At the time of writing, Bitcoin was nearing a new high of $20,000 USD per bitcoin. What has changed since the last time this maximum was reached?

crazy greedy

The Covid19 situation has changed the way people do many things. Technology has been pushed to the forefront of everyday life. Things that used to be done physically are now moving to the virtual world: education, eating in restaurants, entertainment, work, and the purchase of many goods and services. The natural fit to this type of agenda is the use of cryptocurrencies. Why? They are an extension of the world driven by technology. They can also be used to compete with the existing financial system at potentially lower cost.

acceptance

The last time Bitcoin reached its all-time high, many institutions demonized cryptocurrencies as payment methods used by criminals for terrorism, money laundering, and illicit drug sales. Right now, Mastercard and Visa are linking crypto to their credit cards, and Paypal now accepts Bitcoin for use on their platform. Many governments are talking about issuing cryptocurrency versions of their traditional currencies. There was also a push from Facebook associated with major banks and other institutions to issue a cryptocurrency called Libra which didn’t go very far, but the intent is there. Cryptocurrencies are no longer for criminals unless the aforementioned institutions are committing the crimes.

Adoption

The key to any technology is widespread or mass adoption. The more people use something, the more demand there is for its use and the more important it becomes. With widespread adoption, the systems that work in conjunction with the product are also beginning to change. Look at Apple’s iPod, Microsoft Windows, Internet providers, and electric cars as examples. With the new demand will come new industries and products that were not very useful without the adoption of the original product.

Vulnerability of Traditional Investments

Due to the Covid scenario and the unfolding depression, investing in stocks and bonds is becoming quite expensive and carries higher risk as the underlying economy is disconnected from the performance of these markets. The high level of debt makes real estate investment riskier than in the past, as well as the volatility of rental income and people’s ability to pay their mortgages. Cash is a safe haven, but rising debt and the prospect of inflation mean that cash carries risks too. The concept of diversification means that these investments must be held to some extent, but there is now a yearning for an asset that complements these products. This new asset is cryptocurrencies. This product allows for diversification from excessive debt, currency devaluation and high inflation.