The foretelling events that speak for itself
The cryptocurrency industry is currently going through a wild ride at the close of 2020 and continuing through the start of the year 2021 with some leading coins reaching all-time highs or ATHs.
Bitcoin, the world’s first cryptocurrency with a value of less than $4,000 last March 2020 at the start of the pandemic, had just blasted through $34,000 as of this writing. This, not to say, is without the drama of shoot-ups and nosedives that marked the volatility of digital currencies.
Ethereum was wallowing to just $91 back in December of 2018 to bounce back to more than $450 by December 0f 2020. Now it is flying high after hitting $1,000 for the first time.
Cryptocurrencies in general are having a hard time being accepted into the mainstream. When other countries are warmly embracing them, others have outright banned them. in the US, however, a stream of institutional investors and fintech companies began flocking to Bitcoin.
As of December 21, 2020, MicroStrategy, a business intelligence company, holds an aggregate of approximately 70,470 bitcoins, which were acquired at an aggregate purchase price of approximately $1.125 billion and an average purchase price of approximately $15,964 per bitcoin. “The Company continues to operate in accordance with its Treasury Reserve Policy and currently holds approximately 70,470 bitcoins,” said Michael J. Saylor, CEO, MicroStrategy Incorporated. “The acquisition of additional bitcoins announced today reaffirms our belief that bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value. We believe the proactive management of our balance sheet, combined with the improved revenue and profitability performance of the Company, have been significant factors in the recent appreciation in our stock price.”
On October 8, 2020, Square, Inc., announced that it has purchased approximately 4,709 bitcoins at an aggregate purchase price of $50 million. Square believes that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system, which aligns with the company’s purpose.
In the same month, PayPal announced the launch of a new service enabling its customers to buy, hold and sell cryptocurrency directly from their PayPal account, and signaled its plans to significantly increase cryptocurrency’s utility by making it available as a funding source for purchases at its 26 million merchants worldwide.
“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly,” said Dan Schulman, president, and CEO, PayPal. “Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption, and interoperability of these new instruments of exchange. We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”
With these influential developments, it is highly probable that in 2021, one or two major banks from the EU or US will allow their clients to trade or store bitcoins and other cryptocurrencies.
China is starting to spread across its vast land the pilot version of the digital yuan with the first four Chinese cities actively transacting more than 2 billion yuan, or $300 million. If the program continues to expand, the Chinese economy could become the most powerful yet to digitalize its national currency, edging the digital version of the euro which is still about to be offered by the European Central Bank. China hopes to finally break the US dollar’s overall control of the global financial system with its digital currency program. It may also lessen the demand for universal Bitcoin and other leading cryptocurrencies.
China and Europe’s examples are leading the way of about 80% of the world’s central banks in dabbling about their own forms of digital currencies.
Bitcoin opening Pandora’s box offered a lot to every crypto visionary beyond hodling, buying, and selling. Traditional entities and fintech companies discovered a variety of potentials especially in the digital payments category where other digital currencies can create a market. Fees, transaction duration, and local regulations can be windows of opportunity for those who wish to take advantage. Tech giants like Google and Facebook can give Bitcoin a run for its currency this 2021.
Due to the expansive growth of cryptocurrencies around the world, it was only natural that governments and central bank authorities would issue policies and legalities surrounding them.
Common across all borders are government-issued notices cautioning its citizens about the pitfalls of investing in cryptocurrencies. Central bank warnings include educating its population about the differences of actual currencies being protected by the state, and cryptocurrencies which are not guaranteed. Government education includes the high volatility of cryptocurrencies and the unregulated transactions that accompany such, to the extent that being unregulated leave them without legal recourse when problems arise such as loss, theft, or fraud. Some countries have already placed stringent measures to counter the financing of terrorism and other illegal activities through cryptocurrencies via Anti-money laundering initiatives and Know-your-customer procedures are dire warnings about the existence of criminality in the Internet using cryptocurrencies. ICOs are also either regulated or banned. Whatever the case, countries are paying more attention to regulating the entry of cryptocurrencies in their lands. With regulations coming to some sort of rescue since cryptocurrencies cannot self-regulate, the vast majority of populations might just get into it as early as this year.
Largely inherent to Bitcoin and all of altcoins and cryptocurrencies is their unexplainable volatility whose uptrends and downtrends are hard to explain. As they are outside the monetary and fiscal policies of any nation even with the eventful happenings pointed out, the challenge remains. And it is still up to the investor to make masterful choices to make the most of what cryptocurrencies are offering.
But it looks like the industry is maturing. 12 years young and keeps on disrupting, 2021 will still see more of what the crypto world is aiming for.
So, whether like it or not, crypto is here to stay. Disrupting, that is.