Back in 2009, the world was in crisis, after the subprime mortgage collapse in the US triggered a global financial crash that sent unemployment rates spiraling higher than 10% in the US alone.
However, this also created opportunities for aspiring investors and entrepreneurs, while it also altered the structure of the world’s financial markets and paved the way for new and exciting innovations.
This is best embodied by the emergence of Bitcoin, which is a digital currency that was created in January 2009. But what exactly is this currency, and what do you need to know as an aspiring trader?
What is Bitcoin?
In simple terms, Bitcoin is a collection of computers (or nodes) that create an immutable list of transactions that’s supported by advanced blockchain technology.
In this respect, Bitcoin is a transparent and anonymous cryptocurrency, and one that sees transactions stored within individual blocks. This unique type of digital payment system has blazed a trail for others to follow in the crypto market, while potentially revolutionizing banking and financial market trading across the globe.
The structure of Bitcoin is also incredibly secure and largely impervious to the machinations of hackers, thanks to the capacity of nodes and ‘miners’ to forge new blockchains when required and undermine potential thieves or ‘bad faith’ operators.
Interestingly, there’s a finite number of Bitcoin tokens available to investors, which actually plays a central role in negating some of the asset’s innate volatility.
This has also helped to drive a sustained level of inflated value for the market leading cryptocurrency, which currency boasts an average (and impressive) market capitalization of $199.62 billion.
What You Need to Know as a Financial Trader
Of course, Bitcoin has experienced something of a chequered history since its inception in 2009, but more recently it has inched closer to the consumer mainstream whilst emerging as a viable investment option in the digital age.
Not only have increased rates of adoption boosted the value of the asset and helped to minimize volatility, but the finite nature of Bitcoin and the fact that it’s impervious to macroeconomic factors have also combined to establish this as a relative safe-haven asset during times of economic uncertainty.
Remember, Bitcoin is also decentralized and not backed by a central bank, which means that monetary policy and quantitative easing measures (which have been widespread during the coronavirus pandemic) haven’t undermined their value.
We’ve also seen a growing correlation between Gold and Bitcoin, and with the potential roll out of further stimulus measures in the US and across the globe, now may be the ideal time to consider investing in this fast growing marketplace.
Of course, the volatility of Bitcoin does provide a challenge, even though this is slightly offset by the secure store of wealth provided by the asset. However, the price has remained relatively stable during Q3 and the beginning of Q4, while it currently hovers just below the strategically important $12,000 mark.