Evolution of Crypto In Finance
- By FXT
- August 09, 2023
- FXT Analysis
Bitcoin originated around 2008, around the time of the Global Financial Crisis. Using blockchain technology and decentralised banking, the cryptocurrency was used heavily as a tool for money laundering, secrecy and criminal activity. The non-traceable nature of the currency was a way to move money from electronic wallets all over the world, which bitcoin could then be converted with relative ease into major local currencies.
2009 – Starting Value of Bitcoin
Originally priced at a mere $0.00099 USD per bitcoin in the early days, it was unnoticed by the masses until 2016 when it began its first skyrocket.
While bitcoin was seen as a strange thing to invest into, at least in countries where the people trusted the banks enough to stay open and give them their money, it took a while to catch on as a mainstream topic.
2013 – The First Big Rally
During November 2013, Bitcoin reached $1,000, before retracing back to the low $200’s. This was the first major spike that long term followers were excited about. But it was just the beginning. This spike was in conjunction with news of Government making rules in China limiting the ability to send money overseas. The underground of money movement probably helped fuel this bullish cycle of bitcoin, as money was moved out of China and into a global, more flexible form of currency.
Real World Use Case
Meanwhile, in areas like South America, Africa and places where there is a higher chance of issues with banks and theft, bitcoin and cryptocurrency was a way to hold more trust in currency while holding it safely without the fear of being robbed on the way home. This very real use case is not a concern for many people, however where it is a concern, it holds great power and relief.
2017 – Bitcoin Futures
Chicago Mercantile Exchange opens doors to bitcoin futures in December 2017, allowing the cryptocurrency to be bought and sold, which includes the ability to go short. Big funds and those who didn’t believe in bitcoin wanted to be able to profit from the fall of the overinflated currency. With a valuation of around $19,000 USD, big funds wanted a shot at going short and profiting from the fall of crypto, a market that was turning heads and distracting investors from ‘real’ assets that the funds could work with. Soon after, a powerful blow was felt as bitcoin drifted to the mid $3,000 USD mark.
2020 – Global Chaos Amid the Pandemic
Fast forward to late 2020, the world is in chaos and a pandemic has struck every continent. Trust in governmental procedures is extremely low and the response to the pandemic is heavily under question. The inability to see loved ones, attend events and even see a doctor becomes a challenging ordeal.This distrust in societal measures, along with an increased concern of government force, bitcoin once again gains traction as a model to escape the hands of government watch, evade the FIAT currency hold and become worldly by currency, with bitcoin. The level of distrust in governments spanning worldwide saw bitcoin reach a dizzying $30,000 USD but the rally wasn’t over.
Index of Distrust
As an index of distrust in banks, governments, regulation and overbearing authority, bitcoin continued to soar throughout early 2021 topping out at around $60,000 USD. This turbulent year saw a retracement and final push up to breach the highs before losing over 60% of its value.
Bitcoin went from an unheard of asset, untrusted and misunderstood by many, to an asset dwarfing that of most individual stocks in a sharemarket. Coined as an index for distrust in government, and Larry Fink quoting that Bitcoin is an index of money laundering, this once underworld currency hit mainstream making millionaires out of its early adopters.
SEC Steps In, Collapsed Exchange Adds Fuel
Today, another cryptocurrency is under heat as the SEC takes on XRP in a legal battle regarding the status of Ripple as a security or not. Just last year, Sam Bankman-Fried at the head of a collapsed cryptocurrency exchange causing serious ripples in the cryptocurrency space. But was all this noise exactly what the crypto space needed to become a stabilised, decentralised world currency?
Stablecoin, Global Currency
A recent report out of Bloomberg showed Bitcoin as more stable than the S&P 500 and even gold. If you’ve seen the Netflix series “Startup”, you would know that creating a stablecoin holds great benefit to the world and can hedge against global assets and currencies, making it a very attractive store of funds. Given the turbulent and chaotic history of cryptocurrency, is this what was needed to create the stability the world was looking for?