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The first Bitcoin transaction back in 2010 marked the beginning of the financial systems’ revolution. Bitcoin and blockchain are transforming how people transact, the same way the internet changed how people communicate. Since their inception, Bitcoin and blockchain have spurred crypto exchanges and entrepreneurship, with this cryptocurrency and the underlying infrastructure as their basis.
When the COVID-19 pandemic hit the world, it accelerated Bitcoin adoption as more people and businesses opted to go cashless. It’s, therefore, not a surprise that this cryptocurrency’s price increased rapidly during the pandemic. While Bitcoin remains a volatile virtual asset, most investors are optimistic that its momentum will continue as the world regains normalcy. But, what will boost Bitcoin adoption? Here are factors that some experts believe will enhance this cryptocurrency’s adoption.
Differentiating Technologies
Many people have hailed Bitcoin as a pioneer and potentially disruptive technology in the financial world. The blockchain technology behind Bitcoin provides a novel solution to the double-spending problem that’s only possible with digital currencies. And this works without depending on a trusted third party or a central clearinghouse. Essentially, this differentiating technology makes Bitcoin an attractive traditional currency substitute for some users. Also, Bitcoin’s cryptographic technology enables users to maintain pseudonymity when transacting online. By eliminating intermediaries, blockchain technology enhances transaction speed while lowering costs. Thus, these attributes endear this currency to its users.
Substituting or Complementing Conventional Financial Systems
When creating Bitcoin, Satoshi Nakamoto wanted it to serve as a currency and a financial system independent of central banks and governments. Today, people use Bitcoin in the following ways.
- As a payment or exchange system
- As a digital investment
- As a speculative trading tool or instrument
Low international transaction costs make Bitcoin a sound payment system for some people. Ideally, this virtual currency doesn’t depend on monetary authorities, third parties, or governments. And this lowers transaction costs and time for international transactions.
Crypto exchanges like Ekrona enable people trade or speculate about the price of this virtual currency for profits. Essentially, you can purchase this digital currency using fiat money on these platforms and later sell your holdings for gains.
Alternatively, you can buy and hold onto your Bitcoins, hoping the cryptocurrency’s value will increase, and sell your holdings for profits. Some people have used this investment strategy and earned lucrative returns. And their stories inspire others to adopt Bitcoin.
Inflation
Bitcoin can serve as a global currency without ties to any economy or government. Consequently, some people adopt Bitcoin as a hedge against the government or country-specific inflation or risk. Essentially, buying Bitcoin with fiat money can enable a person or institution to hedge against inflation, the way other assets like gold function.
Any investor who has suffered high inflation’s effects may opt to purchase and hold Bitcoin as a hedge against this risk. And this can boost Bitcoin adoption by individuals and institutions. Some experts tout Bitcoin as a less crisis-prone financial system, especially for individuals in countries with unstable fiat currencies.
Final Thoughts
Institutions and individuals have varied reasons for adopting Bitcoin. However, these are the primary factors boosting Bitcoin adoption today, and the trend is likely to continue. Bitcoin presents a unique innovation with many benefits, especially for early adopters. Nevertheless, financial sophistication and literacy are pre-requisites for individuals that want to take advantage of this financial innovation. Essentially, learn about Bitcoin and how it functions to benefit from using it. What’s more, you need an investing or trading strategy to avoid losing money when working with this virtual currency. Additionally, choose reliable trading or investing platform to reap maximum returns from your activity.
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