In 2009 Bitcoin burst onto the scene with the promise that cryptocurrencies would revolutionize the way that transactions were performed. No more would governments control the flow of money and tax would become a thing of the past. It would be up to everyman – aided by advanced algorithms to be the master (or mistress) of their destinies in a brave new world of digital currency.
The question still remains in many people’s minds – is Bitcoin a legitimate investment, can it live up to the promise of its early days and become even more widely accepted as a payment method – or is it merely another in a long line of currency-focused scams. The extreme volatility of Bitcoin has also fueled fears that it would not be able to operate as a bona fide currency without the guiding hand of a central banking system to smooth out the rocky patches of extreme swings in value.
What is the truth? As usual, it lies somewhere between the poles of Bitcoin being the broom that sweeps the current deck of fiat currencies clean – and the being simply a fad and one that is doomed to the dustbin of history.
Let’s take a closer look.
Pundits, such as financial consultants and stockbrokers who have for decades been at the forefront of tracking traditional currency performance are by no means upbeat about Bitcoin. They write buyers of the crypto currency off as incredibly naive and falling for the wiles of the modern day crypto snake oil salesmen and women.
However, despite some enormous swings in value Bitcoin, much to the surprise of many of these pundits are still around – and that might be due to the influence of a diverse group of buyers, each of whom invests in the currency for very different reasons.
First, there were the early adopters who could to a certain extent be termed the idealists. They wanted to buy into (literally) the idea of a digital currency that was untraceable, private and not subject to the scrutiny of third parties such as financial institutions. Bitcoin, thanks to its cryptographically secured (public) ledger seemed to tick all the boxes. According to its inventor, Satoshi Nakamoto, it would also have the advantage of eliminating charges on credit cards and reducing transaction fees.
Then there were those who longed merely for less government interference in their day to day lives – including in their financial affairs – these have been called the ‘libertarians.’ Nakamoto was scathing when it came to the ability of central government’s ability to manipulate the money supply by just making more of it available. Bitcoin had a hard ceiling – there could only be so much of it around. If you are looking for ou en acheter, Bitcoin and crypto currencies are available from a lot of online exchanges!
Then there were the young idealists. These were savvy youngsters who were caught up in the idea that technology could transform the world around us for the better. In their minds tech entrepreneurs were the leaders of a world in which inequality based on access by an elite to vast sums of money would become a relic of the past. Much to their surprise they quickly joined the elite after buying small amounts of Bitcoin and seeing the price skyrocket.
Of course, two other groups have influenced the value of Bitcoin, traditional investors and those who want a hedge against market volatility that might affect the value of their portfolios.
Whatever the future of Bitcoin it is apparent that the diverse nature of investors means that it is protected from extinction at least. Volatility in value, however, seems to be something that investors will have to live with.