Born from its modest 2009 origins in the wake of the 2008–2009 financial crisis, bitcoin has come a long way, rising dramatically in value from its early days.
Today, its influence is not only undeniable, it’s inevitable.
Consider that U.S. Fed Chair Jerome Powell recently told an IMF-hosted digital payments panel that 80% of central banks globally are exploring the issuance of a central bank digital currency (CBDC). He also said, “We do think it’s more important to get it right than to be first and getting it right means that we not only look at the potential benefits of a CBDC, but also the potential risks, and also recognize the important trade-offs that have to be thought through carefully.”
As for being first, Powell was likely responding to China’s head start, where it is already testing in select cities, and plans to launch its own digital currency later this year.
European Central Bank president Christine Lagarde also said the ECB is very seriously reviewing the creation of a digital euro.
Digital versions of traditional currencies not only mean it will be easier to create more, but also to control them more. It inevitably lends further credibility to bitcoin. As investors come to realize it can’t be inflated or controlled, and has a finite total number of units (21 million) to be mined, they will gravitate toward the highly superior alternative.
That’s why bitcoin is increasingly seen as a safe haven. It has become more accessible through a growing number of cryptocurrency exchanges, and it has gained distribution through payment processors like Square (which recently bought $50 million worth of Bitcoin) and Paypal. It’s accepted by big name retailers Microsoft, Starbucks, and Whole Foods, while the list keeps growing.
And bitcoin ownership is soaring. The number of bitcoin addresses with a balance of $1,000 or more has just hit a new all-time high. JPMorgan recently said it expects over time bitcoin will grow in popularity with millennials, and Kanye West just reiterated his support for alternative currencies like Bitcoin.