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Bitcoin remains the most profitable asset of the decade. Is there a possibility of reaching $20k?

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Bitcoin

Bitcoin has definitely come a long way over the years. The crypto powerhouse was barely worth a dollar in 2009. Now, its price has risen by 26,600,000%. Now standing at $13,266 at the time of writing this article, bitcoin’s dominance in the world of digital assets could only be the beginning.

It hasn’t been all fireworks when it comes to the story of bitcoin’s growth. The cryptocurrency has suffered great price drops that had a lot of people avoiding it. In December of 2017, the currency reached an all-time high of $20,000, but in months following the record-breaking price surge, the currency fell by more than 80%. 

A lot of reasons have been attributed to the massive drop. According to a research, half of the hike in 2017 was market manipulation. As opposed to the general belief that the 2017 surge was borne out of investor fervor, the research stated that another coin called Tether, was used to influence market price.

 Texas university finance professor, John Griffin, alongside a graduate student, studied millions of transactions on the bitcoin blockchain. With over 10 years worth of experience in tracking financial fraud, the author of the 66-page research paper pointed out that a cryptocurrency purportedly pegged to the dollar, known as Tether, was used to stabilize and manipulate bitcoin prices. The currency was used to buy bitcoins wherever a drop in price was imminent.  

The great fall has, however, not deterred the growth and popularity of bitcoin in recent times. A survey by Grayscale Investments has revealed that 55% of investors in the US would rather invest in bitcoin. In sub-saharan Africa, weekly trade volumes of the currency tops at $95 million. The acceptance and popularity of bitcoin is clearly not in question. 

However, bitcoin’s record performance throughout the decade, has not gotten it to $20,000. The currency has been showing much resilience since it got to $13,000 a few days ago. A drop below $13,000 on the 28th, and a quick recovery to $13,150 not so long after, are major signs that a downtrend is  unlikely. 

Bitcoin could reach $20,ooo by March 2021. According to analysts, this will be possible if the rate at which new coins are created is slowed down. The Bitcoin blockchain already has a trend of halving the amount of mined coins every four years. A decrease in the number of coins created, will lead to a decrease in the circulating supply. The halving of 2016 led to an all-time high of $20,000 in 2017 (not the only reason for the hike). Another halving this year, could lead to a significant rise by 2021.

While there are possibilities of seeing another price surge next year, the possibilities of a downtrend isn’t totally out of the picture. FOMO (fear of missing out) levels and the U.S. Dollar Index (USDX) raises concerns. The recovery of the USDX could have a negative impact on bitcoin since it is priced against the dollar as an alternative store of value. 

The level of excitement about bitcoin is also on the rise, increasing the FOMO (fear of missing out) levels. Research by Santiment has shown that posts about bitcoin are largely positive, investors and traders are constantly having something positive to post about bitcoin, which is indicating higher than normal FOMO levels. 

When FOMO levels rise, it leads to a sudden hike in price that could make whales (people with high volumes of bitcoins) consider selling. This, in turn, increases the amount of bitcoin in circulating supply, thereby, causing a sharp fall in price.

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Bolu Abiodun is a recent graduate of Theatre and Media Arts, Federal University Oye-Ekiti. A journalist with over a year's experience on the job. A former editor at American Media company Project Forward, he is a skilled content creator, social media manager and digital marketer.

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Bitcoin

El Salvador’s Bitcoin adoption – What you need to know

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El Salvador made history (and headlines) after becoming the first nation to endorse and approve the world’s most popular cryptocurrency, Bitcoin, as a legal tender. The move makes Bitcoin acceptable for transactions within the Central American country alongside the U.S dollar, which has been serving as the paper currency since 2001. This comes after the so-called “Bitcoin Law” came into force after passing legislation in June of 2021. El Salvador’s government announced that it had purchased 400 Bitcoin in 2 tranches of 200 each and plans to get more in the future.

The move to adopt Bitcoin has been justified by the government’s need to boost financial inclusion in the country. It is estimated that 70% of El Salvadorans do not have access to financial services and the government believes that Bitcoin can help close the gap. The Bank of America has outlined a few benefits that they believe will result from El Salvador’s bitcoin adoption. These include promotion of financial digitization, streamlining remittances as well as opening the country to digital currency miners. However, not all agree that the move is a step in the right direction.

Amongst the detractors of the scheme are the International Monetary Fund and the World Bank, each having warned El Salvador about the risks of Bitcoin’s use as legal tender. The World Bank has been irked by what it described as “environmental and transparency shortcomings” with bitcoin, while the IMF cited “economic and legal concerns” in relation to the move.

Other than the push back from these international bodies, there has been some internal opposition to the adoption of Bitcoin. Citizens had held protests over Bitcoin’s adoption in August and about 67.9% of respondents in a poll said they disagreed with the government’s decision to adopt crypto. The results of the poll showed that 8 in 10 people had little confidence in the use of bitcoin as the currency.

In spite of the criticism, El Salvador’s government is moving forward and has reportedly installed 200 Bitcoin ATMs across the country. And in response to the World Bank’s environmental concerns, El Salvador’s president, Nayib Bukele, has said the country plans to power mining activities using renewable energy from the country’s volcanoes. In order to incentivize the use of Bitcoin in the country, any citizen who signs up for the country’s “Chivo” wallet will get 30$ worth of bitcoin.

All in all, the adoption of a cryptocurrency by a sovereign nation is seen as a testing ground for many, as this is a use case Bitcoin has never experienced in its 12-year history. Countries such as Brazil and Panama seem to be watching the move to draw insights on whether to follow suit.

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Is Bitcoin Still a Good Investment?

