Introduction
Bitcoin is the first crypto asset released to the public. Bitcoin is the gold standard for the crypto community. Since its inception in 2008, it has been rallying hard both towards total valuation and price. Bitcoin’s limited availability and a deflationary economic model support the rising purchasing power over time. This makes Bitcoin attractive to investors as the adoption rises manifold. This, along with new technological developments and several other factors keep Bitcoin as a premier investment destination. Let us explore those factors here-
Historical Performance of Bitcoin
Historically, Bitcoin has been a good investment. In the last 10 years, Bitcoin has given a return of 60.29% compounded annual returns with a 75.32% standard deviation. BTC which was priced at USD 0.0041 in 2009 reached USD 73,750 in 2024. Bitcoin is not only the initiator of the crypto community but the leader. Bitcoin-related events affect the whole crypto market and this shows the relevance and importance of Bitcoin.
Read more: Bitcoin Price Prediction
Adoption and Acceptance
The acceptance of Bitcoin has been on the rise since its inception. It kick-started the world of digital assets and revolutionised the global economy. Its economy mimics gold, with a limited supply and energy-intensive mining process. The deflationary model made Bitcoin more than a technical project and has been largely adopted by the populace worldwide.
With the increase in the digital presence of the masses, the adoption of Bitcoin is rising as well. Several events like Bitcoin halving and new technological developments increase the demand for Bitcoin and thus, it pushes the price further ahead. This further accelerates the adoption and acceptance.
Technological Advancements and Innovations
Bitcoin’s blockchain technology has evolved since 2008. With time, alternatives to Bitcoin started emerging. Bitcoin competes with them through technological advancements and innovations.
Bitcoin, being a continuously evolving technology, has seen several advancements in recent times. Here are some of the latest technological developments:
Taproot Upgrade: Taproot is one of the most significant upgrades to Bitcoin since SegWit (Segregated Witness). It was activated in November 2021. It enhanced privacy and reduced the transaction fees.
Lightning Network: The Lightning Network is a second-layer solution designed to enable faster and cheaper transactions by conducting transactions off-chain.
Schnorr Signatures: These are a type of digital signature scheme. It enhanced the security, efficiency, and scalability of the Bitcoin blockchain.
Sidechains and Drivechains: Sidechains are separate blockchains that are interoperable with the main Bitcoin blockchain. Drivechains are a specific type of sidechain.
Layer 3 Solutions: Projects are exploring Layer 3 solutions built on top of the Lightning Network for further scalability and additional functionalities. This handles more complex applications such as decentralized applications (dApps) and further enhances transaction throughput.
These advancements contribute to Bitcoin’s ongoing evolution, addressing scalability, privacy, and functionality to meet the growing demands and use cases of its user base.
Read more: What Are Blockchain Layers
Store of Value and Hedge Against Inflation
Hedging is the process of storing the value in an asset whose value is not directly affected by the downfall of the mainstream economy. During inflation, the purchasing power of national currencies drops. Bitcoin has become one of the favourite destinations for hedging against the economic downturn. Bitcoin hedging protects the investors against the inflationary cycles.
Before Bitcoin, people used Gold for hedging purposes. Bitcoin is a relatively new destination for hedging with better returns when invested for a longer time. The sensor-proof, decentralised and global nature of Bitcoin makes it a proper hedging solution for people all over the world.
Risks and Challenges
Just like any other, investment in Bitcoin doesn’t come without risk. Although Bitcoin is volatile in the short term, in the longer run its volatility subsides with consistent year-on-year growth.
Bitcoin is facing lots of competition from other tokens. Continuous development is very much required to adapt to the modern requirements. This challenge is being overcome rapidly, enhancing scalability and demand.
Conclusion
Bitcoin is the first crypto ever and it is still relevant if not more so. It is globally accepted and is rapidly changing the economic system. It has led the way for several advancements. With continuous technological advancements, scalability and utility have enhanced as well. Events like Bitcoin halving have also made it more scarce and a better investment opportunity.
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