Digital correspondent and consultant
Bitcoin has seen a great deal of action over its 12 year history. Born in 2009, the first purchase using Bitcoin exchanged 10,000 BTC for 2 pizzas, an laughable amount today. In 2013, Bitcoin rose to $1,000 before crashing to $300, a position it would take 3 years to recover from. As more establishments, banks, and fintech institutions came to accept Bitcoin, the cryptocurrency grew gradually while more coins entered the market. In 2017-8, Bitcoin rose to over $19,000 before facing US legal trouble, which crashed the value by 70% in a year. Still, by 2019, Bitcoin outperformed even the best stocks, and last year, new cryptocurrency funds and futures attracted investors while the global economy slowed.
What makes Bitcoin such an attractive investment right now? Thanks to its practice of keeping a finite supply and reducing the rate of new supply every 4 years, Bitcoin is seen as a safe hedge against US inflation. Despite the fluctuations in value, the places where Bitcoin is accepted continue to grow, with Apple Pay even allowing BitPay, a prepaid MasterCard that works everywhere MasterCard does. Proof of Stake blockchains are also growing in prominence, as they incentivize users to “lock” their coins in the network and ensure long-term operability. Representing just 15% of the market, Proof of Stake blockchains are responsible for driving significant growth. Right now, the US dollar is expected to weaken in 2021 while Bitcoin increases investing from traditional finance leaders. Taken together, these fats make Bitcoin an appealing choice as both a currency and an investment.
As cryptocurrencies continue to soar to new heights, investors should remember the costs of mining. In 2018, mining crypto accounted for 1% of the world’s energy consumption. In 2020, Bitcoin alone consumed 120 gigawatts per second. That is equivalent in power to 49,440 wind turbines. With the potential for wild success attracting more and more people, the energy needs for maintaining the system will only grow with time.
Despite the risk, many view crypto as the next generation of currency. Don’t get left behind in the mad dash!
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