There are a few possible explanations as to why Bitcoin is now deemed significant by so many people.
- It’s a “safe” asset
In the face of global uncertainty, buying bitcoins is a way for people to diversify their assets. Its market value can be compared to that of another go-to asset that shines in times of trouble: gold.
Amid the turmoil of a global pandemic, and geopolitical power shifts the world over, it’s possible more people view gold and Bitcoin as better alternatives to dollars.
- It ties into privacy-oriented ideologies
Bitcoin (and cryptocurrency in general) is not politically and ideologically neutral. It was born of the internet era, one plagued with grave concerns for privacy.
Bitcoin’s intellectual and ideological origins are in the “cypherpunk” movement of the 1990s and early 2000s.
Records of online forums show it was advocated for as an anonymous digital currency that allowed people to interact online without being tracked by governments or corporations, offering an alternative for anyone who distrusts the Federal central banking system.
Perhaps the overt rise of digital surveillance in response to the COVID pandemic has further stoked fears about online privacy and security — again piquing the public’s interest in Bitcoin’s potential.
Why is Bitcoin booming?
Bitcoin’s recent boom in value comes down to a combination of three factors: ideology, social sentiment, and hope.
But although these are variable factors, this doesn’t discredit the significance of the digital economy, interest in the technology as it matures, and the influence of institutional investors in cryptocurrency, including Bitcoin.
Bitcoin is in an upward market trend, also known as “bull market” territory.
It was designed to increase in value over time through the rules Nakamoto wrote into its software code — which Bitcoin’s most outspoken advocates, known as “maximalists”, vehemently defend.
Imagining new futures
From a larger frame of reference, decentralized cryptocurrencies allow new ways to coordinate without the need for a central arbiter.
And decentralized blockchain-based networks don’t just enable digital money. Similar to ordinary smartphone apps, software developers around the world are building decentralized applications (DApps) on top of Bitcoin, and other blockchain protocols.
They have introduced other cryptocurrencies, such as Ethereum, which are also open platforms for the public.
Other DApps include decentralized financial (DeFi) tools for prediction markets, cryptocurrency borrowing and lending, investing, and crowd-funding.
Nakamoto’s audacious experiment in the digital currency is working as intended. And what really deserves attention now is what this means for our digital, physical and social futures.