A]rguably the major faults for Bitcoin and other cryptocurrencies throughout the past years lay with security." The amount of Bitcoin and other cryptocurrencies that hackers have stolen from exchanges is estimated to be in the billions of dollars. Bouda is alluding to this amount. According to him, the mainstream acceptance of Bitcoin will follow after establishing a safe Bitcoin ecosystem. He said, "We think Bitcoin will become very popular and have a different reputation in the next ten years."
There is no widespread adoption of Bitcoin as a payment method (or, for that matter, an increase in Bitcoin's appeal as an asset class) unless there are technical advancements made inside Bitcoin's ecosystem. The blockchain that underpins Bitcoin has to be able to process millions of transactions in a very short amount of time for it to be taken seriously as a potential investment asset or method of payment. Scalability in its operations is promised by a number of different technologies, such as the Lightning Network. Bitcoin Cash and Gold are two examples of new cryptocurrencies that have emerged due to the hard forks of the Bitcoin blockchain. The goal of making these new cryptocurrencies was to change how the ecosystem works so that it can handle a larger number of transactions faster.
Along with the advancements made to Bitcoin's blockchain in 2018, the Chief Technology Officer of Ripple, David Schwartz, likened Bitcoin to Ford's Model T. A complete ecosystem, from roads to petrol stations, arose to service the vehicle as it became more popular. The inventor of the automobile hailed this revolution in transportation. Thanks to all the attention from the media over the past few years, the seeds of an ecosystem have been planted.
The ecosystem is expected to grow as new regulations are developed to keep pace with technological advances. Schwartz predicts that the next ten years will see "an explosion of low-cost, high-speed payments that will change value exchange in the same way that the Internet changed information sharing."
In 2021, the price of Bitcoin reached a high of $60,000 before dropping to a low of roughly $40,000. The situation was much worse in 2022, when the price of Bitcoin dropped to a low of $18,500. But big banks are still paying attention to cryptocurrencies. Goldman Sachs recently reopened its trading desk for cryptocurrencies, and BNY Mellon just started offering custody services for digital currencies.
According to Citi, Bitcoin has the potential to become the preferred currency for global commerce. This occurs as a result of the fact that both PayPal (PYPL) and Tesla (TSLA) made investments in cryptocurrencies at the beginning of 2021. Tesla made a purchase of Bitcoin for $1.5 billion, while PayPal made an offer to acquire the cryptocurrency custodian Curv. Citi observed that the future of Bitcoin is still fraught with a great deal of uncertainty, but that it is on the verge of being accepted by the mainstream. Citi says that concerns about custody, security, and capital efficiency continue to be negatives for the digital asset, even though institutional investors' interest in cryptocurrencies is helping to increase public interest.
Conclusion
The technology behind blockchain and cryptocurrencies might be of tremendous use to the economy of the whole world. The path that Japan, the world's third biggest economy, has traveled since the spectacular financial catastrophe of Mt. Gox in 2014 is a great illustration of this. Japan has gone from being one of the most stable economies in the world to one of the most volatile. The use of bitcoin as a legitimate means of exchange has recently gained traction in Japan. As the currency starts to acquire popularity among merchants both inside the nation and worldwide, its top banks have also poured money into Bitcoin exchanges as well as Bitcoin and blockchain-related small-cap firms.
FAQ
Why should you not invest in Bitcoin?
Therefore, if you are seeking an investment that would provide you with consistent returns, you should probably go elsewhere. The cryptocurrency market is driven almost entirely by speculation, and the fact that it is so tiny means that it is more susceptible to changes in price.
Can you make a living off of Bitcoin?
Yes, it is possible to generate income using cryptocurrencies. The inherent volatility of crypto assets makes most of them subject to a significant degree of risk, while others need specific education or experience in the relevant field. One way to answer the question "How can I make money with bitcoin?" is to trade cryptocurrencies.
Is it possible for Bitcoin to become worthless?
In a recent interview with Bloomberg, the president and portfolio manager of the American investment company Paulson & Co., John Paulson, said that cryptocurrencies, regardless of where they are trading at the present time, would ultimately be found to be worthless. As soon as the excitement dies down or the liquidity is depleted, they will return to zero.
That's all for today, see ya tomorrow! If you want more, be sure to follow our Twitter (@croxroadnews)
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
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