Bitcoin turns 10

By George Zarya, CEO, BeQuant

Bitcoin – the name that has become synonymous with cryptocurrencies – celebrated its tenth birthday earlier this month. For cryptocurrencies, the past decade has been marked with extreme highs and lows. Despite a testing few months, however, there are strong indications that the market has a positive road ahead.

The first idea of Bitcoin – or any cryptocurrency – appeared in 1982, when computer scientist David Chaum first proposed the concept of e-cash in his paper Blind signatures for untraceable payments.

With Satoshi Nakamoto’s own paper 26 years later, cryptocurrency was born. Nakamoto never actually intended to create a currency, just to create a decentralised digital cash system after arguing all the centralised attempts fail. This decentralised, immutable ledger, or blockchain, which underpins all cryptocurrencies, was the central and unique component of Bitcoin’s vision.

Cryptocurrency’s use over the past decade hasn’t always been tied closely to this founding vision, however. Bitcoin’s first major theft, in June 2013, reinforced the sentiment of traditional banking advocates that cryptocurrency is nothing more than a vehicle for criminal transactions.

Despite this, cryptocurrencies have made remarkable steps since they were first introduced. In February 2011, just under three years since its inception, Bitcoin reached parity with the US dollar. In April 2017, Japan took the leap and endorsed Bitcoin as legal tender, which opened the door for retailers to embrace the cryptocurrency as a legitimate payment method. In the same year, investors saw healthy returns on their crypto investments, giving Bitcoin its best year yet.

While 2017 was a positive year for cryptos, 2018 was the year that investors struggled. Last year’s price crash still serves as the barometer for the current state of the market. Cryptocurrencies are currently experiencing a period of extreme lows, resulting in some doubts over their long-term viability as an asset.

These fears have been alleviated by a surge of institutional investment for much of the latter half of 2018, however. Recent examples include businesses such as Fidelity Investments announcing a new and separate company – Fidelity Digital Asset Management – to make digitally native assets more accessible.

So, while many cryptos witnessed a decline in price for much of 2018, a healthy inflow of institutional investment gives cause for optimism for the market’s long-term growth.

This spike in investment is having a direct impact on one of crypto’s greatest barriers: its lack of regulation. Many of the advances and upcoming offerings in the crypto market will aim to address this key sticking point, however.

Increased payment transparency for merchants and customers, without dependency on third-party providers, and the ability to track cross-border payments transaction, are just a few ways in which the market might accommodate this. At the same time, alternative cryptocurrencies – including altcoins that are tied to more stable securities – will help to address the issue of Bitcoin’s underlying price volatility.

Since the very first impressions of Bitcoin in 1982, cryptocurrencies have come a long way. While the market has not been without its setbacks, perhaps the most impressive feature of Bitcoin is that despite these, it is still here. Now, with institutional investment continuing to lead the way, Bitcoin, and cryptocurrencies more generally, may continue to gain attention from wider financial markets.

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