One topic buzzing around news and media headlines lately is the re-emergence of cryptocurrency in the mainstream consciousness, with Bitcoin being one crypto that has stood out among the rest.
To refresh the uninitiated, Bitcoin’s growth has been unparalleled over the past decade—growing exponentially in value.
In recent years, Bitcoin and many other cryptocurrencies growth peaked in value in 2021, then fell in 2022 onwards to a third of its peak value. But as of Q1 2024, it has gone and overtook its peak price of over $70,000 USD with little signs of slowing down.
There are many reasons why Bitcoin’s momentum continues to skyrocket: the anticipated 2024 Bitcoin halving, the rising price trend, and the approval of this cryptocurrency to be a part of exchange-traded funds in the US are some of these notable perks.
With these factors combined, cryptocurrencies like Bitcoin continue to make a name for themselves as viable alternative currencies and investments in the present day.
That said, a lot of sceptics wonder: is cryptocurrency going to fall back to the depths of irrelevance after all the hype dies down? Or is crypto going to hold its ground as a financial mainstay in the foreseeable future?
Let’s look at the facts and realities surrounding this elusive digital currency.
Cryptocurrency Explained
Before talking about anything else, it’s important to define cryptocurrency and explain it in the current context. Cryptocurrency refers to a broad range of of digital currencies with an equivalent value in real currency that aren’t owned by a centralised bank.
It’s not regulated by any governing body and is meant to be an accessible alternative currency that anyone can use. This is unlike fiat currency such as USD whose supplies are typically controlled by regulatory government bodies, particularly the U.S. Federal Reserve.
Cryptocurrency transcends borders while still being secure and transparent thanks to its underlying foundational technology called the blockchain. The blockchain is a ledger that publicly records and verifies all transactions, both past and present.
Furthermore, this ledger is not corruptible and hackable, which makes it ideal for hosting alternative currencies to traditional fiat currencies.
Thanks to these characteristics, cryptocurrency has grown in widespread appeal and adoption all around the world to varying levels of acceptance.
For instance, many businesses accept crypto as a form of payment to buy goods from their shop. Kiosks converting crypto like Bitcoin to fiat currency and vice versa are found in public areas around Australia and the US. El Salvador has even recognised Bitcoin—the undisputed king of crypto—as a legal tender.
And for everyday individuals, cryptocurrency has been likened to digital gold. Many who have patiently held Bitcoin in hard storage or cold wallets for investment purposes and have not withdrawn likely have a portfolio that’s more than double their initial investment.
The aforementioned functions are some of the reasons why crypto like Bitcoin and Ethereum are as popular as they are right now. With that said, is the current value of these cryptos justified? Or is a crash imminent?
The Hype of Cryptocurrency
There are many reasons why cryptocurrency is taking the media spotlight right now. Among these reasons include the following:
- The Bitcoin halving: The anticipated halving—a predetermined period when mining rewards drop to 3.125 BTC from 6.25 BTC—is expected to fall in April 2024, which further limits how much crypto miners can earn from mining activities.
- Bitcoin’s limited supply: On top of the halving, Bitcoin has a market supply of just 21 million coins, which plays a role in causing the surge of demand.
- Institutional adoption: Governing bodies, corporate entities, and individual actors are all starting to recognise crypto as a viable financial asset, increasing its legitimacy as an alternative investment.
- FOMO: Also known as fear of missing out, non-investors hearing about the substantial rise in the price of Bitcoin makes them more incentivised to invest and drive BTC’s growth, increasing prices.
3 Reasons Why Crypto is More Than Just Hype
With the current Bitcoin price rallying close to its all-time high as of April 2024, the spotlight is still shining bright in the cryptocurrency space.
And while many people would cast crypto away as being overhyped, there’s a lot of long-term appeal for crypto as a practical form of currency in the near future. In fact, its various use cases can even be observed until now.
Will crypto continue to rise in value throughout the years? With robust blockchain innovation and global-scale participation, the signs indicate that it very well could.
Let’s look into some of the reasons why crypto is actually worth investing in.
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Most Nations Recognise Crypto As A Real Asset
There are only 24 countries in the world where the use of cryptocurrency is prohibited by law, with some notable countries on the list being China, Saudi Arabia, Ghana, and Bangladesh.
While complete global acceptance seems unlikely, the truth is that a vast majority of countries hold a fairly accepting stance on crypto, including most major global and economic giants.
This is especially true for English-speaking countries, countries within the EU Union, and the rest of Asia.
For instance, the US is fairly lenient with cryptocurrency transactions; however, transactions worth $10,000 and above need to be registered with the U.S. Treasury for reporting purposes.
The United Kingdom and the European Union have also proposed for regulation in this space. In the UK, the government has passed the 2023 Financial Services and Markets Act to regulate and protect consumers transacting using cryptoassets.
For EU countries, the Parliament passed the Markets in Cryptoassets (MiCA) Regulation to regulate services related to crypto and stablecoins. This policy will be enforceable by 2025.
Canada and Australia hold fairly lenient stances on cryptocurrency ownership. In Australia, you don’t need to pay tax if you hold Bitcoin for purely personal use. However, transacting with them will trigger a capital gains tax that needs to be recorded in your taxation report.
Canada also has a similar scheme implemented as they view Bitcoin as a commodity just like Australia does.
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Crypto Transactions are Faster and Cheaper
One of the realities of transacting with fiat currency is that it is subject to hindering and expensive bureaucratic rules.
For instance, transacting from bank to bank or e-wallet to bank can incur a transaction fee, with some banks taking a fraction of your deposit. Furthermore, it can take hours, if not a day, for the payment to fully reflect in your account.
Credit cards allow you to make payments without having the cash immediately; however, they often come with a small fee per transaction that may add up. These problems are even more amplified for transactions made in different countries.
With cryptocurrency, this is a non-issue. The consensus mechanism built in the Bitcoin blockchain enables faster and fee-less transactions, making global transactions much easier and speedier to process.
This crypto-specific bypass grants you more control over how you send and receive money.
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Crypto and Blockchain Technology are Ever-Evolving
While Bitcoin is the talk of the town in the crypto space, particularly because of its maximum supply cap, there are more cryptocurrencies than Bitcoin.
In fact, in terms of use cases, other cryptocurrencies like Ethereum have Bitcoin beat.
Ethereum has a blockchain that disrupted industries like healthcare and real estate due to its unique blockchain infrastructure, allowing for the execution of programmable smart contracts.
Decentralized finance (DeFi) services are also available, granting users autonomy and open access to financial services within the crypto space.
And with the crypto space being an emerging industry, there are many new players and updates to old, mature cryptocurrencies that are intended to expand the utility of this space.
And considering that the first cryptocurrency has only been released 15 years ago, the future looks bright for actors in this field.
