Different people around the world have different opinions and points of view about the future of digital currencies. While some experts and market strategists have negative views about crypto and believe that the future of crypto might not be as lucrative for the investors as they believe it will be, due to the massive amounts of risk and volatility involved in crypto prices. Other experts, however, anticipate a more stable and profitable future of the virtual currencies, and that crypto will increase in acceptance and thereafter become the future of finance and many other fields.
The world has suffered in the recent years, with the most recent global pandemic Covid-19, which shook the world and its effects rippled through global markets affecting people worldwide. However, despite of this and many other crisis, a lot of analysts have been rather optimistic about the crypto. And so far, this optimism has not gone wrong given the price rallies of Bitcoin towards the end of last year (2020) and at the beginning of the current year, as Bitcoin was seen rising to it’s all-time high price point.
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Reasons BTC’s Price Rise is Different This Time
It was observed that during the (then) all-time high price rise of BTC towards the end of 2017, people rushed towards the leading digital currency in the world. However, since the price rally lasted for a shorter while and was overtaken by sharp declines, a wide range of people young and old alike, who invested in crypto-currency during the time were disappointed and discontented. Nonetheless, experts and analysts clarify that the price rally in 2017 was caused by individual investors rushing in and buying the crypto rather than institutional investments (which are more long-term in nature and thus cause more stability in price trends). This is why as soon as the individual investors pulled out their bitcoin investments, the BTC prices were seen sharply declining during 2017.
However, more recently, there has been an increased institutional participation in the crypto market which makes the recent price rally of BTC different from the one in 2017 in several ways. Examples of the big names which have bought their significant shares in BTC are companies like PayPal, JP Morgan and Microsoft Etcetera. PayPal will be introducing a feature which will enable its users to pay through their bitcoins through their digital wallets via the PayPal service from 2022. JP Morgan on the other hand will be introducing their internal virtual token and there is a digital asset division within Fidelity itself.
Another thing worth noticing is the fact that the recent rally in BTC price has been publicized and promoted relatively on a smaller scale than the one back in 2017. The reason why this is a good indication is because back in 2017, when the news about the price rise of bitcoin spread across on the news headlines and conversations, everybody began buying the crypto, aiming to get rich. Even the ones who did not have enough information and research to survive in this market began participating, ignoring all the warnings. However, this sudden inflow of buyers was unsustainable and eventually caused the rally to end and the prices started falling instead.
If we look at the current situation, the spread of news regarding the bitcoin price rally has been rather controlled and limited to just the ones who are well-informed about the crypto and the ones who are active participants of the crypto market, the righteous believers of the success of blockchain technology and its mainstream adoption in the future. This absence of frenzy could also be due to the fear instilled in the minds of people after the disappointing events of 2017. Or maybe due to the fact that this bull run might be the real one!
It should be noted that there is a significant number of market analysts and participants who are being more concerned regarding the future of crypto, and are therefore proceeding with caution. Contrary to this, a great majority of people have been rather optimistic regarding the future of crypto during this year and the years to come. However, it should be known that there are certain risks associated with crypto and Bitcoin which should be considered.
A Look at the Risks
While analyzing the disadvantages and risk of Bitcoin, the most prominent one is the underlying uncertainty, or in other words, ‘Volatility’ in its price trends. The price of BTC can increase in some time, and fall back to the same point or even below in a matter of just days or hours. Security risks and threats can be another major area of concern for people looking to invest in crypto. Such as the 51% attack, where an abrupt shift in the controlling dynamics allows the miners to disturb the transactions after they gain the majority control over these transactions.
A Last Word
Despite of all these factors, the pros of Bitcoin outweigh the cons, and a surge in the institutional interest in the Bitcoin and companies like PayPal making Bitcoin transactions more convenient, has increased the accessibility of people to BTC simpler and easier, causing the Bitcoin and other major digital currencies to become a significant part and feature of the future of finance.