The year 2020 will go down in history as one of the memorable year for bitcoin and the crypto market at large. There’s no doubt about that. No one would have expected that the Bitcoin and cryptocurrency market would have defied all odds in a year marred by global economic recession, financial crises and an outbreak of a pandemic.
Around February to March 2020, the whole world was hit with the outbreak of a deadly virus – COVID-19 – which has resulted in the death of millions of people all over the world. The effect of the virus outbreak, which led to a total lockdown in major cities, affected economic activities all over the world. Due to the uncertainty casted on global growth, the financial markets including the cryptocurrency market was hit with a deep plunge. We take a brief look at some of the major events that have shaped the current Bitcoin’s bull run in 2020.
COVID-19 outbreak saw the world embrace contactless payment.
Bitcoin, for instance, suffered a price crash so low, to trading around $3000 in March 2020, thereby, losing about 55% of its value. Other cryptocurrencies in the market, equally experienced price dips. Ethereum was down by 40%, Litecoin dropped by 35%, and XRP also plummeted by 25%.
With a protracted downturn of the global economy, nobody would have predicted a major bull run that saw unprecedented interests and new players entering into the cryptocurrency market. However, the pandemic came as a blessing in disguise for crypto, as contactless payment became the new normal. As such, the Bitcoin price falls were short-term.
Bitcoin’s third successful halving sparks optimism
Bitcoin’s halving in May 2020 was the first catalyst that triggered optimism amongst bitcoiners and crypto traders, as a daily reward of new bitcoins to miners was halved from 12.50 to 6.25. Bitcoin’s price was trading around $8250. At that time, Bitcoin P2P trading boomed in Africa. Trading volumes hit new highs in countries like Nigeria and Ghana.
Mainstream companies embrace Bitcoin as a better store of value.
Institutional buying of Bitcoin came sooner than expected. With the rapid downfall of fiat currencies all over the world, mainstream companies and organisations saw Bitcoin as a better store of value. Nasdaq-listed US firm, MicroStrategy, was one the first to add bitcoin to its treasury reserve. Shortly after, Square Inc, the company behind CashApp, whose CEO is Jack Dorsey (Twitter’s CEO), announced their purchase of Bitcoin, using 1% of the company’s total assets. In October 2020, Stone Ridge Asset management, announced that the company acquired 10,000 bitcoins worth over $100 million as a primary treasury reserve asset.
PayPal’ crypto offering
Fintech giant, PayPal announced its entry into the cryptocurrency market, after it offered cryptocurrencies such as Bitcoin, Litecoin, Ethereum to its over 300 million active users. The news alone, pushed Bitcoin’s price to trade around $12,000. Not long after it was reported that PayPal and CashApp were buying over 100% of the newly minted bitcoins.
Debasing Fiat currencies in developing countries
In Africa, the cryptocurrency market continues to witness an influx of new users into the market. Economic instability and frequent devaluation of many African currencies, worsened due to the outbreak of coronavirus in the continent. Cryptocurrency was seen as a better store of value, as Decentralize Africa reported survey shows that many Africans prefer to save in crypto, while they spend with fiat.
Also, Bitcoin became a tool of activism in Nigeria. Donations made during the EndSars Protest (a cry to end Police brutality in the country) were reportedly frozen by Banks, on the order of the Central Bank of Nigeria. Donations were switched to Bitcoin. That move further accelerated the adoption of Bitcoin to new users.
What more… The chart above says it all.
Bitcoin.org gets hacked, scammers run BTC giveaway scam
Earlier today, Bitcoin.org, the oldest cryptocurrency website registered by the founder of Bitcoin, Satoshi Nakamoto, recently got hacked. Scammers ran a BTC giveaway scam with a promise to return double the amount users send to the named address. In the end, the scammers were reported to have collected $17,764 before the website was taken down. The website was inaccessible for a few hours after the incident, but normal service has been resumed.
To bring users’ attention to the hack, a pseudo-anonymous Twitter account with the name Cobra took to Twitter to reveal the news and claimed that the website may be offline for some days. He also clarified through his tweets that Bitcoin.org has never been hacked and that the breach must have been due to a lapse on the part of Cloudflare- the web provider that the website is hosted on.
“Bitcoin.org hasn’t been hacked, ever. We move to Cloudflare, and two months later we get hacked. Can you explain where you were routing my traffic too? Because my actual server didn’t get any traffic during the hack” he tweeted.
The scam on the website was perpetrated through a giveaway. Visitors on the website were greeted with a popup, asking them to send crypto to a Bitcoin wallet via a QR code and receive double the amount in return. The fake message showed that the Bitcoin Foundation was giving back to the community and that the giveaway will be limited to the first 10,000 people. This was made to draw more people into the scam. According to an analysis on the scam address done by Reddit Sleuth, it was presumed that a chunk of the 0.4BTC came from the scammers themselves to add an element of credibility to the claim. At the time of writing this report, Bitcoin.org is once again, back to life.
How popular is the Bitcoin giveaway scam?
Bitcoin giveaway scam is quite popular among hackers as it allows them to make fast money without tampering with anyone’s wallet. In 2020, Twitter handles of top crypto celebrities, politicians and influencers were hacked to run Bitcoin giveaways. While the scammers were apprehended, the value of Bitcoin was not affected.
