2020 was unforgettable, especially for Bitcoin. To commemorate this year for our readers, we asked our network of contributors to think about Bitcoin’s price action, technology development, community growth, and more in 2020, and what all of this could mean for 2021. These writers responded with a collection of thoughtful and thought-provoking articles. click here to read all the stories from our End Of Year 2020 series.
What a year.
Bitcoiners started 2020 in a hopeful mood. After a quiet two-year bear market, with flat price action but notable technical advancements on the Lightning Network and Taproot, we were looking forward to “The HalveningIn May. We hoped this event would herald another bull run amid a robust global economy that indicated nothing but good times ahead. The rocket was fueled, when the moon?
However, 2020 was a year where almost nothing went according to plan, with everyone’s lives disrupted by the unexpected arrival of a new virus from China, coupled with paralyzed and economically devastating government reactions to that virus as it spread rapidly worldwide. We now come to the end of 2020 with a growing number of COVID-19 deaths and a growing economic disaster looming on the horizon.
Yet despite all the misery and anxiety, there is reason for hope and belief that we can recover and rebuild. There are opportunities in the midst of chaos.
This is good for Bitcoin.
Born in chaos, grown in chaos
Bitcoin is no stranger to economic upheaval. It was born in the chaos of 2009, during the aftermath of the 2008 financial crisis, which so inspired Satoshi Nakamoto that he immortalized it in the Bitcoin Genesis block.
2020 seems destined to mark the beginning of a new financial crisis. But this time around, Bitcoin is ready to perform. Aside from the significant health and medical consequences of COVID-19, the related global financial and economic chaos that has developed in response has created a perfect storm for Bitcoin to thrive in:
- An event to halve the Bitcoin supply in May
- COVID-19 financial aid efforts and global fiat quantitative easing efforts, on steroids (money printer goes brrr …)
- Digital golden story takes hold
- Killed physical cash (COVID-19 fear = contactless / credit cards only / digital payments)
And then, as the icing on the cake, we had what could turn out to be the 2020 equivalent of the famous 2008 Genesis block head:
Quite the headline, commemorated and immortalized by being mined in Bitcoin block #659,678:
This perfect storm of events seems to have caught the attention of a lot of money. With a new wave of large institutional investors Driven by a desire to protect their wealth in turbulent times, and realizing that bitcoin had become a viable alternative to gold or bonds, bitcoin’s story of ‘store-of-value’ suddenly took center stage.
One after another, each new public announcement from a traditional major investor buying bitcoin fueled this story, which in turn attracted more attention. Unlike the 2016/17 bull run, which was mainly driven by retail speculation, we now seem ready to embark on a new bull run, fueled mainly by institutional investment.
Price speculation aside, bitcoin evolves like money. If we look back to 2020, we can start to see it as the year in which bitcoin was really seen more widely as a store of value. Consider the theory of the evolution of money, which states that in order to become money, something goes through several stages:
- Storage of value
- Unit of account
2020 brought us unprecedented levels of unwanted chaos. But the silver lining may be that it drew more attention to the importance of sound money, which in turn has dramatically accelerated the evolution of bitcoin as money, moving it from ‘collectible’ to ‘store of value’ in the minds of institutional investors. .
As we end 2020 and enter 2021 with current downward economic health trends likely to continue, bitcoin is poised to conquer more and more of the world’s wealth as a real, globally valuable asset. And the stronger bitcoin becomes as a store of value, the greater the chance that it will one day become a medium of exchange and then a unit of account.
Entering the regulatory environment
But it won’t be easy. All of this brings the increased attention of institutional investors to the attention of government regulators. We must be ready for another wave of negative consequences arriving in the wake of Bitcoin’s increased visibility and acceptance as a store of value. The long-term future looks bright for Bitcoin, but the short-term road looks bumpy.
We are already seeing increasing interest from the state in the form of renewed calls for regulation, and in the US there are new rumors of increased KYC / AML requirements. Lines of battle are forming …
And on a broader level, we are already seeing leaders’ reflections
Canada and Argentina could prove to be early warnings for other regions around the world.
Governments may like to print money, but that doesn’t mean they won’t keep trying to extract wealth from their citizens by taxing them. 2021 promises to bring new hope in the form of COVID-19 vaccines, but it could take much longer for the economic disruptions that began in 2020 to resolve.
All in all, Bitcoin will continue to operate globally, providing the world with the most solid monetary policy ever invented. More and more people will use Bitcoin as a way to protect and preserve their wealth. And I am confident that at the end of 2021 we will look back again and say “this was good for Bitcoin.”
This is a guest post from Brian Lockhart. The views expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.