Because of the rapid rise in value of Bitcoin, especially in December 2017 when its market price quadrupled in just a couple of weeks, and its subsequent price retreat in January 2018, many people were led to believe that Bitcoin’s just an asset bubble that has already popped.
In other words, they believe that Bitcoin’s as good as dead.
But while the huge returns Bitcoin and other major cryptocurrencies have generated in a relatively short period of time is reminiscent of the Internet and Holland Tulip bubbles in the past, it’s fundamentally different than those two assets. As such, Bitcoin and other noteworthy altcoins have a much brighter future compared to the two aforementioned assets.
The following are indicators that Bitcoin isn’t dead yet and more importantly, it’s going to be around for a long, long while.
More and More Legal
Not to say that Bitcoin’s an illegal endeavor but what I’m saying is that it’s becoming more and more accepted as legal tender. You see, one of the most serious challenges facing Bitcoin with regards to being accepted in the financial services mainstream is acceptance by government monetary authorities (lawmakers and regulators alike), which is hampered by its decentralized and autonomous nature.
Governments hate what they can’t control so Bitcoin’s not exactly in their good graces — at least not yet. But recent developments in major economies indicate that government acceptance, in general, is becoming more and more likely.
Japan announced back in April 2017 that it would officially start treating Bitcoin as a valid or legal alternative payment method and as of 2018, it already is. This has made Bitcoin practically part of the Japanese mainstream financial system as more and more merchants in the Land of the
Rising Sun have officially started accepting Bitcoin payments.
Other major world economies like Russia and Australia have also released similar statements of Bitcoin being accepted as a form of legal tender in their respective economies soon.
As more and more major world economies accept Bitcoin as a legit payment method, the rest of the world is highly likely to follow suit.
More than just government pronouncements, Bitcoin’s acceptance among merchants continues to rise because of the confidence shown by some of the world’s biggest companies in accepting payments using the granddaddy of all cryptocurrencies. These companies include Microsoft,Overstock, and Rakuten.
But more than just riding on the bandwagon of these big companies, there are fundamentally sound reasons for the rising number of merchant acceptance of Bitcoin. One of them is transaction fees, which are much less than what credit cards charge to its merchants.
Other practical advantages Bitcoin as payment has are the ability to reach new customers from regions in the world that are not yet reached by mainstream banking institutions and elimination of chargeback fraud. With the expected rise in mainstream acceptance by merchants, demand for Bitcoin is expected to rise and of course, its price can be reasonably expected to rise over the long term as well.
Remember our discussion in a previous chapter concerning cryptocurrencies’ ability to store value and its relationship with functional value? The increasing acceptance of Bitcoin in many of the world’s financial markets, particularly in countries that are experiencing economic distress,gives the granddaddy of all cryptocurrencies increasing functional value.
In such distressed economies as Bolivia and Venezuela, local currencies’ values continue to deteriorate to the point of becoming worthless. In such economies, Bitcoin is becoming more and more accepted as a mode of payment, which means its functional or utilitarian value is increasing. So as their local currencies are becoming less and less valuable, Bitcoin is becoming more and more precious and as a result, is becoming an even better storage of value for citizens of such countries.
As you can see, Bitcoin’s very much alive and kicking and based on the indicators I’ve just enumerated, you can expect it to continue staying alive. Bitcoin, being the granddaddy of all cryptocurrencies, has the highest market capitalization and best performance track record, both of which will continue to make Bitcoin more and more accepted in the international financial mainstream. And as that happens, the likelihood of Bitcoin dropping dead will become even more statistically impossible.