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From $3,000  to $19,800+: These major events pushed Bitcoin’s price to break an All-time-high in 2020

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The year 2020 will go down in history as one of the memorable year for bitcoin and the crypto market at large. There’s no doubt about that. No one would have expected that the Bitcoin and cryptocurrency market would have defied all odds in a year marred by global economic recession, financial crises and an outbreak of a pandemic. 

Around February to March 2020, the whole world was hit with the outbreak of a deadly virus – COVID-19 – which has resulted in the death of millions of people all over the world. The effect of the virus outbreak, which led to a total lockdown in major cities, affected economic activities all over the world. Due to the uncertainty casted on global growth, the financial markets including the cryptocurrency market was hit with a deep plunge. We take a brief look at some of the major events that have shaped the current Bitcoin’s bull run in 2020.

COVID-19 outbreak saw the world embrace contactless payment.

Bitcoin, for instance, suffered a price crash so low, to trading around $3000 in March 2020, thereby, losing about 55% of its value. Other cryptocurrencies in the market, equally experienced price dips. Ethereum was down by 40%, Litecoin dropped by 35%, and XRP also plummeted by 25%. 

With a protracted downturn of the global economy, nobody would have predicted a major bull run that saw unprecedented interests and new players entering into the cryptocurrency market. However, the pandemic came as a blessing in disguise for crypto, as contactless payment became the new normal. As such, the Bitcoin price falls were short-term.

Bitcoin’s third successful halving sparks optimism

Bitcoin’s halving in May 2020 was the first catalyst that triggered optimism amongst bitcoiners and crypto traders, as a daily reward of new bitcoins to miners was halved from 12.50 to 6.25. Bitcoin’s price was trading around $8250.  At that time, Bitcoin P2P trading boomed in Africa. Trading volumes hit new highs in countries like Nigeria and Ghana. 

Mainstream companies embrace Bitcoin as a better store of value.

Institutional buying of Bitcoin came sooner than expected. With the rapid downfall of fiat currencies all over the world, mainstream companies and organisations saw Bitcoin as a better store of value. Nasdaq-listed US firm, MicroStrategy, was one the first to add bitcoin to its treasury reserve. Shortly after, Square Inc, the company behind CashApp, whose CEO is Jack Dorsey (Twitter’s CEO), announced their purchase of Bitcoin, using 1% of the company’s total assets.  In October 2020, Stone Ridge Asset management, announced that the company acquired 10,000 bitcoins worth over $100 million as a primary treasury reserve asset. 

PayPal’ crypto offering

Fintech giant, PayPal announced its entry into the cryptocurrency market, after it offered cryptocurrencies such as Bitcoin, Litecoin, Ethereum to its over 300 million active users. The news alone, pushed Bitcoin’s price to trade around $12,000. Not long after it was reported that PayPal and CashApp were buying over 100% of the newly minted bitcoins.

Debasing Fiat currencies in developing countries

In Africa, the cryptocurrency market continues to witness an influx of new users into the market. Economic instability and frequent devaluation of many African currencies, worsened due to the outbreak of coronavirus in the continent. Cryptocurrency was seen as a better store of value, as Decentralize Africa reported survey shows that many Africans prefer to save in crypto, while they spend with fiat.

Also, Bitcoin became a tool of activism in Nigeria. Donations made during the EndSars Protest (a cry to end Police brutality in the country) were reportedly frozen by Banks, on the order of the Central Bank of Nigeria. Donations were switched to Bitcoin. That move further accelerated the adoption of Bitcoin to new users.

Bitcoin price hit all time high
Bitcoin hit all time high.

What more… The chart above says it all.

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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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