Four Good Reasons to Be Optimistic About Bitcoin: Is Bitcoin the cryptocurrency of the future?

Four Good Reasons to Be Optimistic About Bitcoin: Is Bitcoin the cryptocurrency of the future?

So far in 2022, the entire crypto market has been impacted by wider economic and political uncertainties, led by Bitcoin (CRYPTO: BTC), with prices down more than 50% over the past six months and the price heading for the ninth consecutive red weekly candle. And while Terraform Labs successfully airdropped new Luna tokens to previous holders, the market sentiment continues to be bearish, with the Fear and Greed Index remaining in the doldrums.

One way to avoid panic selling when the price of cryptocurrencies drop significantly is to remind yourself of the essentials, to stick to your plan and don’t invest more than you can afford to lose.  Of course, that’s easy to say when you’ve lost money in Luna and seen your Bitcoin investments go down in value. However, there’s also an upside to the current market conditions as users can now buy Bitcoin at the new low price around the $30,000 mark.  But no matter what level your holdings in the current market, you should be optimistic about the long term viability of Bitcoin. Here are four key reasons to consider, to help re-frame your mindset and support your belief in Bitcoin going forward.

Mass adoption of crypto assets

According to relevant data, cryptocurrencies have reached a tipping point in 2021.  It has evolved from what many consider a niche investment to be a global, established asset class.  Venture capitalists are pouring money into the cryptocurrency market.  Among them, venture capital invested more than $30 billion in crypto assets and blockchain startups, with more than $10.5 billion in investment in the fourth quarter of 2021 alone. With an estimated $10 globally in the first quarter of 2022, reportedly the largest amount to date, and double the level for the same quarter in 2021. In fact, investment in crypto has continued to grow despite this year’s decline in Bitcoin price. “This decoupling is demonstrative of investors’ disbelief that a prolonged bear market in digital assets is forthcoming, as well as the significant amount of dry powder held by funds seeking to allocate to the sector,” said Alex Thorn, head of firmwide research at blockchain-focused bank Galaxy Digital in New York earlier this month.

Many major financial institutions are also exploring cryptocurrencies.  Recently, Fidelity, the largest retirement plan provider in the US with over $4.2 trillion in assets under management, said it would allow investors to deposit up to 20% of their retirement savings in the form of Bitcoin into their accounts.  While banking giant JPMorgan recently said that despite the crypto crash, its estimate of Bitcoin’s fair value is $38,000. “The past month’s crypto market correction looks more like capitulation relative to last January/February and going forward we see upside for bitcoin and crypto markets more generally,” the bank’s strategists said. In addition, both Visa and Mastercard have launched their own crypto cards.  And as the regulatory environment is catching up, ironically thanks in part due to the Terra collapse, there is reason to believe that cryptoassets will enjoy mainstream adoption in the future.

Countries adopting Bitcoin as legal tender

El Salvador was the first country to adopt Bitcoin as legal tender, led by President Nayib Bukele, but so far it remains uncertain whether the bold initiative will succeed.  As reported in the Wall Street Journal on May 14, “there are no indications that Mr. Bukele plans to change course. On Monday, he said on Twitter that El Salvador bought 500 bitcoin at an average price of $30,744. “El Salvador just bought the dip!” he added.” It’s not just El Salvador, the Central African Republic also recently approved Bitcoin as its national legal tender.  No one could have imagined that this cryptocurrency, which was only invented some 13 years ago, could become the legal tender of a country today.  If these experiments succeed other countries may adopt Bitcoin or other cryptocurrencies as their legal tender in the future.

Is Bitcoin the cryptocurrency of the future?

One of the appeals of Bitcoin and other cryptocurrencies is that it removes friction in terms of costs and transaction speeds from payments, especially international transfers.  Indeed, according to Ark Invest, cumulative Bitcoin transfers have grown by more than 463% in the last year.  ARK analyst Yassine Elmandjra wrote in the report ‘Big Ideas 2022’ that Bitcoin will settle $13.1 trillion in 2021, a figure that even exceeds Visa’s payment volume.

Ark Invest’s research also highlighted several areas where Bitcoin could take market share from traditional activities. These include international remittances, emerging market currencies, institutional investment and acting as a form of digital gold.  Some experts predict that if Bitcoin can make significant progress in advancing these use cases, its price could exceed $1 million by 2030.

