The use of cryptocurrency all started back in 2009 when an anonymous developer designed the first cryptocurrency, Bitcoin. At that point, the future of cryptocurrency was hazy. Before cryptocurrencies were developed, the only currency that was largely embraced as a legal tender to perform transactions was Fiat currency. Today, a lot of people have learned about cryptocurrency, and its benefits, and are investing increasingly in digital money. What with the boon, and increase in the price of cryptos of recent, there has been a spike in the interest and trading of cryptocurrencies.
Since Bitcoin was developed many other cryptocurrencies have trailed it. Digital currencies such as Litecoin, Dogecoin, and Ethereum have been designed to serve as alternatives to Bitcoin.
The Rise of Cryptocurrency
Bitcoin’s value started rising in 2010 increasing from around $0.0008 to about $65,000 in November 2021. A lot of factors have played roles in influencing the adoption of cryptocurrencies. One is the anonymity it confers on the users. The use of cryptocurrency can be hardly traced. For those who want optimum privacy in the performing of transactions use of cryptocurrency is a go-to way to achieve this.
Interest from institutional investors has also been pivotal in the cryptocurrency price workings. They have become an asset for institutional investors that they are as perceived as bringing more liquidity into the ecosystem. The surge in the use of cryptocurrencies by companies led to its sharp rise in 2020.
Effects of Economic Instability
Economic instability caused by the coronavirus pandemic is another indicator of the price fluctuation of Bitcoin and other cryptocurrencies. Cryptocurrencies have been designed to pose as buffers against economic instability to which government-controlled currency is vulnerable. For example, countries such as Venezuela that have experienced hyperinflation of their fiat currency have seen a huge increase in the adoption of Bitcoin. The economic shutdown by the emergence of coronavirus has led to investors considering cryptocurrency as a means to store their wealth without running the risk of losing their value to inflation.
According to Isaiah Jackson, author of “Bitcoin & Black America,” “Inflation is not borne evenly, inflation kills. Literally.” This has been a large contributory circumstance that has led to the rise of interest in cryptocurrencies.
Even with the rise in the use of cryptocurrencies, many countries cracking down on their adoption. Countries like Nigeria and India have outlawed cryptocurrencies. But this has not deterred investors from embracing cryptos. The banning is somewhat creating scarcity, an increase in demand, and price. Other currencies are working on regulating the use of cryptocurrencies as they intend to use them as an alternative to legal tenders.
Future of Cryptocurrency
Cryptocurrencies will reach more success in the future based on consumer demand, the development of technology, and the regulatory environment. Being a speculative asset, its volatility in price is a major challenge in the adoption of digital currency. Investors are encouraged to study each currency well and have an investing strategy before investing, this will help reduce the risk involved.
Another fate that cryptocurrencies have in the future is that many top companies are going to adopt them as a form of payment for services rendered. Early this year Elon Musk’s electric car company purchased $1.5 million worth of Bitcoin. It said it expects to start receiving it as a form of payment in the future. Even so, the purchase led to a spike in the value of Bitcoin demonstrating a strengthening of confidence in the virtual currency and many others. What with this, its adoption as a form of payment will rise further in the future.
As many countries are developing regulatory measures to ensure the regulation and enhance its transparency there will be a rise in its use. Predictions of the future of cryptocurrency are tricky. However, we should expect the mainstream use of cryptocurrencies. One that will be fully integrated into our lives to make the use of money look different.