Rana Gupta, Vice President, Identity and Data Protection, Asia Pacific, Gemalto
We’re now into the second decade of Bitcoin – the cryptocurrency still aiming to take the world by storm. Passing the 10-year mark for any technology is impressive, given the nature of the business, so it’s worth considering if Bitcoin is now established enough to say it’s going to stick around, or will it eventually run out of steam?
Back in 2008 when it was launched, the cryptocurrency was pretty worthless and basically invisible to the wider world. It wasn’t until the major spike hit last year that Bitcoin gained real notoriety as its value shot up and then dramatically down.
Case in point: In the past few months alone, the Token Economy Association in Singapore was incepted to oversee digital tokens such as Bitcoin to regulate the sector and ensure the integrity of this nascent – but growing – market. Looking further afield, it seems that the true value of Bitcoin is actually going to be the very notion of a crypto currency, and the underlying Blockchain technology.
Bitcoin has been the flag bearer for the crypto community for a long time, inspiring the creation of many other cryptocurrencies. With each one of those, whether ultimately successful or not, the chances of one of them eventually taking hold increase as the awareness grows. Problems which have faced Bitcoin since inception, such as not being known by enough people to make it a currency, are being steadily pushed back.
At the same time, the underlying Blockchain technology, essentially a distributed ledger is tested, examined and refined. Blockchain itself is the real emerging shining light in all of this through its ability to underpin solutions of value beyond cryptocurrency. Applications containing the technology are emerging in diverse industries including logistics, population management and financial services.
The bubble rises
Looking at the immediate future, the sheer scale of activity in the cryptocurrency space, coupled with an absence of regulation, mean there’s inevitable risk. Bitcoin has stood the test of time, if a decade can be called that, better than any other, but a storm is brewing in the form of a bubble. The price history and the irrational exuberance which has accompanied many other “alt-coins”, indicates this. Again, however, the only certainty is uncertainty: so while there is a good chance of Bitcoin reaching higher levels, the cryptocurrency bubble is going to burst at some point. Like all bubbles, naming the exact time it’s going to burst is impossible.
When that happens, is Bitcoin finished? The dot-com bubble of 1999 provides hints. Companies like Amazon and Google suffered in the short term, but these businesses survived, prospered and became essential to our daily lives.
Similarly, with the convenience and international nature Bitcoin promises, the hype could give way to the delivery of solid value. A rapid deflation could “clean out weak hands”, according to investors, leaving only the serious players to establish the true value.
The dark side
No review of the past decade would be complete without the perceived dark side of cryptocurrency. Where Bitcoin is concerned, the perception of anonymity and “
While it was established as a currency outside of regular controls (a characteristic that has drawn many to it) Bitcoin and other cryptocurrencies have matured to a point where there is growing understanding of the necessity for regulation and financial controls. Some exchanges are starting to listen and are implementing “Know Your Customer” controls to provide more accountability. Bitcoin is also being more widely accepted for retail purchases and it is starting to align with other legitimate payment systems.
These moves into the mainstream show Bitcoin has a positive future as a currency as it strengthens oversight, thus ensuring that law enforcement can gain a clearer view of who owns the account. It also means that the currency’s appeal is diminished for criminals, pushing them towards other cryptocurrencies (such as, Monero) that strongly enforce privacy and anonymity.
The wheels are already in motion
The key thing to remember with Bitcoin is the established nature of the cryptocurrency, particularly in its market place where it is the de facto leader. The technology behind it, Blockchain, is also been rapidly expanded into other areas, so the awareness of everything is continuing to grow at a rapid pace.
Whether Bitcoin itself ultimately ends up being the one that makes it remains to be seen, but it’s clear the age of the cryptocurrency is here, and Bitcoin will continue to play its part for a while longer at least.