2017 was undoubtedly the year of Bitcoin. The cryptocurrency began the year priced just under $1,000 and ended it a shade under $20,000 – making pundits sit up and take notice and early adopters a lot of money. Whether purchasing Bitcoin or trading on the big price movements at a UK bitcoin exchange a lot of people started to put a lot of money into bitcoin. But, what’s next? Will 2018 be a different story?
Well, if the last 12 months taught us anything it’s that Bitcoin has the power to defy predictions. A number of landmark prices came and went throughout 2017 – and a number of people predicted its demise only to be left open-mouthed as the numbers continued to rise. Since the $19,300-plus peak of December 16 the price has bounced up and down – dipping below $13,000 by the end of 2017 and surging back up past $17,000 in the early days of 2018. At the risk of being a hostage to fortune – the $20,000 barrier does seem like a touch one to crack, but not an impossible hurdle.
Indeed, the price could certainly surge if the likes of Amazon were to accept Bitcoin for payments – one tantalising rumour.
But, while the price matters a lot to investors, there are wider knock-on effects from the rise of Bitcoin to watch out for.
It’s fair to say that Bitcoin is treated with suspicion in many circles. On both sides of the Atlantic, politicians have looked into the possibility of regulation, with fears that cryptocurrencies attract criminals. There’s a danger that policy makers and traditional traders look out of touch and are railing against a fear of the unknown, but it’ll be difficult for Bitcoin to dodge regulation forever, 2017 made it too big to ignore. New rules could include the need for due diligence on customers and the reporting of suspicious transactions.
Environmental impact sparks fears
While some are worried that the cloak of secrecy surrounding Bitcoin offers an opportunity for criminals, other critics rail against the environmentally unfriendly way in which it is created. Coins are now being mined by vast data centres that are eating up huge amounts of energy. According to one estimate, Bitcoin accounts for 32 terawatts of energy every year. The figure, according to CNN, is enough to power about three million U.S. households, in stark contrast to the amount that goes into processing Visa transactions, which equates to the power for about 50,000 homes. It’s an ugly stat and one that will bring unwanted attention to Bitcoin.
Blockchain, the real story?
But, what if the focus on Bitcoin is wrong? Perhaps the real story here is the transformational nature of blockchain, the technology that underpins Bitcoin.
That’s certainly the view of NextBlock Global CEO Alex Tapscott, who predicted: “I think bitcoin is the first killer application for the underlying blockchain technology, in the same way that email is the first killer application for the internet.
“Email is this amazingly powerful tool but it wasn’t the last thing that the internet did and arguably not even the most important.”
Blockchain is already being used for alternative cryptocurrencies, but its wider uses range from tackling voter fraud to finding efficient ways of running Government departments and even the NHS – and that’s only scratching the surface. If blockchain can really help in the fight against corruption and to protect human rights, then its story will be much more significant than that of Bitcoin.
When it comes to Bitcoin, we should continue to expect the unexpected from volatile prices and watch for regulation and the fallout of environmental concerns. Yet, for the biggest repercussions, all eyes should be on the potential of blockchain and the prospect of this being a story about the power of tech, rather than the value of currency.