Bitcoin and other cryptocurrencies have been gaining ground in worldwide economy for years. Pronouncements by the powerful, including Trump, are evidence of the rise of Bitcoin adoption.
Some believe that Bitcoin will be banned, that the dollar is irreplaceable, cryptocurrencies are not money, everything will collapse, and the “Bitcoin bubble” will explode soon, among other opinions.
Trump’s Twitter posts suggest that he has noticed the growing importance of Bitcoin and other cryptocurrencies in today’s society. He claims that crypto assets are not money and that their value is “highly volatile and based on thin air.” He also argues that “unregulated crypto assets” can promote drug trade and other illegal activities.
Since its birth in 2009, Bitcoin has gained ground in society, being certified as money at every step. It was first released to a limited number of e-mails as an experiment, but it was not long until it was compared to the dollar. Only 10 months later it was listed as New Liberty Standard at a rate of 1,309.03 bitcoins (BTC) per US dollar.
In May 2010, Bitcoin was first used to buy a physical good, by exchanging 10,000 BTC for a couple of Papa John’s pizzas, for a cost of US $25.
On July 11th of that same year, the first boost for Bitcoin adoption was given through an article published on the Slashdot site, where the release of version 0.3 of the software was announced. From then on, operations with bitcoins increased steadily, leading the cryptocurrency to its second and best known trade milestone in 2011: the birth of Silk Road.
This clandestine sales site is responsible for much of Bitcoin’s bad reputation regarding illegal activities. However, it should be noted that national fiduciary currencies, in cash form and the prevalence of the dollar and the euro, are more used in illegal activities. On Silk Road, traders offered their products and services in exchange for Bitcoin payments.
Thousands made exchanges on Silk Road, without using dollars (and without risking exchanges in person); therefore, it is not strange that on February 10th, 2011 the bitcoin quote reached parity with the dollar (1 BTC = US $1) in the failed and controversial exchange house Mt. Gox. This drastic price increase was due to Bitcoin’s use and adoption as money.
Eight years later, after hundreds of increasingly intense milestones, Bitcoin is more recognized as money despite Trump’s denial. Thousands of companies base their business in this currency and millions of people worldwide use it the same way as fiduciary money: deposit of value, means of exchange and unit of account.
Some people save in bitcoins instead of dollars because the former is revalued (despite its volatility in the interim) and the latter is devalued in the long term. Others send money to their families abroad using Bitcoin, instead of banking, PayPal or other methods based on the dollar because the speed of shipments with cryptocurrencies is higher and their costs are lower.
The fact that Trump talks about Bitcoin indicates that this crypto asset has reached higher levels of relevance. This implies that it is noticed and recognized by both the powerful and ordinary citizens, not to mention that they are worried about not being able to control it.
By Willmen Blanco