It was released in 2009 as an open-source software and ever since it caught the media attention. It was blocked from some countries, but Bitcoin managed to prevail. Will it fail in the long term?
Short answer: NO. We can’t imagine Bitcoin dying that easily.
Now let’s explore this subject in more detail, shall we?
Bitcoin is just getting started…
This is an exciting moment in the history of internet, and in a way it feels like we’re just getting started. Just imagine how it looked like in the early 1990’s? There was no PayPal, Amazon was just a bookstore, Yahoo was a giant and Google didn’t even existed.
In addition to a few commercial entities, internet was mostly used by the universities, scientists and the military. Today it’s mainstream. And the same goes for Bitcoin — although it keeps popping up in headlines, it is still far from being used by average consumers. Until they are on board, there is a lot of room for growth.
Sure, smart companies recognized the opportunity and some of them will even accept bitcoins, but the vast majority is still standing on the sidelines, looking for more clues what will happen with Bitcoin.
Open platforms are tough…
Bitcoin is an open-platform and there is no one company to “rule them all.” Most likely a few dominant bitcoin exchanges will emerge but the system will work even without them. And chances are the biggest trades won’t happen in their platforms — rather, people and companies will opt for individual transactions.
With any open platform, there are many stakeholders many of which have different interests at heart. Combined, they make sure the platform stays alive.
On one hand, we have miners who have invested considerable amounts of money in mining equipment; there are also bitcoin-related business, as well as venture capital funds which invested in these companies. Plus, let’s not forget the end users who own bitcoins and don’t want to see their money disappear.
Together this disparate group of companies has all the motivation in the world to see bitcoin keep prospering.
Great use cases…
There are several use cases at which bitcoin excels the most:
1. A reserve currency
Yes it is very volatile, but it has managed to keep and even appreciate in value during tough economic times, such as Brexit — Bitcoin grew on the news of referendum results while (at the same time the British Pound was down).
2. Banking for the unbanked
Bitcoin can succeed where classic banks have failed — to bring banks to the unbanked and underbanked. We are talking about emerging markets some of which are already relying on mobile operator-provided banking services (rather than financial institutions).
3. Remittances
A Bitcoin-based system, already in development BTW, could make remittance payments more affordable. This will undoubtedly cause a stir in the market with companies like Western Union and MoneyGram being forced to adjust to the new market conditions.
4. Escaping capital controls
Not really its best use case, but Bitcoin could help people better control their money presuming their governments impose capital controls. Something like that has happened in China, India, Venezuela and Cyprus, so we are not making this up…
5. Offshore banking
A cryptocurrency like Bitcoin could make offshore zones obsolete. No need to hold an account in the Caymans when you can have millions in your Bitcoin Wallet. Volatility is still the problem though, but if you want to better, ahem, manage your taxes — Bitcoin could help you out (we are not advocate anything here, mind you).
6. Diversification
Not all eggs should be placed in one basket, and Bitcoin offers a way to diversify one’s savings. It is a volatile commodity that could go both ways — long-term, we tend to think it will grow (but we are not giving any investment advice here).
Conclusion: Bitcoin won’t die!
It’s been almost a decade since it was first introduced and ever since an entire ecosystem emerged around the world’s first cryptocurrency, which also happened to pave the way for the blockchain technology.
So while we can’t provide you with any investment advice — we can’t be held accountable for that — we can say that Bitcoin is here to stay. It will go up and down just like any other currency. Even more so, its fluctuations will be higher, but in the long run — and given today’s global uncertainties — it should be able to appreciate in value and emerge as a digital currency many people, not just tech-savvy experts, use.
Whether you want to join this ride is totally up to you. It’s your money, after all.