Around the world, venture capitalists have collectively invested $30 billion in cryptocurrency or Web 3.0 startups throughout 2021, with institutions like Tesla, Block, and MicroStrategy all incorporating Bitcoin into their balance sheets.
These astronomical figures are made all the more impressive considering that Bitcoin, the world’s first cryptocurrency, has only existed since 2008 – and has since accumulated a value of $41,000 per coin, at the time of writing.
2021 represented a boom period for Bitcoin, as decentralized finance and NFTs grew into the ecosystem, presenting fresh opportunities for investors and enterprises alike, but the year also ended with brand new challenges for the asset as global inflation rates hit the pockets of investors hard.
As geopolitical tensions in Eastern Europe spilled over, it represented an unprecedented test for the staying power of Bitcoin. Although it’s early days, we can see evidence of Bitcoin trending upwards in the wake of Russia’s invasion of Ukraine – suggesting that the asset is still regarded as a safe haven asset for investors amidst a testing economic landscape.
Institutional Interest Ensures Growth Prospects Stay Intact
Institutional interest in Bitcoin and the wider cryptocurrency landscape is rife. Besides leading trading platforms like Coinbase, a growing number of institutions are investing in various crypto projects. In the case of software developer MicroStrategy, the company is simply purchasing BTC with the intention of holding it on its balance sheet.
Others have developed tools to enable the broader integration of cryptocurrency into the economy. Silvergate Capital, for instance, operates a network that enables the around-the-clock remittance of dollars and euros – a key capability as cryptocurrency markets never close. To facilitate this, Silvergate acquired the stablecoin assets from Diem Association.
Elsewhere, financial services company, Block, has been looking at developing applications for everyday use as a digital alternative to fiat currency. Google Cloud also launched its own blockchain division to help customers accommodate the emerging technology.
As more institutions look to develop blockchain and cryptocurrency solutions, it’s highly likely that it will result in considerably better staying power for the likes of Bitcoin and other crypto. In turn, better institutional interest is likely to help to keep cryptocurrencies anchored in spite of their famous levels of extreme volatility.
Emerging use cases in the field of blockchain have also paved the way for NFTs and DeFi projects to gain prominence, broadening how cryptocurrencies can influence the world.
Bitcoin’s Utility Amidst Geopolitical Tensions
Perhaps most significantly of all is how Bitcoin has recently demonstrated that its technology is capable of becoming a mitigating force against factors that can cause economic downturns.
To illustrate this, Maxim Manturov, head of investment advice at Freedom Finance Europe, notes how Bitcoin was swiftly made legal tender in Ukraine in the wake of the Russian invasion in February 2022:
“Ukraine has legalised cryptocurrency. President of Ukraine Volodymyr Zelenskyy signed the law ‘on virtual assets’ adopted by the Verkhovna Rada of Ukraine on 17 February 2022,” Manturov noted.
“The National Commission on Securities and Stock Market (NSSM) and the National Bank of Ukraine will regulate the market of virtual assets. What provision does the adopted law on virtual assets make? Foreign and Ukrainian companies will be able to work officially with crypto-assets, open bank accounts, pay taxes and provide their services to the people.”
Significantly, the move also helped Ukraine to set up an avenue to receive humanitarian aid in BTC.
Due to Bitcoin’s decentralized nature, the asset may help during national emergencies throughout countries around the world – particularly when economic complications lead to the devaluation of fiat currencies through hyperinflation.
The Road to the Mainstream
Despite Bitcoin still sitting some 40% adrift from its all-time high from November 2021 today, institutional faith in the cryptocurrency remains. Deloitte figures suggest that 88% of senior executives believe that blockchain technology will eventually achieve mainstream adoption.
It’s worth remembering that it wasn’t until recently that Bitcoin’s blockchain framework finally began to achieve the levels of global recognition for its technological framework that it deserved. Since then, we’ve seen the rise of DeFi and NFTs as a taster of what distributed digital ledgers can achieve.
Although it’s hard to predict just how the adoption of cryptocurrency will grow, and whether it may take another NFT-style emergence to act as a catalyst for more mainstream applications, the fact that Bitcoin’s technology is playing an active role in aiding economies in the face of an economic crisis shows that there’s enough potential for the asset to not only outlast its expectations but to outperform its benchmarks during downturns.
Although there are likely to be more twists ahead before the global economic outlook recovers, Bitcoin is already showing that its use cases can ensure that crypto is very much here to stay in one form or another.