It is no surprise that Bitcoin has often been misunderstood over the years, and continues to be in some parts of the world. With mainstream media dictating the sentiment, some governments pushing their agenda by banning the cryptocurrency entirely, and regulatory bodies spreading FUD (fear, uncertainty and doubt), it seems inevitable that people might get the wrong impression.
However, despite this, Bitcoin has still managed to change the financial landscape and continues to do so with each passing day. Let’s explore the intricacies of why Bitcoin is misunderstood in the first place and see how it has risen above this to transform the financial landscape.
What Bitcoin Brings To The Table
Before we explore the factors contributing to the many reasons why the qualitative values of Bitcoin have been overlooked, let’s first take a look at what these values entail. Bitcoin was first introduced to the world in 2008 by an anonymous entity (whose identity remains a mystery over a decade later) before being officially launched in early 2009.
The cryptocurrency was designed to provide anyone around the world, whether banked or unbanked, with access to a digital payment system. This system puts the power back into the hands of the individual, as opposed to under the authorisation of a bank or financial institution. Instead of managing funds through a bank, which oversees all transactions, accounts and storage of the funds, users can for the first time be responsible for managing their own funds, without risk of accounts being frozen or funds confiscated.
Bitcoin provides the world with a direct peer-to-peer payment system, providing a faster and cheaper alternative to international monetary transactions. On top of this, the cryptocurrency also brought about blockchain technology (a new and improved version from its original design in the early 90s).
Blockchain technology is highly versatile and has proven its worth in not only the financial space but industries like supply chain management, business, luxury goods and even art worlds too. The use cases for blockchain are immeasurable and the technology continues to be implemented in businesses around the world each day.
The Great Resistance
While Bitcoin has proven to be a strategic player in global financial development, there are still many regulatory bodies that are not on board yet. Due to the complex nature of cryptocurrencies, regulatory bodies around the world are working on creating and implementing new guidelines concerning the innovative currency. These typically revolve around designing a framework that prevents potential financial risks for the people using it.
Bitcoin, and cryptocurrencies in general, have developed a reputation for being used for illicit activities due to the “anonymous” nature in which they operate (more accurately, it is pseudonymous). This is proven to be untrue, significantly more so in 2013 after the FBI tracked down and arrested the Silk Road founder using blockchain forensics and wallet addresses.
While the regulatory bodies have communicated that “prevention” is the main goal, many governments around the world have unnecessarily banned the use of cryptocurrencies due to their perceived use in criminal activities, fraud and pyramid schemes. China is a classic example of this, as the authoritarian state has continuously indicated that it wishes to ban the use of Bitcoin.
In 2013, China banned third-party payment providers from using Bitcoin, then in 2017 banned the use of token sales. In its latest crackdown, the country banned all businesses from providing services relating to digital currencies, including a severe crackdown on Bitcoin mining operations.
The media has also played a large role in the resistance toward crypto, focusing rather on the cryptocurrencies used for criminal activities than reporting on its innovation and the technology facilitating it.
How Bitcoin Rises Again And Again
Despite countries taking a stance against the digital currency industry, many other countries have done significant research and are supporting the adoption of crypto into their economies. Just last year, South Korea, France, Japan and India implemented more approving legislation concerning the use of cryptocurrencies.
Many other countries are exploring the use of central bank digital currencies (CBDCs), which provide a digital version of the local currency (similar to stablecoins, however, CBDCs are operated by the banks themselves).
Despite regulatory pressure, large institutions have taken to adopting Bitcoin, instigating the epic bull run of 2020/2021. Leading the way, according to a report in June, MicroStrategy holds 105,085 BTC, worth roughly $5.2 billion at the time of writing. Due to the falling US dollar following the global pandemic, the company opted to move their reserves into Bitcoin, inspiring many other retail and institutional investors to follow suit.
While the regulations surrounding cryptocurrencies are being established, the benefits of digital currencies far outweigh the "grey areas" and have provided undiscriminating access for individuals around the world to a global banking system.
Bitcoin Bull Run Continues
Despite countries banning the cryptocurrency and regulatory bodies fueling concern, Bitcoin continues to be a valuable and trustworthy investment. The digital currency has proven this over the last decade by presenting enormous returns and withstanding inflation.