What Lies Ahead of Bitcoin and other Cryptocurrencies?

The very notion that cryptocurrency could transform from a bewildering computerized oddity to something as valuable as gold seems irrational.

16:00 22 November 2021

From a barely comprehensible alternative payment solution said to have been coined up by a mystery man and peddled by financial know-nothings to something of real value even the traditionalists are having to consider seriously now, cryptocurrencies have come a long way in their 15 years of existence. How far can they go? Let’s take a look.

 

The very notion that cryptocurrency could transform from a bewildering computerized oddity to something as valuable as gold seems irrational. 

 

In just a decade and a half since that first whitepaper came out, cryptocurrencies such as Bitcoin, Ether have gone mainstream, garnering attention from people all over the globe. From retail participants to institutional investors and technocrats like Elon Musk, everyone now wants in and perhaps ‘a piece’ of it as well. 

 

Sneered at and laughed off by financial purists when they first burst onto the scene, the pack of cryptocurrencies has grown into a respectable asset class that is hard to ignore now.

 

What caused the ground swell of cryptocurrencies is anyone’s guess, but the transformation from an alternative/digital currency form peddled by shady internet forum members to something of real value (if not lasting value) has been truly ridiculous to say the least. 

 

Crypto Assets in Spotlight

This transformation has all the makings of a fairy tale fantasy story, with its own share of twists and turns (rather ups and downs). And it appears it is far from over, with bitcoin still leading the way for the crypto pack and making new all-time highs consistently every few months. After spending a good two years unable to break through the $20000 US barrier, bitcoin launched itself into a mad run at the start of this year and soared to great heights, almost touching a 70 grand. Yes, you read that right. And it looks like it is not finished. 

 

At the time of writing this article, bitcoin, is valued at roughly $58000 USD for a single unit, tantamount to an increase of almost 3 times in under a year. True to its billing as the leader of the crypto pack, it has captured the imagination of investors and traders alike with its historical rally and earned itself huge patronage from people all over the globe who’re now more than willing to take out their money from traditional saving instruments and put into cryptocurrencies for the massive profit potential on offer. Not only has it made a mark for itself, but it has also clearly put cryptocurrencies and its up-and-coming offshoots such as Non-Fungible Tokens (NFTs) on the radar, making them a hot avenue of investment and trading.

 

A Shift in Perspective towards Investment and Trading

The jury is still out. What cryptocurrencies are in terms of a valid form of exchange or a store of value akin to gold or something is debatable. That being said, investing into digital coins and having a stake in this fast-booming market is now considered far more respectable and a judicious decision to make from a personal finance perspective. Surging interest among retail investors, institutional buyers, and billionaires who all want in and are looking to stay invested in this highly volatile market is a clear indication that the tides have changed. Some may attribute the recent mad run of cryptocurrencies as merely an extended activity of speculative buying, some may see it as a starting sign of something huge. Having said that, these digital currencies are not being regarded as a bubble ready to burst. Even though the level of understanding of the inherent risks associated with cryptos in general is still not something to write home about, people are racking up these currencies just like they would the shares of their favorite company in the stock market. And with increasing confidence. Why wouldn’t people take to the idea of investing in crypto when someone considered to be the smartest entrepreneur on the face of the earth, Elon Musk, puts into this market a whopping $1.5 billion USD? Talk about having skin in the game.

 

Pretty Optimistic about the road ahead, more and more people are jumping on the bandwagon, ready to set aside a major portion of their money into buying bitcoins and holding them hoping that they’ll continue to soar to new heights. Another set of people, who were not as optimistic as their investor counterparts, are bitcoin traders who are now very keen on partaking in the highly lucrative rally. The term bitcoin trader might not have made much sense at all a few years ago, but it’s now looked at a pretty lucrative career in itself. Not surprising at all, considering the events that have transpired around the crypto markets in the last twelve months or so. Full-time traders, who are typically content with operating on familiar grounds like stocks and forex currencies, are now considering getting into this unchartered territory, smacking their lips in anticipation of the rosy prospects these markets present in terms of volatility and liquidity. 

 

Summing up, crypto is on track to becoming more and more mainstream, encouraging more people to trade and invest into them. As with any other stocks or international currencies or precious metals like gold or silver, the performance of any financial instrument is all about the value the people (as a collective) attach to it. It is all about the value that people are ready to buy them at and sell them for. And, by that token, cryptocurrencies are clearly well-positioned to become something larger and much more valuable than they are right now.