Daily transactions add up to $7bn, and Bitcoin is increasingly being used as a recourse in times of political and economic turmoil. Is it time for governments to take action?by Chris Carter / August 23, 2017 / Leave a comment
Bitcoin has had a spectacular run in recent years. Appearing in a far-flung corner of the world wide web eight years ago, the currency’s rise has been meteoric. Bitcoin is the online currency that can be sent and received by anyone in the world, with computers controlling its transfer and creation securely without need for human intervention. The ecosystem of wallets and exchanges the currency is bought and traded on have creaked under the weight of the stratospheric flurry in activity in recent days.
The numbers for this new industry are simply unheard of for a financial market in recent times. Bitcoin and its replicant cryptocurrencies command greater market capitalisation than payment giant, Paypal, with the digital currency universe boasting values in excess of $140bn compared to Paypal’s $70bn. Daily transaction volumes now exceed $7bn and wrack up over 250,000 transactions per day worldwide, totalling 250 million transactions since this nascent currency’s inception.
So why has Bitcoin been so wildly successful? According to the Bank of England, there are three functions of money: acting as a store of value, a medium of exchange, and a unit of account which allows measure of the value of an item for sale. Bitcoin does all three of these things reasonably well, or at least better than those who tried to create virtual currency before.
Its appearance and ascent into everyday lexicon is impressive: digital currency unusually has slipped, for the most part, beneath the radar of governments and regulators tasked with monitoring financial markets and keeping them in line. The last set of reports for digital currencies from the Bank of England were written in the third quarter of 2014. Clearly much has changed since, with over 800 new currencies having been created—and just the mere matter of $60bn being added to the value of Bitcoin.
Suffice to say, were digital currency to continue swelling at present trajectories, it would not be long until many of the dreams for Bitcoin’s enthusiasts could be realised. Notably, those with the greatest interest are Anarchistic or Libertarian politicos who see Bitcoin’s decentralised properties—that is, the fact it’s free from central banks—the means to end centuries of governmental control of currency. This is one of the most controversial elements of Bitcoin’s rise, and the most likely to win the attention of regulators whose feathers would be ruffled by the threat of its mass adoption as a means of exchange.