“The Sorcerer: Dawn of a New Age” (CC BY 2.0) by Keoni Cabral
Back in 2014, Durham University’s professor of finance, Kevin Dowd, outlined his thoughts on why Bitcoin was destined to go bust. From his seat in one of the county’s (moreover country’s) most illustrious academic institution, Dowd described Bitcoin as a system of precariously stacked cards that’s liable to fall at any time.
To be fair, he may have had a point back then. The value of the cryptocurrency sat around the $328/£266, which was 2/3 lower than it was just a year earlier. Not only that, but with mining outfits such as GHash going against the unspoken rule that you don’t try to mine all the Bitcoins yourself, the situation certainly looked uncertain.
Without Trust, Bitcoin Could Fall
“Bitcoin is a state of mind” (CC BY 2.0) by illustir
But, even despite one of Durham’s finest financial minds declaring it a matter of “when” not “if” Bitcoin will fall, the cryptocurrency has enjoyed a resurgence in recent years. In fact, according to the Coindesk Report Index, the value of Bitcoin more than doubled in 2016. Through a combination of Brexit, Donald Trump and more businesses now taking advantage of the digital currency, a single Bitcoin was worth $829/£672 by December 21, 2016.
Naturally, as Dowd suggested back in 2014, the Bitcoin system is “relying on trust” and people’s confidence in its properties such as “transactions anonymity” and “the absence of a single point of failure”. Fortunately, over the last few years, companies across the country have been helping to bolster this trust.
More Outlets Results in More Trust and More Value
“bitcoin accepted here” (CC BY-SA 2.0) by Francis Storr
For example, if you head up the road to Newcastle, you’d be able to walk into CeX on Grainger Street or the Cosmic Flower Shop and purchase something without touching the pounds or pence in your pocket. Similarly, online operators are also taking advantage of Bitcoin’s benefits.
There is a Future for Bitcoin
“Future Money” (CC BY 2.0) by xlowmiller
Of course, the other reason Bitcoin has enjoyed something of an image makeover in the last 12 months is a growing love for blockchain technology, even among mainstream institutions. As we’ve profiled before, blockchain (the ledger system that essentially records and processes Bitcoin transactions) is now helping to revolutionise everything from FinTech and healthcare to the music industry.
Overall, even if Bitcoin is built like a deck of cards, the future seems a lot brighter than it did in 2014. Of course, that doesn’t mean Dowd was wrong in his claims that Bitcoin “can’t defy the law of economics forever”. But, it does seem as though he may have underestimated how much confidence people would have in the currency. Indeed, thanks to major companies across the UK and Europe, people not only have more ways to spend Bitcoin but more reasons to trust it and that, in a nutshell, is why we won’t be hearing the digital death knell just yet.
