If you’ve been paying any degree of attention to the world of finance in the last few years then you will have heard about the phenomenon of cryptocurrencies.
Originating from and popularized by a specific type of coin called Bitcoin, this form of currency has enjoyed widespread notoriety for its rapidly growing influence, and the volatility surroundings its real worth.
As cryptocurrency continues to generate significant hype, questions remain about its viability as a nest egg or savings commodity.
How did it reach this point, why does it generate so much controversy and attention, and what might we expect from Bitcoin in the future? In this article, we aim to take a look.
Forging the First Coins
While there were many ideas regarding the potential of cryptocurrency, it was not until the 9th of January, 2009 that programmer Satoshi Nakamoto mined the first few Bitcoins. This idea of a non-fiat currency which played well with the technologically inclined and forward thinking economists generated significant attention from word of mouth online and offline. The original worth of these coins was so small it was difficult to track, with a single coin at the end of 2009 being worth around $0.001. The creation of additional coins was aided through the then largely untapped market, as generating additional cryptocurrency coins requires an increasing amount of processing power the more coins are in circulation.
The idea was that you could jump in right away, set your computer to calculate – or mine – all the coins it could in preparation for a jump in worth. As it turns out, this was largely true. For a better illustration of the exact growth which Bitcoin showed over the years, we can look at the average prices as listed by Medium.
- 2009: 1 Bitcoin = $0.001
- 2010: 1 Bitcoin = $0.2
- 2011: 1 Bitcoin = $31
- 2012: 1 Bitcoin = $40
- 2013: 1 Bitcoin = $900
- 2014: 1 Bitcoin = $300
- 2015: 1 Bitcoin = $350
- 2016: 1 Bitcoin =$600
- 2017: 1 Bitcoin = $9,000
This means that, at the highest average point, a single Bitcoin could be worth around 9 million times its original position. In 2018, the highest we’ve seen it so far is around $15,000 per Bitcoin. While this alone might appear to paint the price of Bitcoin as steadily reliable, the reality was hardly so predictable.
Unsteady on its Feet
The issue with this coin, as many detractors pointed out, was that this appeared as a wildly unpredictable economy and one which would inevitably be prone to burst. Before we get to that point, however, we need to take a look at how well it was adopted by the mainstream.
For a while, after it was initially released, Bitcoin had a real problem of use. It could be used to trade with other cryptocurrencies and fiat currencies, and once trading websites like the now-bankrupt MtGox popped up it became increasingly possible, though still (even at this point) difficult to cash out large quantities into fiat currency. Since then, there have been a variety of stores and businesses which have accepted the use of Bitcoin. Many, like the online marketplace OpenBazaar or the travel agency Expedia have seen the acceptance of Bitcoin with open arms, while others, like the online video game marketplace Steam, have not.
The reasons for this are numerous, owing to the many difficulties which these businesses have with different facets of the currency. Some online casinos, for example, have adopted cryptocurrency, yet some of the larger examples remain unconvinced. Chief among these reasons, a Betway Casino article explains, is the difficulty in choosing and tracking the worth and viability of each coin, the problem of converting these currencies back to fiat, the prevalence of these coins in the act of money-laundering, and the constant problem of cryptocurrency server security. While these issues might one day be addressed, that day is not today, and these issues act as real barricades to proper mainstream acceptance.
The Potentials of the Future
At the time of writing this article, the year of 2018 is almost half-way through. During this time, the worth of Bitcoin has seen a high of $17,163.38, and a low of $6,845.87, according to measurements of Bitcoin website 99bit. Currently, the price of a single Bitcoin sits at $8,854.47. This, in a nutshell, is why so many industries are slow to jump into the waters of the cryptocurrency market. If you rely on a current then you need to be sure of the reliability of that currency, and this is where they have repeatedly failed.
Proponents of the Bitcoin economy have many explanations as to why the fluctuations are so severe and so common, with many claiming that this is a standard operating procedure for new currency so early in its lifespan. Here, the general idea is that better control through improving technology might aid cryptocurrencies in avoiding the bubble pitfalls, but detractors paint this as a difficult or impossible task given its largely unregulated nature.
Does Bitcoin and the rest of the cryptocurrency market have a future as a nest egg or savings commodity? It remains a possibility, yet one which is impossible to predict. While the general trend shows a constantly improving worth of Bitcoin, its direct history is one of volatility and unpredictability, which makes this a risky bet that many are not willing to take.