Bitcoin is the world’s largest cryptocurrency by market capitalisation. It is considered one of the most significant innovations of the 21st century and requires no introduction today. Most people are aware of the digital currency and especially among investors, Bitcoin has carved a place for itself. The cryptocurrency is increasingly becoming a part of financial transactions and of late, many companies have started accepting payments in Bitcoin. In other words, the trend of accepting Bitcoin for payments is on the rise.
Bitcoin: what is Bitcoin and why is it important?
As mentioned above, Bitcoin is a cryptocurrency that is underpinned by blockchain technology. It is an important class of asset that has now become very popular among investors. It has considerable implications for the economic situation of the financial world because any kind of turbulence in its prices has the ability to sway the markets in a significant manner.
Bitcoin has revolutionized our financial system like never before. It can be considered as the first payment system in the world that works without the intervention of any third party – be it banks, financial Institutions, or payment gateways. It is also important from the perspective of financial inclusion as the cost-effective transactions offered by Bitcoin and other cryptocurrencies can prove instrumental in bringing a larger section of society under the financial coverage.
Price History of Bitcoin
The price history of Bitcoin, just like other cryptocurrencies, is very turbulent and tumultuous. When it was introduced in the year 2009, it was valued at Zero though, by the start of the year 2015, the value of the Bitcoin rose to $315.21. The end of 2016 saw the prices rise to the level of $900.
However, the real surge in the prices came in 2017 when by the end of the year, Bitcoin skyrocketed to the level of approximately $20k. Again in January 2021, Bitcoin breached the level of $40k, and in April, the digital currency crossed $63k. Again, Bitcoin surged high and reached its all-time high value of $67k in November 2021. That said, its prices have tumbled since then, and according to the latest figure, Bitcoin is valued at $43k.
How Does Bitcoin Work?
Bitcoin is based on blockchain technology, and it works on the principle of the open ledger. The advantage of the blockchain is its item per proof nature, which means no addition or subtraction of the data can be done on the ledger without the consensus of all participants of the ecosystem. The algorithm used by Bitcoin is the Proof of Work which is quite a secure mechanism to achieve desirable results.
Pros And Cons of Investing in Bitcoin Cryptocurrency
The Pros associated with investing in Bitcoin include the higher rate of Returns, protection from any potential fraud, ability to immediately settle for the transactions (even in case of the cross border), and ability to diversify the investment with better liquidity options. On the other hand, the cons include very high volatility associated with the prices of Bitcoin, suspicion of black market activities involved in the process of transactions, the threat of cyberattacks, and a completely unregulated structure.
Advantages Of Bitcoin
The primary advantages associated with Bitcoin include its decentralized structure and the highest level of safety and security offered by digital currency. The transactions are based on blockchain technology, and once recorded, it becomes virtually impossible to alter them. The high speed of the transaction associated with Bitcoin can also be counted among the most desirable characteristics of the cryptocurrency. In addition, transactions are cost-effective because there is no third party involved in transferring money from one account to another.
Disadvantages of Bitcoin
The biggest demerit associated with Bitcoin is its high price volatility. The value of the coin keeps on changing with each passing day, and that poses a problem for many investors. It is also a cause of concern for accepting Bitcoin as a legitimate method of payments as high volatility means businesses cannot rely on storing the cryptocurrency for future use. The regulated part, which is merit as far as the cost-effectiveness and transaction time, comes across as a demerit for many investors.
Crypto Experts on Bitcoin Price Prediction
According to most Bitcoin price prediction experts, Bitcoin price may become a bullish trend in 2022, and this is because the basics of digital currency continue to remain strong. With more and more organizations now starting to accept Bitcoin as a legitimate payment method, the mainstreaming of digital currency will play a crucial role in its favor. This mainstreaming will also be the key aspect that will help Bitcoin have a positive price movement in the future.
Bitcoin can be easily considered one of the most innovative solutions that have completely changed how the financial world works. The concept has even inspired the government and regulators across the globe to take a serious look into the prospects of digital currencies. Bitcoin is expected to continue with its positive Momentum in 2022 and is expected to yield rewarding returns for investors in the future.