The past year witnessed significant economic fluctuations stemming from the outburst of the COVID-19 pandemic. It was a time when the world lost faith in the most conventional, tried-and-tested means of transaction and had to bear the brunt of severe losses. However, it was also a period of financial exploration that paved the way for modern economic interventions that used to be regarded as risky and unconventional.
Invented in 2008 and operational since 2009, Bitcoin is one such new-age cryptocurrency that garnered the spotlight during this period. Based on blockchain technology principles, it has become the go-to transactional medium for many individuals, especially in the wake of the pandemic.
What is bitcoin all about, and why has it gained popularity in this day and age? Let's have a look:
How Safe are Bitcoins?
While Bitcoin has been enjoying widespread popularity in recent times, the various factors that had affected its implementation in the past have now resurfaced. Here are some common apprehensions around the use of Bitcoin:
- While bitcoin revolves around blockchain technology, it is a decentralized monetary exchange system not monitored by any governing body. Thus, all users have equal access to and control over the data. This aspect of cryptocurrency has prevented its entry into the mainstream finance sector. However, the aftermath of COVID-19 has demonstrated that this decentralization may prove advantageous during dire situations.
- Today, with the cryptocurrency market at its peak, individuals are using bitcoin as a means of regular monetary exchange and a trading strategy.
1. 2020 Bitcoin Trends: The Rise of Bitcoin Technology
The pandemic situation has been a significant setback for the world economy in general and the finance sector. With many countries resorting to total or partial lockdowns, businesses have been grappling with severe financial losses and have had to begin from scratch. However, amidst this grave situation, bitcoin has come across as a useful alternative for consumers and businesses alike and emerged as the best cryptocurrency to invest in 2020.
According to recent reports, the Bitcoin market capitalization grew by over 400 billion $ and reached an all-time high in January 2021. In February 2021, its recorded market value was higher than a whopping figure of USD 600 billion. Finance experts suggest that one reason for this sudden rise in its popularity could be the hard-coded limits on its supply. The autonomy afforded by bitcoin as a cryptocurrency has facilitated its growth as a popular currency during the pandemic situation.
While the world has been grappling with pressing post-pandemic economic issues like unemployment and debt, bitcoin has remained mostly unaffected and continues to display a converse positive trend even as we step into 2021.
2. Where is Bitcoin Headed Today?
The past year has also witnessed a surge in fintech companies' business, which are industries that provide cutting-edge technology-based financial services to their clients.
Studies suggest that fintech usage among customers shot up by over 50% in the U.K. during the lockdown period. And as an integral part of the fintech services, bitcoin looks upon a promising future in the years to come.
So, what key predictions can we derive for bitcoin's performance this year, based on its 2020 rising trends? Have a look:
- Increased Universal Acceptance of Bitcoin: Following its rising trends in 2020, bitcoin is likely to garner greater acceptance among individuals worldwide. This year, with the pandemic impeding the conventional means of monetary exchange, bitcoin has become a safe resort for investors worldwide. This momentum is likely to continue in 2021, where individuals may incorporate bitcoin as an effective mainstream trading strategy.
- Competition from Other New Digital Currencies: 2020 has restored the world's faith in an otherwise "radical" means of transaction, which, in ordinary circumstances, would be relegated as a risky venture. Thus, the world's leading MNCs like Google are now contemplating formulating their digital currencies, which may pose competition for Bitcoin in the cryptocurrency market during the years to come. Some of the bitcoins already in use are ----
- An Extended Experimentation Period: While Bitcoin has gained momentum among global investors and businesses, it is still considered a novel means of monetary exchange. As a result, it is likely to continue to be subject to scrutiny, even as it paves its way into the mainstream financial arena. 2021 is expected to experience a surge in Bitcoin users; however, many may opt for this investment mode as an experiment rather than a long-term strategy.
Change has always been a slow and steady process; so is the acceptance of Bitcoin as a mainstream mode of transaction. For beginners in this domain, a careful observation of the trends in crypto prices, coupled with a detailed understanding of the functioning of cryptocurrencies, can help them gain a strong foothold in Bitcoin investment. However, the past year has demonstrated that Bitcoin may continue to reign as the best cryptocurrency to invest in 2021!