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Source: ARK Invests Yassine Elmandjra tweet, Jan 25, 2022

Bitcoin’s innovation continues apace

Although Bitcoin is not run by a centralized organization, it continues to grow along decentralized lines.  There is a small core group of developers working on improving the network, fixing bugs and security issues, and improving functionality.  For example, last year Bitcoin implemented a major upgrade called Taproot to improve privacy, scalability, and security.  Another potentially significant move is the development of the Lightning Network, a layer 2 solution to Bitcoin that reduces costs and increases speed.  As reported in Cointelegraph on May 30, “Bitcoin Lightning Network capacity attained an all-time high of 3915.776 BTC, as evidenced by data from Bitcoin Visuals, displaying a commitment to the cause of improving BTC transaction speeds and reducing fees over the layer-2 protocol.” This follows news from CEO of Strike, Jack Mallers, at the Bitcoin 2022 conference, that the company’s plans to collaborate with point-of-sale behemoths Shopify, NCR, and Blackhawk Network to revolutionize the payments industry. As a result, online retailers that support Shopify can now accept payments via the Lightning Network, in turn allowing US merchants to receive payments from customers globally as US dollars. As the integration of the Strike wallet is with major online players in the US economy, this could potentially do a lot for the broader adoption of Bitcoin in the retail industry.

While there are good reasons to remain optimistic about Bitcoin, there are also still many things that investors and traders need to be careful about when investing in Bitcoin and cryptocurrencies.  Data in recent months confirms once again that cryptocurrencies are a highly speculative and volatile asset.  Cryptocurrencies are still a relatively new sector compared to traditional investments like stocks and funds, and while we don’t have certainty exactly how it will develop in the long term the potential is clear to see. “I believe Bitcoin is a viable long term investment both as a store of value looking to the future, with the price trending significantly upwards after each halving event. But also, I’m excited about the rapid development of the Lightning Network, for both retail players but also for financial inclusion across the globe,” said BigONE Chairman Anndy Lian.

Original Source: https://www.benzinga.com/22/06/27599358/four-good-reasons-to-be-optimistic-about-bitcoin-is-bitcoin-the-cryptocurrency-of-the-future

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Four biggest crypto market trends to look out for in 2022

Four biggest crypto market trends to look out for in 2022

The cryptocurrency market boomed in 2021, enjoying a surge in mainstream popularity and acceptance, as well as finding favour with governments and financial institutions seeking to explore a world of payments and transactions beyond the traditional banking paradigm.

Some have gone as far as to label 2021 as the breakthrough year for cryptocurrency. Bitcoin (BTC) hit multiple new all-time high prices; we saw more widespread institutional crypto adoption from major companies; and higher levels of regulation and enforcement were introduced that have the potential to transform the industry as a whole.

There’s certainly a compelling case to be made that cryptocurrency has proven itself as a growing sector. CoinMarketCap data currently lists over 13,000 cryptocurrencies in existence, while the total market capitalisation of all crypto assets surpassed $2tn for the first time in September this year, a tenfold increase since early 2020.

The mere fact that a critical mass of credible institutions are now engaging with crypto assets means cryptos have cemented their position as an official asset class. A clear indication of this is Square investing $50m and $170m in bitcoin (BTC) in the first quarter of 2020 and the first quarter of 2021, respectively.

Tesla announced in its 2020 annual report filing submitted to the US Securities and Exchange Commission (SEC) that it had invested $1.5bn in BTC, while PayPal announced in October 2020 that it is launching a new service enabling customers to buy, hold and sell cryptocurrency directly from their PayPal account.

According to an October 2021 CryptoCompare report, institutional investors seeking exposure to crypto saw BTC trading volumes on the Chicago Mercantile Exchange (CME) rise 121% to $70.3bn in October this year – an all-time high for the exchange.

Similarly, ethereum (ETF) futures volumes on the exchange rose by 13.6% to $21.0bn. In the same month, BTC had its highest month-close to date, reaching an all-time high of $66,981 on 20 October 2021 following the launch of the first bitcoin-linked ETF in the US.

What’s more, a report by Allied Market Research on crypto market predictions estimates that the global crypto market could hit $4.94bn by 2030, growing at a compound annual growth rate (CAGR) of 12.8% from 2021 to 2030.

The main drivers of cryptocurrency market trends will ostensibly be increased demand for international remittances and more transparency in global payments systems.

BTC as a mode of payment

When bitcoin (BTC) was first conceptualised in 2008, its founder, the mysterious Satoshi Nakamoto, envisaged it as a purely peer-to-peer version of electronic cash that would allow payments to be sent directly from one party to another without the need of a financial institution.

More than a decade later, businesses are starting to accept cryptocurrencies like bitcoin as legal tender, thereby boosting the viability and utility of digital currencies more generally.

On 7 September this year, El Salvador became the first country in the world to officially class BTC as legal currency. The country now requires all merchants to accept bitcoin as long as they have the technology to do so. Promisingly, El Salvador’s president, Nayib Bukele, recently stated that over 2.7m citizens are users of the country’s Chivo wallet.

