Wednesday, June 19, 2024

Bitcoin: One decade down, another to go?

Joe Pindar, Director of Product Strategy at Gemalto.

It’s almost hard to believe that it’s been over 10 years since Bitcoin made its way into the world. At first a relatively unknown concept, the cryptocurrency has gone on to dominate conversations from business boardrooms, to the stock markets and even amongst mates in the local pub. However, there is an old saying investors live by, ‘if you hear people talking about investing in something down the pub, it’s time to get out’. So, with Bitcoin’s rise the top of the awareness tree complete, is this the beginning of the end or will we be talking about 20 years of the cryptocurrency a decade from now?

Despite lasting over a decade, Bitcoin has been unable to shake off the notion that it’ll just be another flash in the pan, with continuous fluctuation of its value, from up at nearly $20,000 when it was the talk of the town, to its current status of just over $4,000. But whilst the currency has peaked and troughed, the impact that Bitcoin has had goes far beyond its market value.

From the hundreds of cryptocurrencies that have created since inception, to the amplification of the technology behind Bitcoin, blockchain, organisations across all sectors have felt its power. What’s more, with each cryptocurrency created, successful or not, the chances of one eventually taking hold grow as the awareness builds.

The bursting bubble

Looking ahead, however, the current activity in the cryptocurrency space, alongside a lack of regulation, mean it does present a risk to both consumers, businesses and financial authorities. And whilst Bitcoin has stood the test of time though, better than others, a bubble is brewing. Its valuation fluctuations and the irrational exuberance which has been prevalent in many other “alt-coins”, indicates this. Again, however, the only certainty is uncertainty: so, while there is a chance of Bitcoin rising to higher levels, the cryptocurrency bubble will burst, it’s just a case of when. Like all bubbles, naming when is impossible.

So, will that be it for Bitcoin when it happens? The dot-com bubble of 1999 provides some clues. Companies like Amazon and Google suffered short term, survived, prospered and became essential to daily life.

Similarly, with the convenience and international nature it promises, the hype around Bitcoin could give way to something more solid. A rapid deflation could leave only the serious players left to establish its true value.

An unwanted history

While it was established as a currency outside of regular controls, Bitcoin and other cryptocurrencies have matured to a point where there are growing calls for regulation and financial controls in order to help shake its perception of being a currency for underground criminal markets. And, these calls are being listen to, with a few exchanges starting to implement “Know Your Customer” controls to provide increased accountability. Bitcoin is also being more widely accepted for retailors and is becoming more aligned with legitimate payment systems.

These moves into the mainstream show there can be a positive future as a currency for Bitcoin as it strengthens oversight, thus ensuring it’s clear who owns the account in the eyes of the law. It also means that the appeal is diminished for criminals, nudging them towards other cryptocurrencies (such as, Monero) that strongly enforce anonymity and privacy.

The crypto generation is well under way

Trying to predict whether something that’s been around for 10 years can last another decade is always tricky, particularly in the technology sector which moves at an increasing pace. Regardless, the fact Bitcoin is still around now is a surprise to many, but maybe it shouldn’t be. There is clearly an appeal around cryptocurrency, throw on top of that the expanding use of Blockchain, and the whole awareness of both aspects will only continue to grow. So, whether its Bitcoin, or something else we’re talking about in 10 years’ time, the impact this cryptocurrency has had is undeniable.

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