Although much is still to be learned about its evolving technology, cryptocurrency has become a global phenomenon in recent years. Cryptocurrency is a digital currency that is created and managed through advanced encryption techniques known as cryptography. This method of exchange also helps in controlling the formation of additional currency units.
The beginning of cryptocurrencies
In 2013, Bitcoin captured significant investor and media attention and peaked at a record $266 per Bitcoin after surging ten-fold in the preceding two months. It sported a market value of over $2 billion at its peak. After a raging debate about the future of cryptocurrencies in general, it met a 50% plunge shortly.
With over 2,000 in existence, cryptocurrencies have become progressively accepted by speculative investors and growing market caps. Still, the wider public has yet to see it as a practical form of money due to technical challenges and a lack of trust in the issuing authorities. There is also the concern with understanding how to use them.
It leaped from being an academic concept to (virtual) reality back in 2009 when Bitcoin was created. In just the first quarter of 2021, the crypto economy experienced significant achievements, and the industry is expected to maintain the momentum even after rallies end.
Cryptocurrency trends in 2021
SiaPartners (2021) listed a handful of noteworthy developments in the cryptocurrency industry that happened earlier this year.
In January, Blackrock added Bitcoin for two of its funds as a potential investment. In the following month, February, the world’s first Bitcoin exchange-traded fund (ETF) in North America was approved and launched. In the same month, Square Inc. announced that it is investing $170 million more in Bitcoin. Within the same week, JPMorgan stated that it is exploring Bitcoin and cryptocurrency clearinghouse options.
In March, Morgan Stanley became the first big US bank to offer access to Bitcoin funds for their wealthier clients. One of the most significant custody banks globally, Bank of New York Mellon, invested in cryptocurrency custody Fireblocks.
In the same month, Visa also announced that it would allow the use of cryptocurrency USD coin as an option to settle transactions on its payment network. Additionally, Paypal, Goldman Sachs, and Tesla Inc. announced that they would now accept Bitcoin as payment.
In April, Square Inc., Fidelity, and Coinbase formed The Crypto Council for Innovation. Its mission is to serve as the industry’s voice and communicate cryptocurrencies’ benefits to policymakers, regulators, and people worldwide. Following that announcement, Venmo joined the long list of companies that recently began acknowledging and accepting digital currencies.
With the crypto industry attracting retail investors and traditional financial institutions, we are experiencing the most significant appreciation of cryptocurrency in history, making it clear that the market is here to stay.
Cryptocurrency: bad or good?
Over the years, it has been discovered that cryptocurrencies have been highly volatile, especially Bitcoin. Cryptocurrency’s future outlook is still very much in question, and one of the main criticisms thrown at crypto is that there is no inherent value. However, global fiat currencies have long strayed away from the gold standard.
Professor Grundfest, a professor at Stanford Law School, stated that people living in countries with deficient currencies might be better off investing in crypto than buying local stocks and bonds. For example, countries such as Argentina, Brazil, and Mexico experience lower social trust with central banks. Therefore, their citizens are more open to adopting new digital currencies issued by alternative organisations.
Meanwhile, in Europe and the Americas, knowledge, utilisation, and understanding of cryptocurrencies remains highly limited, and the citizens agree that banks should issue money. The majority do not own digital currencies because they feel it is too risky and not advantageous over their current currencies.
With its ever-increasing popularity, Bitcoin users predict that almost 94% of different types of cryptocurrency will be released by 2024. Thus, Bitcoin’s success or failure may determine the fate of other cryptocurrencies in the future.
All establishments dealing with cryptocurrencies should comply with the associated registration, licensing, and reporting requirements in an accurate, timely, and efficient practice. There are severe legal and financial consequences of non-compliance with regulations. Therefore, it is critical for businesses, and people, to understand, monitor, and fulfill their regulatory requirements.
In any case, it is fascinating to continue observing the future of cryptocurrency unfold.