Bitcoin is money. This is a fact that the world is certainly acknowledging as the coin is just over a decade old. At the moment, the smallest unit of Bitcoin, a Satoshi (0.00000001 BTC) is worth more than national currencies like the Vietnamese Dong, Iranian Rial and Indonesian Rupiah. Still fancy the phrase “magic internet money”? This is something time has simply gotten the better of.
As a matter of fact, Bitcoin’s apparent volatility is not nearly close to any of these national currencies. The Venezuelan Bolivar, for instance, has lost so much value in the past five years, it isn’t worth its value in paper. It goes without saying that Bitcoin had a torrid period in 2018. Nonetheless, this is nowhere close to some national currencies. Many investors may have been disappointed but the recent resurgence is reassuring.
Why Bitcoin Went Through the Bear Market
Bitcoin hit its rock bottom of about $3,200 late last year and many wondered if there was a floor to this slide. However, what they failed to realize is that Bitcoin had a unique set of challenges and the drop was not a product of pure speculation. Moreover, Bitcoin has had past bear markets. There was a bear market in 2011 that saw a drop from its price high of $31.50 to $2.01 low. The decline of more than 90 percent was higher percentage-wise than the most recent one of about 84 percent. Nonetheless, the immediate previous bear market was more devastating because Bitcoin’s market cap was thousands of times higher.
At the time, there were certain events that set the bear market in motion just like in 2018. See, Bitcoin is not inflationary by default and in the right circumstances, can rise drastically. The bear market was a convergence of detrimental circumstances that Bitcoin will get over eventually.
A major factor in Bitcoin’s slump is central banks and regulatory intervention. This will certainly have implications event to the distant future. There is a large section of investors who are wary of getting into crypto because it is on the wrong side of regulators in some jurisdictions. The SEC, in particular, has a prominent role in this. Last year, the decision by the SEC to reject Bitcoin ETFs had an immediate negative impact on prices.
The Politics of Bitcoin
Bitcoin is also reeling from internal politics that fragment the Bitcoin community. This is because there are sections of people within Bitcoin who fit the Puritan ideals of renaissance religion. These are people who insist on decentralization to the maximum possible extent. As such, the Bitcoin wars have had impacts on prices. The more recent fork that resulted in Bitcoin SV was responsible for prices reaching the lows of $3,000.
Nonetheless, the Bitcoin brand continues to grow gradually. More people now understand Bitcoin and how it works than ever before. The coin is an option in a record number of online retail stores, especially in North America. Bitcoin is independent and immutable. These traits will help the coin endure even in the midst of government interference and nonchalance. Will there be a day when one Satoshi= I USD? Certainly, yes. If there are things fiat currencies have shown is that they are inflationary.
Therefore, the magic money of the internet can be the dominant currency in the world.