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Why is Bitcoin making the world go crazy?

With newspapers carving out new sections of their business pages for reports on Bitcoin and other crypto currencies, and a seemingly endless coverage of the latest developments and upsets in the world of Bitcoin and cryptocurrencies, we look at some of the reasons why Bitcoin has taken centre stage in the past six months, and why we think it’s here to stay.

Growing Market Capitalization

The current market capitalization is something we hear about a lot, both how high it is and how volatile it is. An asset that has appreciated so quickly is always going to grab headlines.

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Photo by Daniel Hjalmarsson

But what actually is market capitalization? Normally shortened to market cap, it is the price of an asset multiplied by its circulating supply. As prices in cryptocurrencies tend to vary over different exchanges an average is calculated.

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A chart showing total market capitalization of cryptocurrencies since April 2013, using a logarithmic scale, CoinMarketCap Website

The CoinsMarketCap website has the market cap of all cryptocurrencies including Bitcoin at $385 billion. This is currently down from a market high of $813 billion. Even with the recent market downturn we can see from the logarithmically scaled chart above that the market has weathered similarly volatile down trends in the past.

Evidently this is a large enough market cap to create significant and widespread interest. To give some context Apple’s market cap is $785 billion. Over the past two years the crypto market cap has risen by $384 billion dollars from $1 billion in February 2016.

Robbing the banks

To really understand the craziness around Bitcoin we need to understand the technology itself. Anyone who has started to read about Bitcoin will have learnt about how it has the potential to replace our banks as the way in which we store and manage our money. Many see huge problems within our financial institutions as they are, and so this lends an exciting edge to Bitcoin.

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Photo by Rob Bye

Currently we trust banks as managers of our money, both in digital form and hard cash, they make sure the money is where it should be and protect it from being lost or stolen. Another important service they provide is to make it impossible for someone to spend the same digital currency twice. Without this service a currency loses its integrity, in digital currency this is known as the double spend issue.

Bitcoin was the first to overcome the problems of centralization. Earlier forms of currency had used a centralised checking system much like banks in order to verify transactions and over come the double spend issue. However centralization within digital currency exposes the currency to attacks from hackers, and make it reliant upon its parent company.

Bitcoin solved the problems of centralized bookkeeping by utilizing a peer to peer (p2p) network combined with creating network consensus by the proof-of-work protocol, more commonly known as mining. This is where people lend computing power to the network and get paid Bitcoin as a reward.

The possibilities for a decentralised currency are many. At Bitspark we utilize blockchain technology to provide faster and cheaper remittances in fiat. Providing these currency services has already widened the renown of Bitcoin, exemplifying how useful crypto can be.

Yet the blockchain’s potential reaches far beyond revolutions in currency. An American company recently used it for a multi-million dollar agricultural business deal in order to reduce the time spent processing documentation. As more and more people realize the potential of blockchain the craziness around Bitcoin continues to grow.

Want to know how to start with cryptocurrencies and have the best tips?: CLick here to read the full article : How to get started with cryptocurrencies in 2018?

The rise of the Bitcoin billionaires

With the growing market cap the pioneers of cryptocurrency have begun to reap the rewards of early adoption, as written about in the Forbes article, The Richest People in Cryptocurrency. While lots of people who hold large amounts of cryptocurrency prefer to keep under the radar, Bitcoin had its first “celebrity” Bitcoin billionaires in brothers Tyler and Cameron Winklevoss.

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Photo by Craig Barritt/Getty Images for FIJI Water

The brothers are famous for suing Mark Zuckerberg for over $30 million for stealing the idea of Facebook from them. Tyler and Cameron Winklevoss took $11 million from their Facebook payout and proceeded to make one of the greatest trades ever. They purchased approximately 1% of the Bitcoin in circulation at the time (2013) and by December 2017 their Bitcoin was worth $1 billion. Over this period the price of Bitcoin went from $120 to $11,000. At current prices (February 2018) their bag stands at a cool $750 million.

Tyler and Cameron Winklevoss have put more than their money into Bitcoin, and are also the founders of the Gemini currency exchange, which has processed $300 million in a single day and is partnered with CBOE Global to support their futures contracts.

Stepping into the spotlight

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Photo by Roberto Júnior

Recently we have been seeing widespread engagement with cryptocurrencies from the world’s largest financial institutions and businesses. From being listed on the futures exchanges of CME and CMOE in December 2017 to being the top of the EU’s finance watchdog the European Securities and Markets Authorities 2018 agenda, cryptocurrencies have truly come out of the shadows.

Earlier last week the Commodities and Future Trading Commission (CFTC) and the US Securities Exchange Commission (SEC) held a hearing on the future of their regulatory approach for cryptocurrencies. Christopher Giancarlo, the chairman of SEC, spoke of how,

“we owe it to this new generation to respect their enthusiasm for virtual currencies, with a thoughtful and balance response, and not a dismissive one.”

For the cryptocurrency HODL’r, those long-term believers in crypto, this is being heralded as the coming of a new dawn. Here at Bitspark we are just as excited about driving development in our company as seeing what others are doing in the blockchain space.

A new type of fundraising

Crypto has also been hitting the news because of the new disruptive technology of Initial Coin Offering, or ICO’s. These are ways in which a business can raise funds for a project, combining the opportunity to invest in a company with a technological asset. We can take the example Bitspark’s own recent ICO as a usefulcase study for how ICO’s can revolutionise business ventures.

First of all the Zephyr token was put up for sale in October 2017. Funds raised through the Zephyr Token sale are now being utilised to develop the use of the token into Bitspark’s remittance corridors and existing products. In addition the sale has enabled the creation of decentralised pegged fiat cryptocurrencies for every national fiat currency in the world. This greatly expands the usability of the Bitspark platform.

Money Transfer Businesses and new users are rewarded with Zephyr Tokens for doing economically beneficial activities like sending a transaction, topping up a user's balance or liquidating MTO’s balances. This provides an immediate cash incentive to sign up, which can quickly expand the number of available cash deposit and withdrawal outlets connected to Bitspark. Furthermore, upon every successful transaction, 25% of transaction fees are used to buyback tokens thereby providing upward pressure on the price creating a positive feedback loop between network expansion and token value.

Bitcoin has had the potential make the world crazy since Satoshi Nakamato’s white paper Bitcoin: A Peer-to-Peer Electronic Cash System was first published in October 2008. As Bitcoin is so unlike anything before it’s not surprising that the world has taken this long to notice. Despite being by turn hailed as our financial saviour and derided as a scam, the technology which makes up Bitcoin and the position it now holds means it is likely to keep taking up large sections of the newspaper for some time to come. As more and more of us are digesting Satoshi Nakamato’s invention the power of blockchains will continue to offer new grounds for invention and progression.

Click on the image below to watch co founders George Harrap and Maxine Ryan discussing about the Bitcoin crazyness.
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Why Bitcoin is making the world go crazy?