Right now is one of the most interesting times for Bitcoin. While Bitcoin’s massive price decline from the higher $600s to low $300s may spell doom in the minds of many, it is just one aspect of Bitcoin. There are so many problems and difficulties that Bitcoin has faced that are finally being overcome which is causing an explosion of growth.
1. Mass Adoption and Acceptance
Bitcoin is getting big. Major businesses have started to accept bitcoin. Dell, Dish, PayPal, and Expedia have all started accepting the currency. Many people have started to learn about and buy bitcoins so they could use them with their favorite retailers and save money. NewEgg offered a limited time offering of a 10% discount for people who bought with bitcoin and many other businesses who are currently doing similar discounts. Bitcoin businesses have started bringing themselves to the mainstream. Bitpay has advertised on major college football bowls. Coinbase has teamed up with Budweiser to give attendees of Budweiser’s Made in America (BMIA) Concerts free bitcoins.
The existing financial community is increasing fond of bitcoin as well. The International Monetary Fund (IMF) and the World Bank recently said at their annual conference in Washington D.C that they see potential in Bitcoin’s blockchain for its ability to confirm transactions without a need of several parties. The Bank of England, like the IMF and World Bank, has praised bitcoin for its decentralized public ledger and looking into making use of the technology.
Prominent economists are included among the many people from the traditional finance community to have praised bitcoin. Former head of the Federal Reserve, Ben S. Bernanke, has said that bitcoin, “may hold long-term promise, particularly if they promote a faster, more secure and more efficient payment system.” The former director of the U.S Mint, Edmund Moyis, has become a big fan of bitcoin and its potential. He has spoken at several bitcoin conferences and has become an advocate for crypto-currency, saying in an interview with Cointelegraph.com, “I feel strongly about the promise of cryptocurrencies.”
2. Bitcoin Is A Global Phenomenon
Bitcoin inventions and startups have traditionally been centered in North America and Europe but that is rapidly changing. Bitcoin hubs all around the world are popping up and growing faster than their Western counterparts have. Argentina is one of the largest and active bitcoin communities in the world. It was voted most likely to adopt bitcoin by the Bitcoin Market Potential Index (BMPI).
Africa while traditionally behind in technology, has been adopting bitcoin at a great speed. Bitcoin hubs have been popping up in South Africa, Kenya and starting to take root in other countries around the continent. In Mexico, an emerging economic power and large remittance market, bitcoin adoption has been slow and steady. There wasn’t been supersonic growth, but venture capitalists and entrepreneurs have been creating solid infrastructure for the bright future of the crypto-currency there.
The Philippines is probably only second to Argentina in terms of adoption. The large English speaking, technically knowledgeable, and unbanked population of the Asian country have created the perfect conditions for massive bitcoin adoption. There has been a lot of adoption in southeast Asia beyond the Philippines as well. Economic and technological powerhouses such as Singapore, South Korea, and Japan have also taking a huge liking to Bitcoin. The world’s fasting growing economy, China, is now tone of, if not, the biggest bitcoin market. China is a hub of bitcoin trading and innovative startups.
3. The World’s Biggest Venture Capitalists Are Investing
We are seeing more and more businesses being funded by some of the worlds leading venture capitalists. Asia’s richest man, Li Ka-shing, has invested in the very popular bitcoin payment processor, Bitpay. The legendary tech entrepreneur, Marc Andreessen, has made one of his main goals to invest into and support Bitcoin. He has invested well more than $50 million in various bitcoin companies. Venture capital is crucial for any industry, especially a young and maturing one. It allows a company to focus on developing their killer product or service without having to worry about keeping the lights on in the meantime. It also provides wisdom and connections from the investor’s vast experiences. These well capitalized businesses are crucial to the future of bitcoin and are going to be the ones bring bitcoin to the masses.
4. Bitcoin Core Businesses Are Well Established
Bitcoin’s core business – wallets, payment processors, exchanges, mining hardware manufacturers are finally well established sectors of the bitcoin industry. All of these sectors have businesses with a lot of venture capital, great products, and a growing name for themselves. The days of major exchanges imploding, like Mt.Gox, are over. Coinbase has taken the risk out of the process by becoming the first insured Bitcoin exchange. Circle is making buying and selling bitcoin easier than ever. They helping bridge the traditional banking system and bitcoin, by providing the best of both worlds. The basics that bitcoin ecosystem needs to run on are finally stable and in proper order. This allows a new generation of companies to look at innovations and uses, beyond the traditional ones.
5. Businesses Taking Bitcoin To The Next Level
A whole new generation of bitcoin business is being born right now. The basic businesses needed have been well established and now businesses are exploring new applications of Bitcoin’s technology and currency.
As bitcoin’s trading volume has risen, it has been easier and easier to move bitcoins around and get bitcoins in your hands. As a result, bitcoin’s long sought after killer app, remittances is finally taking form. Services like Ghana’s Beam and Kenya’s BitPesa are already helping thousands of people send money from Europe to Africa cheaper and faster. In the Philippines there are numerous business also helping the local population receive money from all over the world. These services are gaining a lot of traction and going to be a bigger part of the $542 billion worth of remittances sent every year.
There is also blockchain 2.0 technology. These businesses are not focusing on the bitcoin currency, but the underlying technology that makes it all possible – the blockchain. One already very popular application is a site called Twister. It is a micro-blogging site like Twitter but is a based on Bitcoin’s blockchain and is hosted through user’s computers. This allows Twister to be censorship resistant, ad free, and anonymous. This is a particularly useful service in places in where governments use censorship against protesters and other minorities.
