- Bitcoin is a decentralized currency that uses peer-to-peer technology, allowing the network to perform all operations such as money issuance, transaction processing, and verification collectively
- Authorities in the southwestern Chinese province of Sichuan halted cryptocurrency mining, affecting an estimated 90 percent of China’s Bitcoin mining capacity
- According to Todaro, some of Bitcoin’s recent price rise is due to trading and speculation, but the majority is due to funds looking at Bitcoin as a store of value alternative to gold
Some economists predict a significant shift in crypto as institutional money enters the market. There’s also the possibility that crypto will be listed on the Nasdaq, bolstering blockchain’s credibility and applications as a substitute for traditional currencies. Others believe that all crypto needs is a verified exchange-traded fund (ETF). Bitcoin is a decentralized currency that uses peer-to-peer technology, allowing the network to perform all operations such as money issuance, transaction processing, and verification collectively.
While decentralization protects Bitcoin against government manipulation and meddling, it also means that there is no central authority to ensure that things function smoothly or to guarantee the value of a Bitcoin. Bitcoins are generated digitally through a process known as mining, which necessitates the use of powerful computers to solve complex algorithms and crunch numbers. They are now manufactured at a pace of 25 Bitcoins every 10 minutes and will be capped at 21 million, which is projected to be reached in the near future.
Needham’s John Todaro said Friday on CNBC’s Squawk On The Street that the negatively perceived Bitcoin rules in China will wind up being favorable for the cryptocurrency market in the long run. What happened on June 20, China stepped up its anti-Bitcoin enforcement. Authorities in the southwestern Chinese province of Sichuan put a halt to crypto mining, which is thought to have affected more than 90% of China’s Bitcoin mining capacity. According to Todaro, the network hash rate has dropped by more than half as a result of China’s crackdown on Bitcoin mining.
The decentralization of Bitcoin mining has produced short-term volatility in crypto assets, but he believes it will be beneficial in the long run. He claims that miners outside of China who have been able to continue mining are doing so with larger profit margins. Some of Bitcoin’s recent price movement is due to trading and speculation, but most of it is due to funds looking at Bitcoin as an alternative to gold as a store of value, he said.
He stated that there are other applications in the domain besides trading, such as the current adoption of payment networks. El Salvador’s legislature approved a Bitcoin law on June 9, allowing the Central American country to use the cryptocurrency as legal tender.
Bitcoin’s future prospects are a hot topic of discussion. While so-called crypto-evangelists abound in the financial media, Harvard University Professor of Economics and Public Policy Kenneth Rogoff claims that the overwhelming sentiment among crypto advocates is that the total market capitalization of cryptocurrencies will skyrocket in the next five years, reaching $5-10 trillion.