While millions of people in India and abroad are starting to trust the narrative around cryptocurrencies and other decentralized technologies, there are as many others who are still on the fence. If you are one of the latter and still aren’t convinced that Bitcoin will exist in the long term, or if you simply want to know more about its various advantages, this article is for you.
- Bitcoin currently has a market cap of more than $740 billion, and all of that value is stored on its blockchain. That’s because Bitcoin is incredibly difficult to hack.
- With increased adoption and more development, Bitcoin will also prove to be accessible and durable, both of which will increase its credibility in the market.
- Institutions around the world have also warmed up to the idea of Bitcoin being a viable asset class.
- Now that cryptocurrencies like Ethereum have made important strides in development, Bitcoin has even more incentive to outperform everyone—if only to stay at the top forever.
Find out all about the five different and distinct reasons why we think Bitcoin is here to stay.
Blockchains, the tech on which cryptocurrencies like Bitcoin are based, are probably the most secure way to track information without having to rely on a third party.
Despite having a whopping market cap of more than $740 billion, Bitcoin is confident enough to store all of its value on its blockchain. It is so sure because the blockchain was designed to be incredibly difficult to hack.
Its strength comes from the fact that it employs thousands of computers and users around the world who work continuously to encrypt data on the blockchain through a process called mining. The better and faster they complete the process, the higher the chances they have of winning a block reward. Worth almost $250,000, the reward keeps miners motivated, and that in turn makes the transactions more secure.
Hedge Against Inflation
The US Dollar (USD) is ever increasing in supply. According to the Wall Street Journal, the US money supply increased by $5.5 trillion between December 2019 and August 2021 and is showing no signs of slowing. This results in inflation and affects the whole world, as the USD is considered the standard against which the value of all other currencies is measured.
Bitcoin supply, on the other hand, is capped at 21 million. When it hits that threshold, no new bitcoins can be supplied to the market. This creates scarcity over time, a good characteristic for every “hard asset” and usually a good inflation hedge.
With increased adoption and more development, Bitcoin will also prove to be even more accessible and durable, which will increase its credibility in the market.
Ever-Increasing Market Dominance
It is believed that more than 10% of the US population owns Bitcoin or some other form of cryptocurrency. That’s more than 40 million people!
Not to mention CoinSwitch alone serves more than 15 million people in India.
Bitcoin has also become the go-to currency when it comes to economic problems within countries. For example, when Turkey’s currency Lira plummeted in value, Turks desperate to hedge the value of their cash turned to Bitcoin in large numbers, and Bitcoin trading rose to an all-time high.
Institutions around the world have also warmed up to the idea of Bitcoin. Companies like Riot, PayPal, MicroStrategy, Galaxy Digital, and Sequoia Capital have already started accepting cryptocurrencies. Huge names like Mastercard, Facebook, and Tesla have begun to let customers pay for services in bitcoins.
Constantly Under Development
Although Bitcoin is by far the largest cryptocurrency in the world by market cap, it is by no means complacent. The development team behind the project is constantly working to make sure that the technology is more secure, efficient, and productive than ever.
The Taproot Upgrade, which was the biggest upgrade in many years, enhanced the network’s smart contract functionality and introduced several new privacy features. It brought in features that allowed the network to hide the type of transactions being executed, bringing more anonymity to participants.
Now that cryptocurrencies like Ethereum have made important strides in development, the crypto giant, which has already been under the ever-watchful eyes of developers, has even more incentive to outperform everyone, if only to retain its position at the top forever.
Bitcoin To Become Deflationary Eventually
As we’ve said earlier, Bitcoin will eventually reach the point of no return, where all 21 million coins have been mined and there can be no more supply. Analysts predict that at the current rate of mining, all 21 million bitcoins should be in circulation by 2040.
Besides, transactions won’t stop and neither will burning (a process by which tokens are removed from circulation permanently by sending them to a burn wallet), and availability will gradually decrease. People will also inadvertently lose bitcoins on occasion. What happens then? Well, all of this will contribute to deflation.
Fact Check: When supply in a free market stops, prices generally go up due to increasing demand.
While this is common knowledge, we also know that it is impossible to predict the future price of an asset accurately. So it is only reasonable to assume that macroeconomics will have a strong say in the matter.
In the long term, though, the cryptocurrency is expected to eventually prove to be a great store of value.
Bitcoin is here to stay. Although it might not feel like that when prices go up or down so violently, the fundamentals all point to the same thing. That’s why analysts recommend that buyers hedge their risks in cryptocurrencies and invest in the long-term value instead of betting on the short-term.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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