CRYPTO 101: Understanding Foundations of Bitcoin and Digital Currency

Welcome to my new blog where we will be talking about crypto essentials, specifically demystifying Bitcoin and other investment areas to lookout for in the crypto world. Bitcoin is simply a tradeable asset that has value and can be bought or sold. There are two assumptions of Bitcoins as defined below.

1. Bitcoin is a store of value. This means that it can serve as a way to preserve and protect wealth over time much like traditional assets such as gold or real estate. A store of value is an asset that either maintains its value or appreciates over time despite economic fluctuations, inflation or other market conditions.

   Bitcoin’s value proposition centers on limited supply.

2.  Bitcoin is a non-security. A ‘security’ refers to an investment contract or asset that represents ownership or a stake in something e.g. stocks, bonds. Securities are subject to specific regulations such as those from U.S Securities Exchange Commission.

   Bitcoin is classified as a non-security because it does not meet the criteria of an investment contract. It is a decentralized asset as it is not issued or controlled by a company nor does it represent ownership in a business or project.

   Market Dynamics

   Ethereum’s technological innovation and expanding DeFi ecosystem continue to draw institutional attention, even though Bitcoin now controls the conversation. In 2021, ETH reached its highest point ever, $4,891. Though predictions differ greatly, one thing is consistent: Ethereum’s future worth seems to be more closely linked to its technological development and practical applications than to market speculation.

   Bitcoin’s bullish surge will continue. Due to the dynamic nature of the business, it is anticipated to reach between $150K and $300K in 2025. We are seeing the emergence of a new asset class as institutional capital flows and possible government involvement approaches.

Reflections of the Crypto market in 2024

A number of events in 2024 changed the landscape of digital assets. Numerous regulatory changes have resulted in fewer market crashes and a more stable industry’s maturity as it finds its footing. Here are a few key issues that were witnessed in 2024:

1. Bitcoin Spot ETF approved in the United States😀

   A Bitcoin Spot Exchange Traded Fund is a type of financial product that allows investors to gain exposure to the price of Bitcoin without actually owning the cryptocurrency.

   Spot refers to current price of Bitcoin in the market. A Bitcoin spot ETF directly tracks the real-time of Bitcoin.

   The most significant news story of the year was the approval of several Bitcoin Spot Exchange Traded Funds.

   In addition to providing institutional investors with a streamlined investing procedure and regulatory compliance, Bitcoin Spot ETFs allow investors to obtain exposure to Bitcoin through conventional investment accounts. Eleven spot Bitcoin ETFs have been approved in total. BTC surged after the Spot Bitcoin ETFs were approved.

2.  Bitcoin complete fourth Halving event

   The fourth halving event of the Bitcoin network was completed in April, resulting in a 50% decrease in the inflation of the BTC supply. About every four years, a predetermined occurrence known as the Bitcoin halving halves the incentive offered to cryptocurrency miners in half. The most recent halving took place in 2020. This is done so as to create ‘scarcity’ in the market and thus leading to a higher surge, pushing both the value and demand of Bitcoin. The halving is essential because it ensures that supply of Bitcoin is kept in check and prevents inflation.

3.  Ethereum Spot ETF Approved in the US

   The first spot Ethereum ETFs were approved by the U.S. Security Exchange Council just months after multiple Bitcoin Spot ETFS were granted. Ethereum thereafter saw a notable 18% increase in price.