Bitcoin: 15 years of disruption and innovation — and why this will continue
by Nigel Green
SINCE its creation in 2009, Bitcoin has not only survived but thrived.
From its mysterious beginnings under the pseudonym Satoshi Nakamoto, to its current status as a household name, Bitcoin has achieved remarkable milestones that set it apart from traditional asset classes.
It’s beaten all expectations, has disrupted and innovated the financial world and, I believe, it will continue to do so for the next 15 years and well beyond.
One of the most remarkable aspects of Bitcoin’s journey has been its unparalleled price appreciation.
In its early days, Bitcoin was virtually worthless, with the first recorded price in 2010 being less than a cent. Fast forward to 2021, and Bitcoin reached an all-time high of nearly $65,000.
This exponential growth has generated substantial returns for early adopters, outpacing many traditional asset classes, including gold, in terms of sheer magnitude of appreciation.
Bitcoin’s market capitalization has also soared over the years, attesting to its growing influence.
In 2009, the market cap was negligible, but by 2021, it had surpassed a trillion dollars.
While traditional assets like stocks and bonds might boast larger total market caps, Bitcoin’s ascent to the trillion-dollar mark reflects a significant shift in perception and adoption within the broader financial landscape.
The world’s largest crypto’s decentralised nature is a key differentiator from traditional asset classes. Operating on a distributed ledger, or blockchain, Bitcoin eliminates the need for central authorities, offering security against fraud and censorship. The network’s resilience is evidenced by the fact that, to date, it’s never been successfully hacked, providing a level of security that is unparalleled in traditional financial systems.
With a capped supply of 21 million coins, the cryptocurrency introduces an element of scarcity reminiscent of precious metals like gold.
Approximately every four years, the network undergoes a halving event, reducing the rate at which new Bitcoins are created. This scarcity has positioned Bitcoin as a deflationary asset, a characteristic that distinguishes it from fiat currencies.
Bitcoin’s narrative has evolved over the years, initially conceived as “peer-to-peer electronic cash” and later evolving into “digital gold.” This transformation reflects a paradigm shift, with it now often being considered a store of value akin to gold.
Investors, seeking a hedge against inflation and economic uncertainty, have increasingly turned to the cryptocurrency as a long-term wealth preservation asset.
Comparisons with traditional asset classes
When comparing Bitcoin to traditional asset classes like stocks, bonds, and commodities, several distinctions come to mind. While stocks have historically delivered stable returns, Bitcoin’s potential for extraordinary gains comes with increased volatility. Bonds, known for safety and steady income, contrast with the dynamic nature of Bitcoin’s price movements. Commodities, including precious metals like gold, share the scarcity element with Bitcoin but lack the borderless and decentralized characteristics.
Why Bitcoin will continue to reshape finance
First, institutional adoption of Bitcoin has gained significant momentum, with renowned major companies, such as $9 trillion dollar asset manager BlackRock, integrating — or aspiring to — the original crypto into their portfolios. This institutional validation contributes to Bitcoin’s legitimacy and broadens its acceptance within traditional financial circles.
Second, Bitcoin is becoming more widely accepted as a means of payment and store of value. Major companies, including Tesla and PayPal, amongst many others, now facilitate Bitcoin transactions.
Third, ongoing technological advancements, such as the Lightning Network for faster and cheaper transactions, contribute to its scalability and usability.
Fourth, Bitcoin’s borderless and permissionless nature opens up financial opportunities for individuals in regions with limited access to traditional banking services. It serves as a means of financial inclusion, allowing people to participate in the global economy without relying on traditional banking infrastructure.
And fifth, the integration of decentralised finance (DeFi) and smart contracts on blockchain platforms holds the potential to extend Bitcoin’s utility beyond a store of value. These innovations, I believe, pave the way for more complex financial instruments and applications, expanding the crypto’s role in the wider financial ecosystem.
It is undeniable that Bitcoin’s achievements in its 15 years are monumental, setting it apart from traditional asset classes and transforming the financial landscape.
With its decentralised, secure, and borderless nature, Bitcoin has proven resilient in the face of economic uncertainties. As institutional adoption grows, technological advancements continue, and as it gains wider acceptance, it’s poised to continue shaping the future of finance, offering an alternative and decentralized paradigm that challenges conventional notions of money and investments.
Nigel Green is the founder and CEO of deVere Group
Disclaimer: This article provides general information and is not personalised investment advice. Individuals should consult with a qualified financial advisor before making any investment decisions. The content does not consider individual circumstances, and past performance is not indicative of future results. Always conduct independent research.