Other applications of blockchain 2.0 is smart law, or contracts. One of the amazing achievements of Bitcoin is the decentralized aspect of the blockchain. For the first time in history, groups of people who don’t know each other can transact without worry and can be verified by anyone at anytime afterwards because of the blockchain public ledger. This is unheard of all throughout history and has huge implications. Contracts are a vital to modern civilization but they are suspect to biased because of the humans involved. While judges try to be fair, it is unrealistic to say they don’t have prejudices and preferences like every human being. Today the blockchain can solve that problem by acting as neutral third party. This is already exists in escrow services that mediate bitcoin transactions. Pamela Morgan of Empowered Law, is already working to make even more contracts like employment, real estate, loans, debt, possible on the blockchain. Ink Factory is one of the many services that allow you to timestamp legal documents on the blockchain. There is a lot of potential here and it is just getting started.
6. Transaction Volume
A major issue that bitcoin has faced for a long time is, the lack of trade volume. This lack of liquidity has held back many uses of bitcoin and has caused bitcoin’s notorious volatile price. According to a report published by the research institute, Capgemini, Bitcoin transactions have nearly doubled since 2013! The report found there were an average of 35,000 bitcoin transactions per day in 2013, now that number is growing to 60,000 transactions per day. This means bitcoins will be spread more evenly among users as large holders start to trade. This will drastically reduce bitcoin’s volatility and allow it to be used by more people, in different and new ways. This will likely continue as more companies continue to accept bitcoin and mobile payments become a bigger part of the economy. Bitcoin’s lack of transactions was a huge problem but that will soon be a thing of the past!
Regulation has been the one of the biggest obstacles for Bitcoin. Despite activists trying their hardest to resist regulation, if Bitcoin wants to be used by the world it will need to be regulated. Until now, the regulation posed was harsh and a bitcoiner’s worse nightmare, but that is starting to change. Jurisdictions all around the world are seeing bitcoin as huge future industry and they want to be a hub of it. The UK, Isle Of Man, Philippines, Korea, Japan, USA, and a host of other countries have been improving their regulatory stance on Bitcoin in order attract businesses. Besides that, bitcoiners are realizing the problems of the past and choosing to not repeat it. Before, bitcoiners refused to believe regulations would come and totally neglected communicating with the regulators. This caused regulators to have poor knowledge of the subject and create ridiculous regulations, but bitcoiners are starting to reach out. Recently, one of the leaders of the bitcoin movement, Andreas Antonopoulos, stood before the Senate of Canada’s Banking, Trade, and Commerce Committee to talk about how to regulate bitcoin. He explained to many of them the self-regulatory aspects of bitcoin and a couple models for healthy Bitcoin regulation. Most had heard very little about the technology and were very open to bitcoin. Companies are also doing their part to reach out to the regulators. Some of the biggest names in industry, such as Coinbase and Bitpay, have hired regulatory staff, including ex-Visa executive, Tim Byun.
8. Professional Financial Instruments
Trading bitcoin on exchanges has been one of Bitcoin’s earliest killer apps. As bitcoin grows and becomes a bigger global economic force so has its financial sophistication. U.S and Chinese bitcoin exchanges have been providing new financial tools and products for traders. Bitcoin traders have long yearned for more complex trading options, such as futures. Huboi, a Chinese bitcoin exchange, offered 60-day fixed-term investment product and it sold out in a hour. These new options allow traders to make money off bitcoin in new and lucrative ways.
The increase in trading has several effects on bitcoin. Since these tools and products provide new ways for traders to make money, more traders are attracted to bitcoin. This causes more money to be put into bitcoin and the market capitalizations grows. As the market grows, it becomes attractive to bigger investors with more money. Also, this increase in trading, helps stabilize the price of Bitcoin and reduces volatility. Reducing volatility makes bitcoin more attractive to merchants and everyday people.
9. Wall Street Is Moving Into Bitcoin
Illegitimacy and a small a small market cap, compared to the dollar and other government currencies, have been very big problems for the currency. Wall Street is quickly moving into bitcoin and that will boost bitcoin’s value and its legitimacy among the world’s leading financial institutions.
Founder of SecondMarket, Barry Silbert, has left his role at CEO at SecondMarket in order to focus on bitcoin more. You could say he has become obsessed with bitcoin. He has invested in many bitcoin companies, and founded several businesses himself, including an investment fund, Bitcoin Opportunity Corp.
It is not them merely accepting Bitcoin that will help bitcoin. Wall Street institutions face many problems similar to smaller businesses, like losing their bank accounts due to being involved with the crypto-currency. The difference with Wall Street is that they have long public track records, experience dealing with the regulators, and connections to make official opinion change. The money Wall Street will bring to bitcoin will be a small portion of the massive value they will add.
10. The Price!
While the sudden drop caused a momentary disruption, there are in fact many benefits to the drop in price.The cheaper price is, the more incentives there are for people to buy in, especially the big Wall Street firms who have been looking to get large amounts of bitcoins for their investment funds. Not only that, but bitcoin accepting businesses are incentivized to provide discounts for their services or products to get as much of the cheap bitcoin as they can. As a result, this incentives more people to spend their bitcoins.There are many more factors to bitcoin’s health, other than the current price it is trading at.
What all this Means…
This is one of the most amazing and interesting times for bitcoin. Many problems, such as unclear and non-existent regulation, a volatile and unpredictable price, insecurity, and difficulties buying or selling bitcoin have already been or about to be solved. Freed from the difficulties of the past, bitcoin is entering new ground and with that, new possibilities. The future of bitcoin is brighter than it has ever been.