Why the rise of Bitcoin could be the first shot in a currency revolution
Bitcoin is enjoying its latest surge in price, rising to over US $40,000 a coin recently, before then slipping back as investors took their profits.
Skeptics will argue that we have seen this all before, and would point to the events when the digital currency lost over 80% of its value in the year. Many small investors saw their life savings wiped out as a result.
However, there are signs that it may be different this time.
For one thing, much of the demand for the alt-coin has been fuelled by Wall Street and other major financial institutions, who had previously shied away from any involvement with it.
That was underscored earlier this year when Egon Musk’s Tesla Corporation invested the US $1.5 billion to buy Bitcoin a ringing endorsement from one of the world’s wealthiest men.
Another reason why Bitcoin might be here to stay in the increasing number of outlets that now accept Bitcoin as a valid means of payment. Tesla has now said that you can buy one of their cars using it, whilst it is has been added to the list of payment options by many e-commerce vendors.
For example, when looking at Canadian Casinos 2021 as listed here, you can find a number that now lists Bitcoins among their payment options.
One reason why Bitcoin may have gained new credence is because of the global pandemic and governmental responses to it.
Central banks around the world have been printing money and pumping hundreds of millions of euros into local economies to help them survive lockdowns and support initiatives like furlough schemes.
Whilst at some stage there will have to be a reckoning – punitive rises in income tax rates can be expected to help claim some of this money for years to come – in the short-term, there is a concern that these stimulus schemes could devalue national currencies, by having a major inflationary effect.
Bitcoin, on the other hand, is not controlled by any central bank and, unlike a fiat currency, it is impossible to create more of them. It is a distinguishing feature of Bitcoin, embedded in its DNA, that there will only ever be a finite amount of them. Once they have all been “mined” and the limit of 21 million coins reached, that is all there can ever be.
Some experts are even predicting that Bitcoin will replace gold as the traditional haven for investors during economic downturns – something unthinkable even a few years ago when it was popularly associated with criminal gangs and the dark web.
Bitcoin may be the market leader at the moment but is by no means the only digital currency, and more are coming on stream weekly. And, like many institutions facing an existential threat, the central banks and governments are not just going to take the threat lying down.
Instead, they are likely to launch their versions of Bitcoin, with many of the same characteristics, but with several other controls built-in.
After all, if you can’t beat them, join them!
Photo: Pete Linforth, Pixabay