Why Is Cryptocurrency Gaining Popularity in New Zealand? And Why Is Bitcoin Still King?
Although Bitcoin is that one coin that most people know, there are actually thousands of cryptocurrencies in the market. Every few months or so, we see a new coin or token being listed on exchanges. While the price of Bitcoin traded relatively stable over the month of July, we witnessed a significant surge in the prices of altcoins like Cardano, Chainlink, Vechain and Kyber Network.
Most of the cryptocurrencies created have something to offer our modern world. Cryptocurrencies are created to provide new ways of migrating aspects of our everyday life over to the virtual world. An international payment needs to be made. You can log onto your cryptocurrency wallet and this transaction is done instantaneously. Need to buy something online? A few clicks and you can process it using your crypto debit card. Even UNICEF now welcomes donations made in Bitcoin, Ethereum and Litecoin. We now see a lessening dependence on cash as a society, and there are more and more establishments that are open to accepting cryptocurrencies payment in New Zealand due to cryptocurrencies’ low fees, speed and security.
With the world becoming more and more interconnected every day, some even question how much longer before societies go cashless? In New Zealand, our reliance on cash transactions have rapidly declined over the recent years. And with the recent pandemic and chatter around possible negative interest rates, the idea of a cashless economy that transacts using cryptocurrencies does not seem far fetched at all. More merchants are now embracing the benefits that cryptocurrencies bring. In some sense, it would not be surprising to see cryptocurrencies replacing cash in the near future.
There are a number of reasons why cryptocurrencies such as Bitcoin are so popular. Without a doubt, their infamous price actions have contributed to their popularity. A little over a decade ago, there was no concept of cryptocurrency. Yet, Bitcoin went from trading at USD $0.01 to its 2017 all-time high of about USD $20,000 within less than a decade. Since then, we have also witnessed Ethereum’s promising price performance. And more recently, the pump in the prices of De-Fi tokens. Perhaps, all eyes are on the potential of what cryptocurrencies bring, and it is this anticipation that drives these cryptocurrencies to trade at new highs.
So then, why is Bitcoin still King?
Despite the popularity with the cryptocurrencies market as a whole, Bitcoin is only coin almost synonymous with the term cryptocurrency. For those of you who are new to the cryptocurrencies market, or are looking to make your first crypto asset investment, it is not surprising that your first purchase was Bitcoin. Bitcoin, the poster coin, has caught many of our attention and drew us into the crypto-verse. Despite the numbers of cryptocurrencies growing exponentially, Bitcoin continues to be the yardstick by which other cryptocurrencies are measured. But why then, is Bitcoin still number one?
Here’s three simple reasons to explain Bitcoin’s dominance:
1. A major head start
One of the main advantages Bitcoin has over other cryptocurrencies is the fact that it was unprecedented when it was first created. It took about two years between the first Bitcoin being mined in 2009, before the emergence of other cryptocurrencies. By that time, Bitcoin has already been used by early adopters for payment and money transfer with a ‘real-world’ value of USD $13.
When the other cryptocurrencies were launched, namely Litecoin, there were already more than 8 million Bitcoins in circulation, allowing it to hold a market cap of more than $100 million at the time. Naturally, Bitcoin accounted for the majority of the cryptocurrencies market. However, even as more cryptocurrencies were introduced (such as Ethereum), no other cryptocurrency has been able to reach a market cap near that of Bitcoin’s.
2. Mainstream acceptance
As Bitcoin popularity continues, an increasing number of mainstream investors began considering it as an legitimate investment alternative. Investors from all walks of life were interested in Bitcoin’s promising growth. While hedge funds managers were attracted to Bitcoin because of its limited supply, traders were drawn to Bitcoin’s volatility as it offers speculative returns.
I wonder how Satoshi Nakamoto (Bitcoin’s mysterious creator(s)) would react if he/she/they learnt that this creation of what was supposed to be an alternative to the modern world’s financial order, is now embraced by some of worlds’ biggest banks? Banks all over the world are offering Bitcoin-related services to their customers at a rapid pace; accelerating the recognition and acceptance of Bitcoin. In the US, for example, banks are now able to offer their customers custody for their Bitcoins. In European banks such as Germany and Italy, customers are able to buy Bitcoin directly from their banks.
3. In the limelight
Whether it’s good or bad news, Bitcoin publicity and chatters are growing. In the earlier days, Bitcoin was linked to black market deals, including the notorious Silkroad platform. However, Bitcoin’s reputation has indeed cleaned up over the years. Not only was it discussed in The Big Bang Theory TV series, there are now several movies with plots surrounding Bitcoin. Rumour has it that the book, “Bitcoin Billionaires” will be produced into a movie. The story surrounds the Winklevoss twins and their purchase of 120,000 Bitcoins at an average price of USD $10. In 2020, we even have J.K Rowling and Elon Musk exchanging tweets about Bitcoin.
I guess we can all agree that Bitcoin is like a buzzword these days. People are discussing Bitcoin on the news, you also hear about Bitcoin on Youtube and podcasts. Even people around you, like your family and friends probably chatted about Bitcoin with you at some point. And for those of you who have bought Bitcoin, delving deeper into the cryptocurrencies market to explore what other coins and tokens are out there, seems almost like a natural path.
Whether or not other cryptocurrencies will ever surpass the market cap of Bitcoin remains unknown, especially when the cryptocurrencies market is still so young. However, what is apparent is that the cryptocurrencies market as a whole, is growing. And at an exponential pace. Even with a global pandemic unfolding globally in 2020, the demand of cryptocurrency continues to strengthen. Whatever one’s opinion on Bitcoin and other cryptocurrencies, or what economists and commentators may have ‘predict’, it seems that Bitcoin and cryptocurrencies are here to stay. Will cryptocurrency succeed in doing what many of its early adopters claim it was destined to; such as replacing central bank and government controlled fiat money? Well, only time will tell.