How Did Bitcoins Become Popular?

Although the crypto market has gone through so many transformations over the years, the one thing that hasn’t changed is the fact that Bitcoin, the cryptocurrency that started it all, is still the biggest and most popular digital currency in the market right now.

This article discusses the key reasons for Bitcoin’s current popularity.

  1. Offers an Alternative Financial System

Bitcoin is not just the world’s first digital currency—it is also the most popular. Bitcoin was originally intended as an alternative to fiat currencies, and to encourage sellers and buyers to use it as their mode of payment for purchased goods and services. While Bitcoin prices are still rising because of the volatility of the currency, it does offer certain benefits to users.

Here are some of the top reasons why people choose to use Bitcoin as their mode of payment instead of traditional methods:

  • Anonymity –Bitcoin allows users to send money anywhere in the globe and buy goods and services without revealing their identity to merchants. While it is not completely anonymous because customers still have to use a traditional financial provider to purchase Bitcoin from exchanges, it is a lot more private than fiat currencies.
  • Stability – Despite the volatile nature of Bitcoin’s price, Bitcoin can be more stable than fiat currencies, which are susceptible to hyperinflation.
  • Speed –Transfers, remittances, and payments made with Bitcoin tend be some of the fastest transactions around. This speed offers consumers with ease and convenience when purchasing goods or sending money online.
  • Security – One of the biggest concerns these days for online transactions is securing customers’ financial information. Bitcoin offers a secure way to do transactions online since the blockchain ensures that the identity of a customer won’t get exposed to online merchants. Bitcoin also uses complex cryptography, so serious hacking skills are needed to decrypt any Bitcoin wallet.

  1. Created a Social Phenomenon

Across the globe, more and more people are opting to use Bitcoin to make payments. The cryptocurrency is characterized as a secure, appreciating, and decentralized method of payment, which has attracted a lot of users.

This increasing adoption of Bitcoin follows a theory referred to as the S-curve adoption. The theory derives its name from the shape that the graph takes when adoption is plotted over a length of time. When any type of innovation is introduced into the market, it takes a few years for it to diffuse and completely penetrate the market. At first, it only gets adopted by innovators and early adopters. Gradually, people become more interested in it just because everyone else is.

The S-curve can also be explained by the psychology of the majority. It’s natural for people to gravitate towards what the majority is doing. They are influenced by their social environment, and thus tend to value Bitcoin more as time passes since it has already become a social phenomenon.

  1. Became a High-Risk, High-Reward Investment

Investors have also had their eye on Bitcoin for quite some time now. When its value slowly started rising over the thousand-dollar mark, even traditional investors took notice. This also aroused the interest of investors who are looking for high-risk and high-reward assets.

Given the volatility of Bitcoin, risk-averse investors are naturally uncertain about entering the market. However, the promise of considerable returns can be very alluring for risk-lovers. Here are some great reasons to invest in Bitcoin:

  • A Hedge against Inflation – When the government print more money, its value tends to go down. This means that purchasing power goes down, so consumers have to pay more to purchase the same goods and services. Bitcoin, however, has a finite supply and is not dependent on the government for its monetary policy. You can invest in Bitcoin as a way to protect your portfolio from the effects of inflation.
  • New Uses – Bitcoin is not just a store of value or a way to pay for online transactions. It can also be used for securities trading, transactions that involve land titles and real estate, insurance claims, remittances, crowdfunding, and so much more.
  • Anonymity – Unlike other types of market where your identity is disclosed to other traders and investors, you enjoy a certain degree of anonymity with Bitcoin trading and investing. Although you still have to provide your personal details when you sign up for a wallet or an exchange, your identity will remain anonymous to other users since the Blockchain only lists public keys or addresses. Furthermore, you can use multiple addresses to increase your level of security.

Keep in mind, however, that even the most experienced and risk-loving traders and investors are careful when adding Bitcoin to their portfolio. Make sure that you do your research and arm yourself with all the information you can get before you venture into this new asset class. Use software like bitcoin-code.org that will help you out when you are trading. The tools within the software can help you identify and predict trends in the market, as well as automate most of your trading.

  1. Born as a Response to Crisis

In 2008, the banking crisis was in full swing and a group of developers decided to create what is essentially a “financial counterculture.” The Lehman bankruptcy had a considerable impact on the money market. Investors who invested a dollar received 97 cents back. This essentially constituted a breach of the trust that investors had placed on money market funds. Eventually, the effects of the bankruptcy spread to other financial markets.

In the same year, Satoshi Nakamoto released a white paper detailing a decentralized system for digital transactions that didn’t rely on trust, unlike the current financial system. Bitcoin’s ideology, in a nutshell, hinges on a distrust of traditional financial institutions. People who became disillusioned after the banking crisis started to take Bitcoin more seriously as a response to the broken system.

Conclusion

Commenters about the rise of Bitcoin have described it as everything, from a revolutionary innovation to a complete scam. No matter what you think about Bitcoin, it has created its own niche and is definitely here to stay.

 

 

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