From a merely geeky fad in 2009, recording-breaking growth in the next decade and an increasing acceptance of its role in society, cryptocurrency has assimilated into our modern world. The question is however, whether this is just temporary or the start of a new era. This article will focus specifically on Bitcoin’s past, present and future to determine its longevity.
Nearly everyone is familiar with cryptocurrency, whether they are skeptics, wholehearted fanatics, or gamblers looking to make an easy profit. Bitcoin specifically has shown quite some resilience, as, despite its volatile market capitalization, the coin is still commonly used as standard for the health of the cryptocurrency market. Bitcoin has established itself firmly, but despite some experts’ expectations, the coin has only turned out to be complementary to the existing financial system, instead of altogether displacement. This makes one wonder, why everything has not been transformed to Bitcoin, or another cryptocurrency. Although entire books could be written about this, it mainly boils down to established institutions, regulations and financial systems but also general public opinion being extremely rigid and being far less able to change flexibly than technology. Naturally, this protection by existing frameworks halting innovation is not necessarily a bad thing, as technologies should be properly understood before recklessly transforming modern society. (Mukhopadhyay et al., 2016)
Considering the increasing use of blockchain, metaverse, AI and machine learning technologies, it is very likely that cryptocurrency or some derived version of it, will become an integral part of our future, or at least heavily impact its development. This still leaves the question whether Bitcoin specifically will be part of this future as well. And despite the remarkable growth and resilience that can be ascribed to the coin, the future might not look too bright in this regard. (Kolbert, 2021)
Firstly, usage of Bitcoin (and other cryptocurrencies) is often associated with crime. This can range from money laundering to human trafficking or cybercrime, involving malware and ransomware. There are many coins whose creators/owners recognized this risk and increased the coin’s traceability and potentially limit its usage. Bitcoin is not regarded as one ‘cleanest’ coins in regard to crime linkage, but this alone could not possibly spell its doom.
Secondly, and arguably more importantly, the operationalizing/mining of Bitcoins as well as the blockchain server maintenance, are extraordinarily demanding of the environment, often rivaling carbon emissions of entire modern nations. In other words, if Bitcoin does not get with the times of environmental awareness and manages to ensure related changes to its structure, it could very well become obsolete. The coin currently runs on about 60% of green energy, but not only is the type of energy relevant, the sheer energy usage could cause the coin to be incompatible with the future of crypto. Some cryptocurrencies are already fully carbon-neutral, and focus intensely on energy efficiency and sustainability. (Kumar, 2021)
The future is hard to predict, but regardless it will prove challenging to try and transform an unwieldy financial structure, generally typified by freedom and the absence of boundaries. Will Bitcoin make the cut?
Sources
Kumar, S. (2021). Review of geothermal energy as an alternate energy source for Bitcoin mining. Journal of Economics and Economic Education Research, 23(1), 1-12.
Kolbert, E. (2021). Why Bitcoin Is Bad for the Environment. The New Yorker, April, 22.
Mukhopadhyay, U., Skjellum, A., Hambolu, O., Oakley, J., Yu, L., & Brooks, R. (2016, December). A brief survey of cryptocurrency systems. In 2016 14th annual conference on privacy, security and trust (PST) (pp. 745-752).
Interesting blog! I’ve been thinking a lot about this myself. I think the same is true for bitcoin as for other big technological changes, it takes a lot of time. It will take years before the Metaverse and Blockchain are accepted by the big crowds, this will also impact Bitcoin. As with the Metaverse, there will have to be strict regulations from (local) governments. If these regulations are in place, people will also become more confident in using Bitcoin. So my expectation is that Bitcoin will only gain real acceptance with government interference.
This is a very informative and interesting post! As I am a believer of Bitcoin (and cryptocurrency in general) being part of the future, I think there is still a long journey for people to accept Bitcoin. Central banks in the world are pressured to accept Bitcoin as digital currency in their country. For instance, Russia has allowed to use cryptocurrency for international trade settlements, but not within the country itself. Saudi Arabia, on the other hand, hires a crypto chief to oversee its program on virtual assets. Both of these countries have rejected the use of cryptocurrency in their countries before but managed to meet halfway in terms of its adoption. I wonder how would other countries react to this!
Sources:
(a) https://www.nasdaq.com/articles/russia-one-step-closer-to-using-bitcoin-crypto-in-international-trade-as-central-bank
(b) https://www.bloomberg.com/news/articles/2022-09-04/saudi-central-bank-hires-crypto-chief-to-boost-digital-ambitions
Interesting blog on crypto! A question that comes to mind is if crypto will be the same as other disruptive technologies, where many people do not believe it will last and make the cut as they believe it is a gimmick not to stay, yet eventually pulls through, and if it will follow the same trends as the internet and the .com bubble with the market fluctuations, eventually leading to a well established industry, which everyone accepts and embraces. As other articles mention, bitcoin will likely become the gold of the crypto industry, yet other coins will for sure need to take the large load of the market in terms of spending and using with the large energy consumption of bitcoin.
Another question that arises is security for the user, people partially use banks as they know if they make a mistake sending money or their account is defrauded the bank will most likely fix this situation. currently due to the decentralisation of crypto your money often then just disappears. With humans seeking security, how will crypto grow to support this?
Very interesting look on the future of Bitcoin. As Bitcoins come with many benefits, their side effects come with huge negative externalities as it is mentioned in the article. Money laundering, human trafficking, but they are also used in the finance of terrorism. Though, the increasing demand for a decentralized digital currency has been accelerated by the COVID-19 pandemic and decreasing trust in central banks. So, people are ready to adopt a new (decentralized) digital currency but not in the current form of Bitcoins as its impact on the environment are too substantial. Furthermore, a lot of regulations can also take its toll on the adoption of digital currencies while a lot of central banks are currently developing their own digital currency.