Cryptocurrency has been on the rise since early 2009. Although the term cryptocurrency may be unfamiliar, many people have heard of the oldest and most well-known cryptocurrency, Bitcoin.
During the early years of Bitcoin’s existence, people saw Bitcoin as a decentralized currency that would allow for peer-to-peer transactions. The view of Bitcoin has changed with the changes in Bitcoin’s utility.
People that support the project have changed their perspective from seeing Bitcoin as a useful currency that can handle transactions to a store of value.
Recently people have started calling Bitcoin a store of value since the transaction fees skyrocketed due to the influx of users. Bitcoin’s transactions are open for anyone to view, but they are nearly impossible to identify who the transaction happened with. This is due to Bitcoin’s transaction only being linked by two different, seemingly random, 34 character addresses.
This anonymous way to send funds is what originally brought interest to Bitcoin. People on the Silk Road used it to pay for contraband items. This created a supply and demand for the coin, resulting in the price to rise.
Bitcoin’s market cap dropped over $500 million when the Silk Road was shut down, although it recovered quickly after.
After people saw that Bitcoin could thrive without the assistance of the black market, many new investors entered the market. The technology side of Bitcoin led to a much larger scale adoption.
Since Bitcoin’s code is open sourced any person can view or even modify it, much like how Wikipedia works. This is regulated by needing the majority of the community to agree with any changes, this prevents most malicious attacks against the cryptocurrency.
Many groups followed the hype train created by Bitcoin. They sought after creating a better alternative to Bitcoin. These next generations of cryptocurrencies created the label, “generation one” for Bitcoin.
Generation two and three focus on alternative coins that have the possibility to outperform Bitcoin. Ethereum is a platform that is capitalizing on these startup companies by letting them base their cryptocurrency off the Ethereum network. The companies use the Ethereum token to confirm the transactions of their own coins.
With the enormous amount of effort being put into designing these coins, investors have started taking notice. In early 2017 the price of cryptocurrencies pumped up with the growing support for the new technology.
Since the start of 2018 investors have been selling off their positions in cryptocurrency due to the uncertainty in the market. This lack of support for the technology is often referred to as FUD (fear, uncertainty, and doubt).
With the combination of rumors and the pumped-up prices of cryptocurrency, many new investors cashed out due to fear. This resulted in the market cap dropping from roughly $800 billion to approximately $300 billion.
All in all Bitcoin along with many other cryptocurrencies have a strong future ahead, however, they are being held back by new investors and market speculation.