While many Bitcoin buyers have been burnt by its volatility – and the rapid drop of the cryptocurrency market since the beginning 2018 – the world’s biggest cryptocurrency may be on the comeback trail.
Improved technologies have made the Bitcoin blockchain easier to use than ever before, and many big companies, governments, and banks are looking to blockchain technology to solve a variety of problems.
Regulation around the trade of cryptocurrencies is also more defined, granting users protection from malicious actors and improving confidence in the technology from companies.
The price of Bitcoin and other cryptocurrencies have – perhaps as a result – bounced back in recent weeks, showing a steady upward trend.
Investors and exchanges
Users who want to purchase cryptocurrencies with fiat currency such as rand need to buy their digital cash through an exchange.
The regulation surrounding the operation of cryptocurrency exchanges is still not concretely defined, but regulatory bodies around the world have recently begun working with major exchanges to improve this.
Coinbase recently stated that it worked with SEC staff to expand its operations, and begin operating as a broker dealer.
This means the cryptocurrency exchange can now offer digital tokens which are considered by the United States to be securities, following its acquisition of Keystone Capital, Venovate Marketplace, and Digital Wealth.
Bitcoin is attracting the attention of major investment firms in the United States, too, with BlackRock looking at Bitcoin investments for clients.
Although interest from clients is limited, it is progress from BlackRock previously dismissing cryptocurrencies completely – stating they were speculative and that none of its clients would want to invest in digital tokens.
The firm is now working with clients to determine the feasibility of cryptocurrency investment offerings.
As of 19 July 2018, the price of Bitcoin is up more than $1,000 over the past week and has seen overall growth in the last month.
Cryptocurrencies are extremely volatile, however, and there is no predicting whether Bitcoin will continue its growth or experience another sharp fall.
Skepticism and technology
It is important to note that while certain investment firms are offering Bitcoin-based investment products, and regulators are working to improve the legal framework surrounding the trade of cryptocurrencies, the market is still volatile.
Many companies and investment institutions remain uninterested in the cryptocurrency market, due to the wild speculation driving the value of digital tokens.
While this poses risk, it also offers potentially large rewards.
Investors should become acquainted with the technology behind cryptocurrencies before examining which tokens to purchase, though, allowing them to base their investment on information – and not just pure speculation.
Blockchains like Ethereum are drawing real interest from application developers and companies across a variety of industries, and a large number of developers see the cryptocurrency and its blockchain as the future of online applications.
It could therefore be considered a better investment than Bitcoin, due to its stronger technology and adoption.
Blockchain technology is still in its infancy, however, despite several years of increased adoption.
As we have stated before, users should not purchase cryptocurrency as a primary investment – and accept the potential for their investment to fall to zero in an extremely short space of time.
That being said, of late there is increased positivity around cryptocurrencies – and Bitcoin’s ability to stay at the top of the pile.
This is an opinion piece, and is not intended as financial advice.