If someone is asked to name the most promising asset type in the financial market, the answer would probably be cryptocurrency. While globalization was undermining the borders and there was a need for a decentralized medium, cryptocurrencies have come up with a unique solution by providing a safe marketplace. This solution was considered suspicious and unreliable by many financial actors in the first place, however, it is now seen as the future of finance. Of course, the journey was tough and the cryptocurrency market had very hard times. To understand in which way the future will be shaped for this industry, we have to look at its history and how it performs now.
The Earliest Stage Of Cryptocurrency
Everyone thinks that the history of cryptocurrencies has begun with the invention of Bitcoin in 2009 by pseudonymous developer Satoshi Nakamoto, but it can be traced back to 1983 when the American cryptographer David Chaum found electronic money called e-cash. In 1995, he improved this model and came up with Digicash, which could be only validated by the approval of an issuer, usually a bank. After the approval, the encrypted transactions were becoming untraceable even by the issuing bank.
While admitting Bitcoin is the first one of modern cryptocurrencies, the industry has not performed very well in the first five years. The total market cap was only $1.5 billion and Bitcoin was claiming 90% of it.
The First Sign of The Legacy
While cryptocurrencies have shown growth at a steady speed, something happened in 2017. By the first quarter of 2017, the market cap was around $15 billion. At the end of that year, it reached the level of $700 billion, which indicated an increase by 45 times. As you can guess, this growth has attracted a lot of attention all around the world and put cryptocurrencies at the center of the stage.
But why did this boom happen eight years after the introduction of the technology? There is no proper answer to that question, but the main reason would be hidden in the structure of Blockchain technology. While the transaction volume has been increasing rapidly, the old technologies have cost people lots of time and transaction fees. With the boost of popularity by the hands of finance experts, cryptocurrencies leaning on Blockchain technology took their place in the market.
Can The Market Keep Going Up and Reach The Sky?
The year 2021 has started very well for a bunch of cryptocurrencies. Bitcoin has reached an all-time high and Dogecoin has become a phenomenon as a meme-based cryptocurrency. While everything goes more and more digital, it may be a good prediction that cryptocurrencies will be appreciated more in the near future.
The relationship between cryptocurrencies and centralized organs will be a key factor for the performance of the market. There is an increasing number of countries abrogating bans and restrictions on cryptocurrencies and this may result in more and more people entering the market.
The support from reputable people also plays a very important role in the success of cryptocurrencies. As we have seen in the Dogecoin process promoted by Elon Musk, how this industry can perfect our financial atmosphere needs to be validated by the experts and those who have credibility in the eyes of people. If this continues, we can observe that this market will be thriving in the future.