As is often the case in massive cultural and societal shifts, the story of cryptocurrency’s 2018 ups and downs is incredibly complex, requiring several smaller stories to explain its current place in the world, and why people are so stirred up over it. This post is particularly aimed at folks with a reasonable understanding of the world of crypto, so if you’re a little out of your element, we recommend reading up on the basics first.
In this post we’re going to look at two seemingly contradictory trends in the world of digital currencies and why they are likely to become a tipping point for this revolutionary technology. We’ll cover these trends in two sections and then explore what it means when you bring them together.
Fringe Adoption Vs. Mass Adoption
While crypto’s detractors (and there are many) will argue that spending Bitcoin, Litecoin, etc., is complicated and unsecured, reputable companies such as Microsoft, Subway, Overstock and Expedia have all begun accepting popular cryptocurrencies. Additionally, many small, independent businesses, retailers, cafés and so forth, have begun accepting cryptocurrency as an alternative to government-controlled centralized, fiat currency. In this sense, crypto is inarguably growing closer to mass adoption.
On the other hand, while we may be approaching this tipping point, we are not quite there yet. Adoption by a tech giant like Apple, Amazon or Google would certainly constitute the required push – a sort of Deus Ex Machina effect – to bring crypto fully in the mainstream, for it is currently perched just on the cusp.
In the past year, a plethora of easy ways to sell Bitcoin have popped up, with an increasing number of reliable, secure digital platforms serving as fiat gateways for those who are interested in using crypto as currency, or purchasing it as an investment. Know your customer (KYC) and anti-money laundering policies provide a solid level of security to guard against untoward uses of crypto, but as it is still largely an unregulated frontier, more conservative, pro-fiat individuals argue that it facilitates shady dealings and undermines government.
Bears & Bulls
Even the most fanatic crypto proponent would admit that Bitcoin’s 2017 high of $20,000 constituted a bubble, and that $7,000 (the level that it fell to) was a correction, alarming though it was. The November dip below $5,000 is being heralded by glib detractors as a death knell, but this completely discounts the fact that the global market (at time of writing) is a bear, dropping rapidly and indicating a recession.
Thus, to declare the death of crypto is to ignore the greater context: yes, digital coins are losing value, but only at a rate proportionate to the overall drop in the markets at large. Of course, this drop comes at an extremely inconvenient time for crypto, which seemed poised to establish a consistent store of value around that $7,000 mark. As we get into the first quarter of 2019, it will be fascinating to observe the relationship between the fluctuations of global economies in relation to the fluctuations of Bitcoin prices.
For the time being, crypto geeks and rain-makers are holding their breath, waiting to see what happens next. The rise of crypto is utterly unique, and thus the current situation is unprecedented – we can only wait and see.