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Recently, Tesla Inc revealed that it had bought $1.5billion worth of bitcoins and would support it as a payment method. The world's biggest asset manager BlackRock Inc has reportedly followed suit by investing in bitcoin. Miami city has also considered allowing residents to pay taxes via bitcoins. That indicates cryptos are not going away any time soon, and the asset, once a domain for outsiders, is heading closer to the mainstream as more people feel confident to talk about it now.

The recent bitcoin embrace

Traditional financial systems are laying the groundwork for their own responses to the current cryptocurrency boom, although its future is quite uncertain. Several reasons have triggered the recent bitcoin embrace: both retail and institutional investors believe in its value. Another reason is that increasing low interest rates seem to be boosting the value of everything, which has triggered more investors to turn into cryptos to get more out of their cash holdings.

The covid19 pandemic has also increased more activity in the ever-growing eCommerce industry and is nudging consumers away from the allure of physical coins. Again the development of covid19 vaccines could trigger a gradual economic recovery that could see a burst of inflation. The pandemic has prompted traditional central banks to print more traditional money backing the notion that cryptos like bitcoin and other digital assets provide a potential hedge against a possible outburst of inflation and the depreciation of fiat currencies.

As the global crypto market cap hits $2.43trillion, more pressing concerns may be about who else is getting into the crypto space, how they will cope if they decide to go that way and how mainstream the crypto movement can go. Again, more investors who wish they hopped onto the bitcoin bandwagon a few years ago are trying to invest for profits.

According to Timothy Lane, Bank of Canada deputy governor, the recent surge in crypto prices seems like a trend and more of speculative mania in a space where a single high-profile tweet is enough to cause a high rise in crypto prices. 

Generally, three main reasons have led to the surge of bitcoin value. First, the media frenzy over the bitcoin value boom attracted more investors into the market looking to make money. Secondly, the regular finance companies are investing in bitcoin, and lastly, the comparisons between bitcoin and gold that are aligning with the trends in the global economy.

Why are cryptos so important?

As more people are talking about crypto, there may be more arguments for and against them, but there is no doubt that increasing numbers of mainstream players are getting on board. For instance, earlier this year, Mastercard Inc announced that it would support some cryptos directly on its network, which provides a new payment option for companies and consumers.

According to Elliot Johnson, chief operating officer at Evolve Funds Group Inc in Toronto, during the launch of an ETF (Exchange Traded Fund), there is growing adoption of cryptos by the respected players in the market. That is encouraging for everyone in the crypto space as it shows a promise for the legitimization of the asset.

To understand why people are still talking about cryptos, we must know what it is about cryptos that makes them attract so much attention. At the very least, cryptocurrencies are based on blockchain technology that allows them to be decentralized, meaning that they are not governed by any monetary authority. Instead, the platform is maintained by the peer-to-peer community computer network consisting of nodes.

Blockchain is a distributed public ledger run via cryptography. Bitcoin is usually secure because it is confirmed digitally via a process known as mining which involves solving complex cryptographic puzzles to verify new entries to the ledger. Bitcoin and Etherium are the leading cryptos, but there are more cryptocurrencies in the market.

People are talking about cryptos because they are indispensable and are not going away any time soon. They rely on secure technology, transactions are fast, and allow the maintenance of records to minimize the risks of pirated data. Large banks are now developing their own cryptocurrencies, for example, Bank of America, as others collaborate with the current crypto clients such as JPMorgan and Zcash.

Blockchain technology

As cryptos get more popular, it is really the underlying blockchain technology that is the real masterpiece. Blockchain technology is a robust platform that allows cryptocurrencies and other digital tokens to exist and operate. In essence, any transaction that needs recording can adopt blockchain technology. From medical records, immigration information, birth certificates to insurance records can be stored and accessed over a blockchain.

Another notable thing is that the Etherium network facilitates the use of smart contracts. The protocols that allow self-execution of contracts after meeting the requirements will become a big thing as well.

Indeed many investors, venture capital funds, and fintech are slowly starting to make commitments to cryptocurrencies seeing it as the future of money. Additionally, banks can no longer afford to ignore this opportunity. However, the FCA is still warning on cryptocurrencies. It is concerned that crypto investment firms are overstating the potential returns and understating the potential risks of investing in digital currencies.

CONCLUSION

There is no doubt that cryptocurrencies have brought a paradigm shift in how we perceive money and spend it. Cryptos have been in existence for a decade, and the underlying technology has demonstrated the potential to disrupt the global financial system. However, it is still in its growth phase and not perfect by any stretch; therefore, there is still much uncertainty on the future of cryptos. With people still talking about cryptos, it is more evident that they are moving closer to the mainstream.

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