Today’s scam on Bitcoin.org did not affect the price of the coin either. Despite the Evergrande debt crisis and the fluctuations bedevilling the crypto market within the week, Bitcoin increased by 2.05% within the last 24 hours, thereby moving from $42,789 to $44,378.
El Salvador’s Bitcoin adoption – What you need to know
El Salvador made history (and headlines) after becoming the first nation to endorse and approve the world’s most popular cryptocurrency, Bitcoin, as a legal tender. The move makes Bitcoin acceptable for transactions within the Central American country alongside the U.S dollar, which has been serving as the paper currency since 2001. This comes after the so-called “Bitcoin Law” came into force after passing legislation in June of 2021. El Salvador’s government announced that it had purchased 400 Bitcoin in 2 tranches of 200 each and plans to get more in the future.
The move to adopt Bitcoin has been justified by the government’s need to boost financial inclusion in the country. It is estimated that 70% of El Salvadorans do not have access to financial services and the government believes that Bitcoin can help close the gap. The Bank of America has outlined a few benefits that they believe will result from El Salvador’s bitcoin adoption. These include promotion of financial digitization, streamlining remittances as well as opening the country to digital currency miners. However, not all agree that the move is a step in the right direction.
Amongst the detractors of the scheme are the International Monetary Fund and the World Bank, each having warned El Salvador about the risks of Bitcoin’s use as legal tender. The World Bank has been irked by what it described as “environmental and transparency shortcomings” with bitcoin, while the IMF cited “economic and legal concerns” in relation to the move.
Other than the push back from these international bodies, there has been some internal opposition to the adoption of Bitcoin. Citizens had held protests over Bitcoin’s adoption in August and about 67.9% of respondents in a poll said they disagreed with the government’s decision to adopt crypto. The results of the poll showed that 8 in 10 people had little confidence in the use of bitcoin as the currency.
In spite of the criticism, El Salvador’s government is moving forward and has reportedly installed 200 Bitcoin ATMs across the country. And in response to the World Bank’s environmental concerns, El Salvador’s president, Nayib Bukele, has said the country plans to power mining activities using renewable energy from the country’s volcanoes. In order to incentivize the use of Bitcoin in the country, any citizen who signs up for the country’s “Chivo” wallet will get 30$ worth of bitcoin.
All in all, the adoption of a cryptocurrency by a sovereign nation is seen as a testing ground for many, as this is a use case Bitcoin has never experienced in its 12-year history. Countries such as Brazil and Panama seem to be watching the move to draw insights on whether to follow suit.
Is Bitcoin Still a Good Investment?
The above question is being asked a lot due to the surge and drop of bitcoin over the past months – so aspiring investors are curious about whether the coin remains a lucrative investment. Bitcoin is the world’s most treasured and appreciated digital currency in terms of its worth in the open market and this fascinates a vast scale of investors. While there have been ups and downs, Bitcoin still poses to be a good investment.
When compared to various cryptocurrencies, Bitcoin has been proven to have innumerable benefits;
Diversifying your crypto portfolio is very important and investing in bitcoin, amongst others, can help you do just that. Several foundations and pension funds have added bitcoin to their portfolio over the years. Investment strategists have gone on to say that adding bitcoin to your portfolio may improve returns without notably increasing volatility.
Working Capital and Cash Flow
Bitcoin has shown to be a financial strong suit in terms of liquidity. At inexpensive prices, you can quickly swap Bitcoin for fiat currency or gold. The level of cash flow is often dependent on how many users, or in this case investors, a platform has. The liquidity of cryptocurrencies is likely to skyrocket if adoption rises and more people invest in Bitcoin as a viable means of exchange.
Basic Trading And Operations
More often than not, investing in stocks or company shares would require a license for the former and a visit to a broker for the latter. However, with Bitcoin, trading is made easy. Buying and selling Bitcoin is made easy and you can store them in your wallet with little to no hassle. Trading in Bitcoin is also instantaneous.
Digitalized Storage And Repository
Due to the upgrade of technology, cryptocurrencies are not subject to the traditional form of investment and storage like banks. Instead, the data is stored in a peer-to-peer network of nodes and duplicated across the world.
Owing to its limited accessibility, Bitcoin is referred to, by many, as the “digital gold”. Like with gold, which has to be extracted from the earth, Bitcoin has to be “mined” through the use of computer software and thus, cannot be produced at the snap of fingers. Bitcoin has been said to have features akin to gold, silver and the likes.
Brand New Opportunities
The fact that Bitcoin is still current in the world of cryptocurrencies brings room for fresh opportunities. Its newness poses a high price alteration and volatility, which may lead to vast profits if invested properly.
Bitcoin has always been a smart expenditure. The rate at which individuals adopt the coin is proof that it is still a good investment. Bitcoins will help in diversifying your portfolio, it will help in simple and stress-free trading, it will help in electronic and digital storage, amongst many others. Bitcoin as a long-term investment is feasible because the supply is fixed. It goes without saying that Bitcoin has the potential to become a global currency.
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