Bitcoin is meant to create the economy tailor made for the digital realm. But what is the state of Bitcoin in 2016?
There‘s no denying the political and economic systems around the world is in disarray. With Donald Trump (read: poop emoji) a serious candidate to be the next US president, the UK removing themselves from the EU, ISIS being an ever increasing threat and economies around the world like Brazil, Venezuela and to a lesser extent South Africa in turmoil, many are questioning the current state of affairs and how the world‘s economy is run.
This is no new phenomenon, however. Ever since the economic crash of 2008 many people have tried to find a safe haven, or at the very least, something different. Currencies have never been as volatile as they are today, and very few jobs are being created in the “˜new‘ economy.
But what if we could CREATE a new economy? An economy that is tailor made for the digital realm, where many (if not most) live our lives these days. Read: Is Bitcoin the future of currency, or just a commodity bubble?
This is where Bitcoin comes into play. It is meant to be the technological advancement so powerful, that it transforms the basic pillars of our society. Bitcoin is meant to markedly influence how our economy, governance and businesses around the world function. While Bitcoin isn‘t the only cryptocurrency in the world, it is certainly the most well-known.
Understanding of this foreign idea has evolved since its inception, but to most it is still just a digital currency with no tangent value or real place in the world. But in actual fact, the currency value is just the tip of the iceberg. Money is just one of the possible applications of this ground breaking internet technology.
In historical terms, money has existed to facilitate trade. But this trade has become immeasurably complex, i.e. everyone trades with almost everyone. The bookkeeping of these trade agreements are very often isolated to only the two parties involved in the trade and the public have no sight of it. The facilities and middlemen we hire are there to validate these transactions and make sure everything is above board (like banks, accountant, auditors and governments).
Bitcoin‘s ultimate power underlies the sidestepping of these aforementioned interactions, in that the connected computers offer a collective bookkeeping via the internet. It isn‘t closed or in control by one party, therefore everyone that makes a transaction has access to the entire ledger. This is called the blockchain.
The blockchain transactions are verified by the Bitcoin miners. These machines “˜mine‘ by solving complex mathematical problems, which generate a 64 digit code. And that is where Bitcoins come from, but where has it left us? Read: Is there an industry for the expensive process of Bitcoin mining?
The state of Bitcoin has never been more uncertain to the sceptics, yet it will endure. The focus of the believers have been the increasing focus on Bitcoin’s underlying technology, commonly referred to as blockchain or distributed ledger technology (DLT) in the last 12 months. Many parties, from government authorities to financial institutions, began to examine potential applications of DLT for securities transaction settlement and other use cases.
Investment into the platform is also speeding up in 2016, with capital investment increasing a whopping 36% year-on-year. Unfortunately, mainstream retail adoption of cryptocurrencies continues to lag due to a lack of compelling use cases, and there are also signs that Bitcoin’s use on the dark web has peaked.
It doesn‘t leave Bitcoin without risk, however. It is (by far) the world‘s most volatile currency. In 2013 it was the world‘s best performing currency. Then, in 2014, it was the world‘s worst performing currency, losing 67% of its value against major currencies in one year. It then rebounded in 2016 to be, once again, the world‘s best performing currency (up 35%). Read: What is Bitcoin Exactly?
So what should we extract from this mountain of information? What is the state of Bitcoin in today’s world? We should keep our wits about us, because cryptocurrency is here to stay. It is still in its infancy, but it could potentially transform the world economy once it has a proper foothold. In 2016, we find for the first time a currency that is starting to mature and stabilise in relative terms.
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