Could this new development pave the way for more countries across the world to modernise their economies? A domino effect could happen in 2022, with more nations adopting bitcoin as legal tender. This would help to provide financial inclusion to those outside of the formal economy, since BTC transactions can be conducted by those who are unbanked as well.

In another monumental moment, the second-largest bank in Spain, Banco Bilbao Vizcaya Argentaria (BBVA), enabled a bitcoin trading and custody service for its private banking clients earlier this year. More banks could follow suit in 2022 as demand for crypto products increases among customers.

The installation of bitcoin automated teller machines (ATMs) also marks another turning point for the crypto sector. According to data from Coin ATM Radar, there are currently 27,983 BTC ATMs installed across major cities in the US as of 22 November 2021.

However, it’s worth noting that adopting bitcoin as legal tender raises a number of macroeconomic and legal issues, since BTC isn’t regulated in the same way as traditional currencies, thus making it potentially more susceptible to money laundering and tax evasion.

Central bank digital currencies: The money of tomorrow

In parallel to bitcoin adoption, many countries across the world are now developing their own central bank digital currencies (CBDCs). A CBDC is an electronic form of money that can be held both by the public and financial institutions depending on the adopted model.

Faster settlement is a key advantage of a CBDC-based payments system. A recent study by the Bank for International Settlements (BIS) found that central banks representing a fifth of the world’s population are likely to issue a general-purpose CBDC in the next three years, while a vast majority of those surveyed (86%) are exploring the benefits and drawbacks of CBDCs. Overall, if a CBDC qualifies as legal tender, it can provide a credible and trustworthy alternative to current cash transactions.

In terms of cryptocurrency market analysis, CBDCs could gain further popularity in 2022 as their direct links to central banks, and the reduction of both domestic and cross-border intermediaries, aim to improve the efficiency of retail payments significantly.

Among the many central banks exploring whether they should issue a digital complement to cash is Swedish-based Riksbank. The bank is currently exploring the concept of an electronic Krona to provide an alternative to state-guaranteed means of payment.

Comparatively, the Monetary Authority of Singapore and Banque de France announced the successful completion of a wholesale cross-border payment and settlement experiment using CBDCs earlier this year, highlighting how digital currencies can be utilised for different purposes by virtue of their versatile and customisable nature.

Will 2022 be the golden year where countries all over the world finally experiment with their own versions of digital currencies? Since China announced in April this year that it will test digital yuan during the 2022 Winter Olympics in Beijing, the world’s second-largest economy could take the lead in the CBDC race.

BigONE Exchange chairman and chief digital advisor for Mongolia’s national productivity agenda Anndy Lian told Capital.com:

“China has made a good start in terms of their national digital currency initiatives. This has pressured many other governments and private sectors to ramp up their CBDC efforts in order to remain globally competitive. The need to embrace and adopt new technologies is a must. It is all about CBDC now. The new Currency Cold War has just begun.”

Increased emphasis on environment: Bitcoin’s carbon footprint

Next in the list of crypto trading trends is BTC production, which generates an estimated 22–22.9 million metric tonnes of carbon dioxide emissions a year.

Why? Bitcoin is created using high-powered computers that rely on fossil fuels (particularly coal) to operate their energy-intensive processes.

Is it possible to mitigate the harmful environmental effects of bitcoin mining? Hydropower could be the answer in 2022, especially if we look at southwestern China as an example, where hydropower currently accounts for an astonishing 80% of generated electricity in the provinces of Yunnan and Sichuan.

Global crypto regulation: What to expect

This year, UK tax office Her Majesty’s Revenue & Customs (HMRC) published its Cryptoassets Manual containing new guidance on the taxation of staking rewards and derivatives, while a new 2021 bipartisan bill in the US laid out a provision to levy taxes on digital currency transactions.

Last year, the Spanish government created a new law that includes measures to combat tax fraud linked to cryptocurrencies too.

Along with the countries that already mandate crypto-asset holders to disclose both the value of their assets, as well as the interest earned on those assets, new lawmakers and governments may start taking a deeper look at regulating the sector better in order to improve how they monitor cryptocurrency trade.

The chief investment officer and director of research at ETF Trends, Dave Nadig, believes that the SEC has been disappointing this year in terms of its comprehensive crypto regulation:

“The US has a chance, as a country, to become a real leader in the future of global finance. Currently, I’m convinced we are hindering this through regulatory inaction and legislative indifference.”

Given that governments worldwide remain divided on how they define cryptocurrency as a store of value, we’ll have to wait and see how policies unfold in 2022, since each country possesses its own diverse range of regulatory and compliance frameworks.

 

Original Source: https://capital.com/crypto-market-trends-what-is-next

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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