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Source: Decentralize Africa; Bitcoin Investment

The above question is being asked a lot due to the surge and drop of bitcoin over the past months – so aspiring investors are curious about whether the coin remains a lucrative investment. Bitcoin is the world’s most treasured and appreciated digital currency in terms of its worth in the open market and this fascinates a vast scale of investors. While there have been ups and downs, Bitcoin still poses to be a good investment. 

When compared to various cryptocurrencies, Bitcoin has been proven to have innumerable benefits; 

Diversification

Diversifying your crypto portfolio is very important and investing in bitcoin, amongst others, can help you do just that. Several foundations and pension funds have added bitcoin to their portfolio over the years. Investment strategists have gone on to say that adding bitcoin to your portfolio may improve returns without notably increasing volatility. 

Working Capital and Cash Flow 

Bitcoin has shown to be a financial strong suit in terms of liquidity. At inexpensive prices, you can quickly swap Bitcoin for fiat currency or gold. The level of cash flow is often dependent on how many users, or in this case investors, a platform has. The liquidity of cryptocurrencies is likely to skyrocket if adoption rises and more people invest in Bitcoin as a viable means of exchange. 

Basic Trading And Operations 

More often than not, investing in stocks or company shares would require a license for the former and a visit to a broker for the latter. However, with Bitcoin, trading is made easy. Buying and selling Bitcoin is made easy and you can store them in your wallet with little to no hassle. Trading in Bitcoin is also instantaneous. 

Digitalized Storage And Repository

Due to the upgrade of technology, cryptocurrencies are not subject to the traditional form of investment and storage like banks. Instead, the data is stored in a peer-to-peer network of nodes and duplicated across the world. 

Digital Gold 

Owing to its limited accessibility, Bitcoin is referred to, by many, as the “digital gold”. Like with gold, which has to be extracted from the earth, Bitcoin has to be “mined” through the use of computer software and thus, cannot be produced at the snap of fingers. Bitcoin has been said to have features akin to gold, silver and the likes. 

Brand New Opportunities 

The fact that Bitcoin is still current in the world of cryptocurrencies brings room for fresh opportunities. Its newness poses a high price alteration and volatility, which may lead to vast profits if invested properly. 

Bitcoin has always been a smart expenditure. The rate at which individuals adopt the coin is proof that it is still a good investment. Bitcoins will help in diversifying your portfolio, it will help in simple and stress-free trading, it will help in electronic and digital storage, amongst many others. Bitcoin as a long-term investment is feasible because the supply is fixed. It goes without saying that Bitcoin has the potential to become a global currency.

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Why The Average Informed Nigerian Is Crazy About Twitter And Bitcoin

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Image Credit: Kabiru Yusuf

It goes without saying that cryptocurrencies are quite popular in Africa’s largest country. This popularity exists quite pervasively amongst a demographic of the young, internet surfing section of Nigeria’s population. Obviously, access to information and particularly the internet are key to the penetration of any cryptocurrency in any society, and this informational access isn’t particularly lacking in Nigeria. 

Nigeria has an internet penetration of about 50% amounting to around 104 million people with internet access according to DATAREPORTAL. 15.8% or 33 million people use social media in Nigeria with 61.4% of that figure using the micro-blogging platform, Twitter. Therefore, there are around 20 million twitter users in Nigeria, almost a tenth of the country’s population. While this may not seem like a lot compared with the rest of the nation, Twitter has been instrumental in Nigeria in formulating public opinion, having conversations as well as being a site for various campaigns. The power of Twitter in the hands of Nigerians became very apparent in October 2020 as it was the platform of choice for the organization of the now infamous #ENDSARS protests.

Quite a lot of reasons make twitter as popular as it is especially amongst Nigeria’s young people. The ease at which posts on twitter could travel far and wide compared to many other social media platforms means it is a solid tool for advertisement for large and small entrepreneurial ventures alike, the latter of which many Nigerians are participants of. Secondly, Nigerians have grown weary and distrustful of traditional media outlets and often times get their information through social media, thereby, turning Twitter into a place where views can be aired quite easily. The fast nature of information transfer on twitter allows it to be the platform of choice for activities such as crowdfunding, organization of protests and in some cases, crime watch.

Bitcoin serves as the umbrella term for cryptocurrencies, especially in Nigeria, much like “Indomie” does for noodles. Nevertheless, as Africa’s Bitcoin Nation, cryptocurrencies have seen tremendous growth in Nigeria over the last few years. This growth is largely driven by the same demographic that dominates social media use. 32% of Nigerians surveyed online by Statista said they owned at least one cryptocurrency asset. And, in the first quarter of 2021, Nigeria’s peer to peer BTC trade volume was in excess of $99 million, nearly 3 times the volume of the next highest nation, Kenya. In 2020, Nigeria generated $400 million worth of bitcoin transactions, ranking third place worldwide behind the US and Russia.

So why are bitcoin and/or other crypto assets so popular? Well for one, it highlights the dire state in which Nigeria’s economic scene finds itself. Nigeria’s unemployment rate stands at 33.3%, which is what one would describe as dangerously high. Also, the local currency, the Naira, has been constantly fraught with increasing inflation. Hence, the naira has been largely unstable and it’s purchasing power has fluctuated a lot recently. In response, a lot of people have turned to cryptocurrencies to act as a buffer against the volatile economic scene. Furthermore, the decentralized and peer-to-peer nature of cryptocurrencies give a lot of people a preferred alternative to traditional banking institutions.

The benefits afforded by cryptocurrencies like Bitcoin and social media platforms like Twitter were put on full display during the #ENDSARS protests. Twitter was the mobilization platform of choice for its ease in information dissemination while bitcoin was the value exchange system of choice for crowdfunding and financing the protests due to the inability of regulatory authorities to pin down cash flow. All in all, both platforms underscore a discontent and distrust of the populace toward traditional methods of communication or wealth creation. 

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