BTC price has seen a meteoric rise in the last decade and surprised even the biggest Bitcoin bulls with its ability to double or triple in price in a matter of days. It’s a true anomaly in the investment world. So what makes Bitcoin so special and capable of this massive growth?
It turns out that there is a number of factors at play that make Bitcoin unique and able to grow at unprecedented rates.
1. Hype in the Media
The main reason why Bitcoin has been able to grow so effectively is over-hype from the media. It’s stories of turning regular people into millionaires and mysterious technology that make it so attractive to media outlets.
Bitcoin has soared in value many times, and it’s disappointing to look back at those times to work out how much money you could have made. That’s why every time Bitcoin starts to rise in value, the media has a field day. Headlines saying that this could be the time that Bitcoin goes to the moon, or that it’s all going to come crashing down. Either way, it gives Bitcoin constant attention and drives investors to put even more money into it.
Without this media hype, Bitcoin would likely have remained a relatively fringe technology confined to technologists and enthusiasts. The value would have tracked much more closely with its real-world usefulness, rather than fantasy.
Looking forward, it looks like the hype is going to play a smaller role in the growth of Bitcoin, with many investors taking a more cautionary approach to Bitcoin.
2. Inexperienced investors
The price of Bitcoin hasn’t been very high lately. Such a situation can happen with any investment. But, the difference with Bitcoins is that most of the investment hasn’t been made by experienced traders. It has been made by the people who have never invested before in their lives.
Bitcoin has almost no barrier in entering the market nor legally nor physically. Anyone with an internet connection can download a Bitcoin wallet and buy some Bitcoin in a matter of minutes. This, combined with the media hype we talked about earlier has led to a very dangerous situation.
These inexperienced investors are quick to adopt the get-rich-quick mentality and buy into Bitcoin when they really shouldn’t. This has been a key driver of Bitcoin’s growth.
3. Distributed and decentralized technology
Another reason due to which Bitcoin was able to grow so quickly is that it’s a distributed technology with no central point of control. This means that there is no company or government that’s in charge of growing Bitcoin. Bitcoin is rather a protocol that can be used by anyone who wants to interact with the network.
This means that there was no real speed limit to Bitcoin’s growth. Moreover, Bitcoin isn’t limited by national borders. Anyone in the world could hear about Bitcoin, download the protocol, and start using and mining Bitcoin without anyone’s permission. And this is exactly what happened.
Now that Bitcoin has reached a global scale with millions of users, it’s starting to feel the strain of having no central point of control. Decentralization is what makes Bitcoin so revolutionary, but now it’s the main bottleneck stopping Bitcoin from growing further quickly.
There are some ingenious solutions on the roadmap that could solve this problem. They see new ways of operating the Bitcoin network that allows many more people to use the network without performance issues. Let’s hope the community can come together to make them happen.
4. Limited supply
One very unique thing about Bitcoin is its digital nature combined with its limited supply. There can only be 21 million Bitcoins in existence, yet it can be sent anywhere in the world instantly. Such an investment asset has never existed before.
There are plenty of limited-supply assets in the world, for example, gold. But gold can’t be traded across international borders in seconds and for pennies. The combination of scarcity and transferability makes Bitcoin a revolution in the investment world and has contributed enormously to its massive growth in price.
5. The internet
Another reason why Bitcoin has been able to grow at insane rates is that its distribution channel is the Internet. Unlike many other technologies that had to wait for the internet to be built-out before taking it over, the internet was well established across the world when Bitcoin was launched in 2008.
Bitcoin is simply a protocol of exchange and all of the digital infrastructures was already in place. This made it possible for Bitcoin to grow exponentially. There was no waiting for cell towers to be built, or for internet speeds to catch up to a minimum level. Everything was there for the Bitcoin protocol to take the world by storm.
The Bitcoin whitepaper was published by Satoshi Nakamoto in 2008. That’s the same year that the entire global financial system came crumbling down due to the negligence of bankers and financial institutions. Foreclosures, bank runs, and massive amounts of quantitative easing over the coming years ate into the wealth of people around the world. Many people lost their jobs, savings, and everything else they have. The worst part is that most of them could never have seen it coming.
The reckless behavior of major financial corporations ended up costing the general public a huge amount of money. This sparked widespread outrage and distrust in the global financial system.
Bitcoin came along as a completely new alternative to the banker’s centralized model for global finance. The idea that everyone would have complete control of their own money, and not even their government could take it or inflate it away was highly appealing. This technological marvel helped Bitcoin to get its supreme media coverage and enthusiasm globally.
Is there more massive growth to come?
Bitcoin’s growth has truly been a marvel in the financial world. A unique combination of its technological features and the state of the world when it launched have allowed it to become one of the fastest-growing assets in history. It’ll be interesting to see how long it can keep this pace up!