EspañolBitcoin, the world’s most famous cryptocurrency, is poised to reach a major milestone before the end of the year: 100 million transactions. As of the morning of December 23, it sits at 99.7 million, with the landmark due in the next two days, and for a virtual currency that has the support of no central bank or government, it’s a remarkable feat.
“Without a doubt, bitcoin was the strongest and fastest-growing currency in 2015,” says Sebastián Serrano, CEO and co-founder of payments processor BitPagos, which has thousands of partners in Argentina, Latin America, and Europe.
Since its inception in January 2009, bitcoin’s growth has skyrocketed. While the first 50 million transactions took place during the first six years, the rest took place in 2015 alone.
This year’s Black Friday eve saw the highest volume of bitcoins traded in as single day, 2.86 million. That is over US$1 billion, based on that day’s average exchange rate.
For Nubis Bruno, entrepreneur and CPO at bitcoin trading-platform Bitex.la, bitcoin’s performance was to be expected: “It’s following the adoption curve of other disruptive technologies when it comes to promotion.” However, he warns that there is “a long transition phase for people who discover bitcoin before they learn how to use it and do so.”
Also, “businesses offering bitcoin-related services have had enough time to mature, and regulatory agencies are gradually reducing uncertainty about how they will treat bitcoin.”
In a clear demonstration of support, the New York Stock Exchange (NYSE) launched a bitcoin price index in May. “We are now going to use our name, reputation, and stature as a global index provider to give bitcoin values that the rest of the market can look to,” announced NYSE’s President Tom Farley.
Reputation is a crucial component of bitcoin, “because it’s a currency that does not depend on any bank or state entity, what gives the network its strength is users’ acceptance and trust.”
Investment Funds Eye Bitcoin
It wasn’t only bitcoin transactions that increased in 2015. Investors injected more than US$1 billion into bitcoin start-ups, almost tripling last year’s funding. Some of the world’s largest finance players ventured into bitcoin: BBVA bank, Goldman Sachs, American Express, Master Card, and even semiconductor manufacturer Qualcomm.
In January, bitcoin exchange Coinbase alone managed to collect US$75 million, the biggest yet for a bitcoin firm. But it was quickly dethroned by 21 Inc., which obtained $116 million from angel investors. In September, the firm delivered: it launched the first computer specifically designed to interact with the bitcoin network.
All about the Blockchain
The most discussed aspect of bitcoin in 2015, however, was neither the funding nor its price. Blockchain, the underlying ledger that keeps track of every bitcoin transaction, was the subject of much debate in the community.
Developers, activists, and entrepreneurs alike pondered whether the network should limit the number of transactions to avoid scalability problems in the future. No one controls bitcoin, so reaching a consensus on changes is critical.
But not only insiders debated the essential technology. The banking system showed interest in adopting the blockchain, not the currency, to handle their transactions more efficiently and cheaply. Giants like JP Morgan, Credit Suisse, and Scotland Royal Bank decided to invest heavily in creating a partnership to set up a “private blockchain.”
British bank Barclays funded three blockchain start-ups, and a Deutsche Bank official said the blockchain could “revolutionize finance,” given that “the speed of execution is so much faster for securities settlement. [And] you can see how it could reduce the capital that banks have to hold against each trade.”
But Bruno of Bitex.la believes all the buzz about “contradictory concepts such as private blockchains or bitcoinless blockchains” is the result of financial institutions trying to adapt to a new environment. Bitcoin firms should “build bridges and present [bitcoin] as a benefit for the whole industry,” he says.
Even though it’s still in its infancy, blockchain applications have the potential to change much beyond the world of finance. Honduras, for instance, is seeking to build a blockchain-based land-titles registry, and other firms are developing solutions to notarize birth certificates and marriages without the need for a central authority.