Bitcoin Whitepaper completed its 15 years on October 31, this Halloween season. It was even met with a spicy tease from Gary Gensler, the Chair of the SEC. It has been so long since Satoshi Nakamoto published their first paper, Bitcoin: A Peer-to-Peer Electronic Cash System. The world has changed significantly since that year, which was 2008. Many digital tokens have entered circulation, providing enthusiasts with an endless selection from which to choose.
Bitcoin’s decentralization and independence are what keep it on the cutting edge. There is no intermediary control over its operation; rather, only the network’s participating partners determine it. Blockchain technology serves as proof that the entity’s functionalities are truly decentralized.
The Journey of Bitcoin
The ascent of Bitcoin has been a challenging endeavor. At first, its native token encountered considerable disdain and ignorance. The situation was further complicated by regulatory compliance practices, which rendered Bitcoin less trustworthy and identified a method to misappropriate public funds. Those criticisms have passed, although a few of them remain persistent.
Bitcoin has helped its holders earn greater returns, which is one of its achievements. Bullish holders who accumulated tokens a few days ago have seen a ~1.90% increase in trading value in 24 hours. A growth of 28.46% in just one month is even more remarkable.
More digital assets have been introduced since Bitcoin’s inception, which has caused significant shifts in the cryptocurrency industry. Ethereum’s ETH is among the most significant introductions. Once coined as the next BTC, ETH is rallying at $1,883.89 at the time of articulating this piece. Other tokens that have entered the market are SOL, DOGE, and LTC, among others, XRP, TRON, and Tether.
Stablecoins have become a prevalent form of cryptocurrency globally. To reduce volatility, stablecoins are backed 1:1 with the US Dollar.
The Perfect Storm for Bitcoin
The term “perfect storm” can be defined in two different ways. One is the storm that has been or is currently impacting Bitcoin. Another is the storm that is facilitating its ascent. Volatility and regulatory recognition are the two primary factors causing the token significant distress. Additionally, some voices reflect cracks in the traditional financial system.
Such cracks pertain to the following problems:
- Time to complete the transaction
- Costs charged by intermediaries
- Complexities in cross-border transactions
Global variables such as war or politics significantly impact the traditional financial ecosystem as a whole. However, crypto is unaffected by these factors. In light of its positive contributions to society, even if the assumption is off by a little, the difference is negligible.
There is a need to accelerate Bitcoin because:
- It enables seamless cross-border transactions.
- Lowers the cost of a transaction
- Eliminates intermediaries to make transactions cost-effective.
The global financial and monetary networks have cracks and can be improved. But the fact cannot be overlooked that Bitcoin also has a lot to offer that works in collaboration with it.
Drivers of the Changing Financial Landscape amidst Bitcoin hype
Various factors are playing a role in altering the financial landscape. Additionally, they have a ripple effect on the cryptocurrency ecosystem.
US National debt continues to skyrocket
As of September 2023, the aggregate national debt had surpassed $33 trillion. This includes $6.8 trillion in intragovernmental debt and $25.8 trillion in public debt. These figures are hardly remarkable for a country that has flown the anthem of a superpower.
The Israel-Hamas conflict and the Russia-Ukraine war are two significant international events that have contributed to this. An ongoing escalation in national debt will inevitably result in economic difficulties and potentially lead to inflation.
Flight to Harder Assets
Despite having managed interest rates at a stable level at the start of this month, the Federal Reserve is now confronted with the circumstance where it may be necessary to raise rates. There has not been any confirmation about this but reports claim that there are fewer chances for authorities to take it up a notch.
High inflation will compel people to find ways to hold values and earn returns. This suggests the flow is leaving the traditional mechanism and entering the digital domain. Notably, there have not been reports of money printing by the Federal Reserve till now.
Bitcoin against Traditional Financial Assets
Bitcoin has gained popularity while traditional instruments struggle to improve. The 24-hour volume rose 29.83%, and the market cap rose by 2.04%.
There are fewer chances that commodities, land, and equities will face fierce competition. They may enter the same list altogether in a perfect financial landscape.
Institutional Interest and Capital Inflows
Grayscale’s victory against the SEC was first hailed as a partial victory. That is now a turning point for the entire ecosystem. Chances of Spot Crypto ETF have also gone up for BlackRock, expected to get approval in January 2024.
The most recent report from Digital Assets Fund Flows Weekly shows that $261 million was invested in digital asset investment products, making this the sixth week in a row of inflows reaching $767 million and surpassing the $736 million reached in 2022.
Institutional investors are willing to contribute to the rise and grab a fair share of profit. Larry Fink has even quoted Bitocin as a flight to quality.
Three aspects are truly shaking the crypto industry: delistings, active wallet addresses, and PayPal.
PayPal UK Unit
PayPal has been granted permission to register as a crypto service provider. The Financial Conduct Authority’s approval enables the company to offer restricted crypto services and advertise them to clients who are local to the region.
They are at an all-time high, with Binance and Coinbase in the lead. A minimum of 3,445 tokens have been removed from platforms, including trading pairs. This signifies a 15% escalation in delistings compared to the corresponding data from 2022. BTC is less affected, with Bitcoin projections estimating the token to touch its all-time high mark by the end of this year.
Weekly active wallet addresses
Current reports indicate that 460 million BTC wallet addresses are active. L2 solution proliferation poses a difficulty for crypto ventures attempting to enroll more users. While not inherently obsolete, Layer 1 is gradually transitioning to advanced Layer 2.
Previously and currently, Bitcoin’s potential has been called into doubt. Despite this, the community maintains its support for their holdings. This forms a critical part of the Bitcoin revolution fueled by holdings, knowledge, and understanding of the traditional and upcoming decentralized financial landscape.