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The value of Bitcoin

The value of Bitcoin
Date
12/08/2020
Written by
Lykke
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Unless you took the self-isolation to the extreme and you ended up practicing social media abstinence, you are assumedly aware of some of the recent events that allegedly led Bitcoin to the all-time highs we are all currently enjoying. So take a big breath while we break down the recent events of the crypto world and what they mean.

With recent active influence from popular figures such as Elon Musk (co-founder and CEO of Tesla, SpaceX, Neuralink, and The Boring Company), Jack Dorsey (co-founder and CEO of Twitter and founder and CEO of Square), the Winklevoss twins (founders of Gemini), and other public companies, the prime digital currency is reaching the mainstream and the lobbies of corporate investors.

Major companies such as Tesla and Uber have recently stated they are considering accepting payments in Bitcoin. For quite some time Microsoft has been accepting Bitcoin in their stores. Twitch owned by the giant Amazon has had a love-hate relationship with the digital asset, accepting it in 2014 and then silently removing it, only to finally add it back in 2019. A CocaCola distributor in the Asia-Pacific Region (Coca Cola Amatil) started accepting payments in Bitcoin in 2020 and the list of similar examples goes on including PayPal, Starbucks, and others. 

Perhaps COVID-19 was the kick-starter, confining people and pushing the rollout of technology to replace the bonds of human contact. Indirectly guiding us deeper into the digital world, combined with the economic uncertainty generated by the global crisis, these factors were probably the catalyst the cryptocurrency industry needed to reach the mainstream. 

In the UK, the FCA (Financial Conduct Authority), has completed the 2020 Cryptoasset consumer research in which concludes that 5.35% of the population (over 18) has held or holds cryptocurrencies, and that’s 2.35% more than the previous year(2019). Of course, we can argue that this is only in the UK and there are other countries where the cryptocurrency adoption is greater or less, but for the sake of this article, we will consider this study as a representative sample for the world population with the hope that provides you a clear image of the size of the crypto industry. 

From the perspective of a long-lasting advocate of the crypto industry, Lykke can assure you that one of the biggest challenges we face in our daily activities is to bridge the gap to the mainstream. Whether this refers to the stance of regulators or the negative sentiment on social media, the crypto world had its hands tied. Let’s think about this at a lower and less complex level; try earning your daily salary in any digital currency and then go and have fun trying to pay your taxes. Unless you live in a very very open minded-progressive government, you will knock your face against the wall. 

Now - thanks to recent events - normal people outside the crypto world are becoming more permeable to the idea of investing in Bitcoin. Not only that but thanks to the progressive-minded regulators who are untiringly working and creating a forward-looking regulatory environment(emoji wink), the crypto industry has become attractive to corporations. 

We won’t embark on an endless debate about what currencies have value, nor to discern between commodities, fiat, or cryptocurrencies. We will simply cut to the chase; the real value of Bitcoin is not what the digital asset represents, nor its underlying technology. The real value of Bitcoin is driven by the popularity and acceptance of the digital asset at a mainstream level. With the increase of SMEs accepting the digital asset, the utility of Bitcoin increases giving value to the retail investors, combine this with slowly but steadily being more and more regulated, makes Bitcoin a beacon for corporate investors. Nonetheless, while the digital asset is being amassed by big players, one way or another they will eventually influence the price as we recently experienced the almost USD 11K drop on Monday (speculation alert).

It is clear that with the influence and support of the above mentioned companies and individuals, the digital currency is gaining ground. Bitcoin has experienced the major bull run in the history of the digital asset, and we strongly believe it will not stop here (friendly warning, this is not trading advice). Now people like your parents or that weird uncle are wondering if they can buy some Bitcoin or Dogecoin, and that is indeed extraordinary. Considering how hard it was for the crypto industry to break the invisible barrier to the mainstream, we are finally doing it. 

As digital assets achieve more and more popular consensus, this will presumably provoke a new wave of regulations, however. Regulators are out there in the wild trying to control industries with the intent to protect retail and corporate investors by cleaning the weeds in the lawn without killing the grass (a scenario that can be argued). 

In conclusion, why did no one think of Elon Musk to tweet a few years ago? 

About Lykke

Lykke’s mission is to build a new ecosystem for the outdated finance industry by leveraging the power of the blockchain. Since its inception, the company has been committed to upgrade finance and support the industry in reinventing itself, with a systemic approach across both B2C and B2B markets. Through its marketplace, Lykke offers unique financial products and empowers both retail customers and financial institutions to invest with no intermediaries, low cost, and ease of use.

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