Bitcoin’s Journey From Being a Bubble To a Commodity

Bitcoin, the first decentralized cryptocurrency was first launched in 2009 by pseudonym Satoshi Nakamoto. Bitcoin’s journey has seen different ups and downs ever since it has been introduced and has evolved a lot. Although nothing is clear in this context what led to the invention of the first decentralized digital currency it has been assumed that the major reason behind this was the financial crisis of 2008.

Who knew the future

In its initial years, people did not see much potential in Bitcoin and very few people were aware of it. The price of the digital asset also remained near zero in its early years. To understand the magnitude at which king coin has grown in leap and bounds in the last decade, the best example is of Kristoffer Koch who bought Bitcoin worth $27 in 2009. As of October 2013, the price of his holdings raised to $980,000 which he must not have expected at all during the time of its purchase. And if we evaluate the price of the asset as per its 2017 bull run the price would be in millions.

For a few consecutive years, there was not any notable success in terms of price for bitcoin. People were unable to show their faith only until it started growing. A person paid 10,000 bitcoins for just two pizzas and surprisingly those coins would have been worth of $100 million as per its current value.

Bitcoin Accelerated in Growth

Bitcoin primarily gained traction and became popular on darknet when many vendors started accepting it as a form of currency because of its anonymity features, and governments having no control over it. The acceptance and popularity also started reflecting on its price when in 2013, the price of the digital asset had soared above $1,000 apiece which was its biggest rise till then.

Due to this increased value, people started investing more in the king coin and it started gaining worldwide popularity. Some universities also started accepting bitcoin as a mode of payment for tuition fees. One notable example is the University of Nicosia which started accepting bitcoins for payment of tuition fees even the financial office chief denoted the king coin as the gold of the future.

In 2017, Bitcoin reached an all-time high price of near $20,000, which propelled it at the centre of glaring media attention and various reactions from the financial world.  This was one of the major turns that have ever been there in the history of the crypto market which led more people to invest in bitcoins. While traditional players like banks, governments and other financial institutions called it a mere bubble waiting to burst.

However, in the following year, Bitcoin did lose its market cap by over 80% but did not die out as many had predicted. The massive fall was also understandable given Bitcoin was not even a decade old and was going through bubble cycles as it is the case with any new commodity.

Slowly the very same bankers and governments who declared the demise earlier, came around to either realize that Bitcoin is here to stay or even incorporated it.

Legalization of Bitcoin in different countries

After surviving the bubble phase, the next challenge for Bitcoin was legality and real-world acceptance.As Bitcoin is the first decentralised currency, it also faced a lot of complications related to the regulations by the government. Initially, the governments were reluctant and a few also deemed it illegal, however, they soon realized that it is impossible to ban something that is not controlled by a centralized authority.

Government regulations and licensing play a huge role in the growth of bitcoin as it is easy for people to trust anything that has been approved by the government. And soon governments started forming rules, guidelines and in few countries like Japan clear regulations around the use of Bitcoin. And many more are seriously pondering to bring more clarity around its use.

Bitcoin = “Digital Gold”

With the whole evolution of bitcoin over time, it is now being seen that people have started considering it as safe-haven assets. Even though there is a risk associated with bitcoin which is completely uncertain, still people are making huge investments in it.

The government has also started considering bitcoin as a commodity and not a security. This could be seen clearly as the government's way of providing assistance and support to cryptocurrency exchanges so that their market can grow.

Due to this involvement by the government people are more confident while investing in bitcoins. Even after the huge risk associated with digital assets, people are still seeing these digital currencies as a viable investment option.

Another major reason why people have started considering bitcoins as safe haven is that there is not any political intervention to it. Being a decentralised currency, it is far away from the changes in the market that are due to government interventions.

Conclusion

Overall if you see throughout the journey of bitcoin till now, it has outgrown any traditional investment in the past decade despite not being at its peak at the moment.  The changes in the regulations are also contributing more towards its worldwide acceptance. It is expected that sooner or later, bitcoin will emerge as an alternate financial vehicle.

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