Growth of Cryptocurrencies
Once an evolving trend for tech enthusiasts, Cryptocurrency is an obscure and complex safe currency that has existed outside of standard finance. But it has seen steady growth as more coins materialize – and massive gains in the past few years, as bitcoin and related currencies have skyrocketed in value. In 2021, the cryptocurrency as a whole reached a market cap of $2 trillion.
Bitcoin was the oldest form of public cryptocurrency, created by an unknown person or group known only as Satoshi Nakamoto. Initially created in 2008 and released in 2009 as open-source software, it was the first instance of a decentralized digital currency without a central bank or administrator, or any need for intermediaries. And now, in 2021, bitcoin is no longer the only currency available. Other options, such as Ethereum, Dogecoin, Litecoin, Ripple, and more, are readily available through accessible marketplaces and are often integrated with the community as mobile apps.
In 2017, we witnessed the first real cryptocurrency boom, known as the year of the ICO, or Initial Coin Offering, as the number of ICOs launched jumped by more than 90%. And in 2020, we saw the second season of significant growth, with the introduction of decentralized finance, better known as “Defi.”
Along with the ‘Summer of DeFi’, public interest in cryptocurrencies for 2020 has increased dramatically in a variety of countries, with search interest across a few newer currencies jumping 87% in Turkey compared to the previous year, and 74% in Greece, And similar numbers in Argentina – all of them have seen relatively flat growth since the start of 2018. And while the US has seen a downward trend during this time, 2020 still causes a 6% increase in interest in searches. The same applies to the United Kingdom, where despite the downward trend from 2018 to 2021, 2020 provided an interest rate hike of 5%.
Regardless of these shifting levels of interest, the massive gains in value in 2017 and again in 2020 have shown that cryptocurrency is only a growing industry – and therefore one to watch as it begins to directly impact traditional retail.
2020: The Year of Cryptocurrency
While 2017 saw an initial massive surge in the value of Bitcoin, 2020 is when both Bitcoin and altcoins really started to gain traction outside of the crypto trader markets.
This has been a self-fulfilling prophecy: the more value expands, the more companies engage with the consumer in order to incorporate it, and thus the greater the value.
In addition to the launch of the cryptocurrency Visa Card, a handful of Wall Street investment firms and similar institutions have begun investigating cryptocurrency, albeit on a small scale. Major banks, such as Goldman Sachs, have also begun to explore the possibilities of currencies, by expanding their internal teams that handle crypto transactions.
Value also benefited from Bitcoin’s third “halving”. Every four years, the reward that bitcoin “miners” (who effectively “create” the currency) receive for providing the resource is halved, to slow the creation of new bitcoins and limit the supply.
This artificial limitation of demand did not immediately show a drastic change in the value of the currency, but it did show that there is often an upward trend after the event.
Even social culture influences the Cryptocurrency Market
However, it is not just Bitcoin and its technology that has fueled interest in cryptocurrencies. The “joke” currency Dogecoin (DOGE), created in 2013 as a way to simulate the wild speculation in cryptocurrencies that were developing, has long since consolidated into a true market force. Part of this is down to Elon Musk’s support: his promotion of the coin on Twitter personally and through its recent use by SpaceX to fund a rideshare mission to the Moon has sent the coin’s value up and down.
As other currencies become more popular, trends will increasingly be influenced in this way by consumer-focused discussions rather than that of experts and financial institutions.
Cryptocurrency and the future
The normalization of cryptocurrency and its slow entry into the broader culture is likely to usher in the early stages of broader acceptance. As banks and financial institutions begin to treat cryptocurrency as just another asset, consumers will begin to follow suit and put aside the risk of the unknown that likely limited the spread of Bitcoin and its competitors in the past.
As a result, it seems likely that online stores will more readily start including cryptocurrency as a payment solution alongside traditional card payments and PayPal (or equivalent). From there, moving down would mean physical stores start to catch on as well — particularly as the number of bitcoin ATMs becomes more widespread and the aforementioned cryptocurrency Visa card adoption rate increases.
It’s also likely that Elon Musk’s fame in both the tech community (as a figure in Tesla and SpaceX) and his advocacy of Dogecoin in particular will fuel much of this market. His hints about Tesla possibly accepting the Doge were only bolstered by the news that SpaceX would be using it for a space mission. The parody coin is now the fourth-largest cryptocurrency in the world.
Countries are also consolidating their resources and preparing for the broader use of cryptocurrencies. SmallBusinessPrices investigated which countries are best equipped to handle the decentralized currency uptake.
Caroline Brown also shared her thoughts on how and why a full cryptocurrency could happen:
There are 3 current trends that predict the adoption of digital currencies around the world:
Government and Central Banks’ Advancement to Digital Currencies (China and the European Union are Creating Government and Central Bank Digital Currencies)
Stablecoins (popular stablecoin with Tether the most popular having a market cap of over $50 billion)
Dwindling public faith in governments and the US printing exorbitant amounts of money during COVID (with public trust in governments globally waning and fiat currencies depreciating in value, people are turning to cryptocurrencies to create and save wealth)
The greatest example of this is Argentina. Hyperinflation in Argentina caused the Central Bank of Argentina to put a limit on the number of dollars that citizens could buy. To protect the Argentine peso, citizens can purchase a maximum of $250 per month. Argentine citizens cannot save or plan for their future and need a currency outside the traditional banking system that is not controlled by the government to store wealth. For this reason, Argentina is one of the cryptocurrency hubs.
The countries most prepared for a cryptocurrency takeover
Perhaps unsurprisingly, the country most willing to integrate cryptocurrency is the United States. Equipped with the highest number of crypto ATMs per person worldwide, and with an above-average valuation of its current cryptocurrency uptake, it appears that the country has already made some progress in making the currency part of its standard financial offering.
This matches Wall Street companies’ exploratory moves in the cryptocurrency direction, as well as the promotion of Dogecoin by the major vehicle company Tesla through Elon Musk.
After the United States, Hong Kong is actually one of the best locations for cryptocurrency adoption. A moderate increase in interest during 2020, high internet speeds (indicating a good level of technology adoption), and an estimated increase in interest in cryptocurrencies by 2025 indicate opportunities for market growth over time.
On the other end of the scale, countries like Cambodia, Lebanon, and El Salvador currently have little interest in cryptocurrency and some of the lowest ratings in terms of adoption. It indicates any possibility that cutting-edge technology will reach mass market adoption there any time soon.
Expert Advice: How to get involved in and prepare for cryptocurrency to be a part of our daily lives
Learn the basics of how to buy, store and hold cryptocurrency. An exchange is where you buy and trade cryptocurrencies for coins, tokens, or other fiat currencies. The wallet is where you hold your coins. You can either hold your cryptocurrency on an exchange or use an external wallet. If you want to hold your cryptocurrency on an exchange, check out the exchange’s security practices and read user reviews.
The history of cryptocurrency is filled with horror stories of users leaving their cryptocurrency on an exchange (instead of transferring it to an external wallet) and then having the central exchange gets hacked. There is a popular saying in cryptocurrency that is “not your keys, not your bitcoin”. Finally, cryptocurrency is filled with a lot of crash-and-dump schemes. Before buying a new token or coin, read it and ask yourself “Does this token solve a problem, or is it a solution in search of a problem?”