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Why Bitcoin Soared (Why Bitcoin is Popular)

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Why did Bitcoin soar? Why did Bitcoin become popular?From 2009 to 2013, with the

Why Bitcoin Soared (Why Bitcoin is Popular)

Why did Bitcoin soar? Why did Bitcoin become popular?

From 2009 to 2013, with the continuous printing of money by the US government, the strengthening of the US dollar, stock market crashes, and turmoil in other financial markets, more and more investors began to seek safe havens. But when considering how to protect their assets from money laundering risks in the current financial environment, there is often a situation where people always choose a relatively stable investment vehicle, and stocks are considered more conservative than hedge funds. So now everyone is waiting for the right opportunity, which has led to various choices – if traditional insurance companies are important tools for value preservation and solving the problem of high returns, then digital currency is a new category of assets, and its value is also supported by it. However, its price volatility is much lower than what ordinary people can bear, and this process also takes a long time to complete. So all of this is just the beginning.

Bitcoin has now been around for decades, and although many countries do not recognize the existence of Bitcoin, it still has great potential. Because Bitcoin is not only a cryptocurrency but also a good medium of exchange, and it can even be said to be indispensable in the future world. It is for this reason that it has attracted many people’s attention and participation to explore this field. On January 18, 2017, Coinbase, one of the world’s largest exchanges, released an article titled “Bitcoinistime”, which detailed the latest developments on the platform. The article mentioned that “Although Bitcoin is still in its early stages (about two years ago), it has been underestimated.” At the same time, Bitcoin has another major feature, which is decentralization. In other words, members of the Bitcoin community believe that Bitcoin will become the most important commodity in society and will have the world’s first completely open-source security system. Of course, this is similar to many other encryption projects: “All rights on the Bitcoin network are public.” These encryption projects include Ethereum 2.0, Cardano, etc., which have this feature, and Ethereum 2.0 pays more attention to security, such as Ethereum, Ripple, Polkadot, etc. In addition, some developers are also working hard to make Ethereum mainstream, thereby promoting the development of the ETH2.0 upgrade. At the end of 2018, Ethereum founder Vitalik Buterin stated that Ethereum 3.0 may be launched and go online this year, but he was subsequently criticized by opponents. In early 2019, Musk suddenly tweeted that Ether was not a security, and he called for the regulation of tokens as securities.

It was not until the middle of 2018 that Bitcoin finally ushered in a round of upward trend. According to data from CoinMarketCap, the price-earnings ratio of Bitcoin in December 2017 was about 4.9%. In comparison, the price-earnings ratio of Bitcoin in early 2019 was only 2.8%.

Why did Bitcoin soar?

Editor’s note: This article is from Zhongben Onion (ID: xcongapp), author: Lao Yapi, authorized publication by Odaily Star Daily.

In November of last year, Bitcoin reached its peak and continuously renewed its all-time high, and its price also rebounded.

According to the latest statistics from the data analysis platform Coinmarketcap, in October 2019, the trading volume of Bitcoin reached 5 trillion US dollars, an increase of more than 300% compared to the end of 2018. Since mid-June this year, the average daily turnover rate of BTC has also hit a historical high, close to 20%, which indicates the increasing demand for Bitcoin in the market and the recognition and acceptance of digital currency by investors.

From an investment perspective, cryptocurrencies are an important part of the financial system, providing a new and safer way for global economies to make daily payments.

However, Bitcoin has the following shortcomings compared to other major cryptocurrencies:

1. No technical support. The development of the blockchain industry is still in its early stages and has not been widely applied.

2. The price of Bitcoin is highly volatile. With more and more institutions entering this field, many products may be launched in the future, but if they cannot meet the demands of investors in a timely manner, a situation of supply shortage may occur.

3. Decentralized exchanges (DEX) have become one of the most commonly used functions in the current market and the focus of attention for many people. DeFi is a very promising application scenario that can help people easily create their own tokenized funds, manage risks, and various other applications. At the same time, DeFi allows users to automatically execute complex tasks such as loans and insurance through smart contracts. Although many DeFi projects require custody solutions provided by third-party service providers, they are not reliable infrastructure.

4. Centralized exchanges cannot guarantee the safe storage of user funds, leading to difficulties in obtaining liquidity for centralized exchanges.

5. There are vulnerabilities in the Bitcoin ecosystem. Most people are not aware of what decentralized exchanges are, or they simply close accounts due to lack of trust. But decentralized exchanges solve these challenges. For example, how will users use the protocol when they discover a certain type of token?

6. Decentralized exchanges on Ethereum are rapidly developing. In recent months, transaction fees on the Ethereum network have reached over $1 million. This means that the Ethereum network has processed a transaction volume of over $5 billion.

7. The DeFi boom has driven the explosion of the entire industry, especially on the Ethereum network. Due to its unique functions, developers can build more use cases, including staking pools, etc., using its tools.

8. DeFi projects are gradually maturing. Some decentralized exchanges (dYdX) based on Ethereum have launched their tokenized futures products.

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