How Bitcoin came through Global Economic Downturns
Venture capitalists have unitedly invested $30 billion in cryptocurrency or Web 3.0 startups throughout 2021. In addition, institutions like Tesla, Block, and MicroStrategy incorporated Bitcoin into their balance sheets.
These monstrous numbers are pretty impressive given that Bitcoin has only existed since 2008 and has gone on to accumulate values touching $40,000. So 2021 was quite a year for Bitcoin, with decentralized finance and NFTs booming in the ecosystem, bringing new opportunities for investors and enterprises. But the year was not short of challenges either, with global inflation rates hitting investors’ pockets hard.
Eastern Europe was brimming with geopolitical tensions and represented an unexpected test for Bitcoin. But we witnessed evidence of Bitcoin trending upwards with the Russian invasion of Ukraine; it came through as a safe haven asset for investors amid a testing economic landscape.
Institutional Interest Keeps the Growth Prospects Intact
Institutional interest in Bitcoin and cryptocurrency as a whole is pervasive. Institutions are growingly investing in various crypto projects. For example, when talking of software developer MicroStrategy, the company is solely buying BTC to hold it on its balance sheet.
Others have developed tools to integrate cryptocurrency broadly into the economy. For example, Silvergate Capital has a network that facilitates a 24/7 remittance of dollars and euros- a key facility since cryptocurrency markets never close. Silvergate acquired stablecoins to enable this.
Meanwhile, Block, a financial services company, is looking at developing applications for daily use as a digital alternative to fiat currency. Google Cloud launched its blockchain division as well; it helps customers accommodate the emerging technology.
With an increasing number of institutions looking to develop blockchain and cryptocurrency solutions, it is expected to increase the staying power of Bitcoin and other cryptos. Consequently, better institutional interest will likely keep cryptocurrencies anchored despite their infamous volatility.
Emerging use cases in the blockchain arena have paved the way for NFTs and DeFi projects to gain momentum as well. It has broadened how cryptocurrencies influence the world.
The Use of Bitcoin Amid Geopolitical Tensions
Bitcoin has recently demonstrated how its technology can alleviate the factors that cause economic downturns. For example, bitcoin was made legal tender in Ukraine when Russia invaded it in February 2022.
Ukraine legalized cryptocurrency, and Ukraine President Volodymyr Zelensky signed the law on virtual assets adopted by the Verkhovna Rada on 17 February 2022. The digital asset market will be regulated by the National Bank of Ukraine and the National Commission on Securities and Stock Market (NSSM). The provision is that foreign and Ukrainian companies will work officially with crypto-assets, open bank accounts, pay taxes and provide services to the people. The move helped Ukraine set up an avenue to receive humanitarian aid in BTC as well.
The decentralization of Bitcoin makes it a haven for countries around the world during national emergencies, especially when economic complications devalue fiat currencies through inflation highs.
Walking to Mainstream
Although Bitcoin is still sitting some 40% adrift from its record-high of November 2021 today, the institutional faith in cryptocurrency has not deterred. On the contrary, blockchain technology is expected to eventually achieve mainstream adoption.
Do not forget that only recently did Bitcoin’s blockchain framework achieve global recognition for the technological framework it deserved. Since then, the rise of DeFi and NFTs has given a trailer of what distributed digital ledgers can achieve.
Although not easy to project how the cryptocurrency adoption will grow and if it will make another NFT-style emergence to aid more mainstream applications, Bitcoin’s technology is playing an active role in aiding economies against economic crisis, indicating that there is enough potential for the asset to outgrow its expectations and outperform its benchmarks in the face of downturns.
There are more twists to come before the global economic outlook bounces back, but Bitcoin is already showing that it can ensure that crypto is here to stay in one form or another.