Bitcoin has proven to be one of the most successful assets in modern history.
The value of the cryptocurrency has grown nearly 1,000 times over the past decade, surpassing US stocks and real estate.
Encouraged by the friendly stance of the President of the United States Donald Trump, the history of Bitcoin reached a high price of $ 107,000 on Monday after the Republican reiterated his intention to create a place to store Bitcoin methods.
Bitcoin, the first public digital currency, was created by the fraudster Satoshi Nakamoto after the global financial crisis of 2007-2008.
Nakamoto invented the blockchain system – a digital ledger that stores transactions on computers – so that anyone can make money without the involvement of banks, financial firms or governments.
Once widely scorned as a fantasy with no real value, Bitcoin is being taken more seriously by governments, financial institutions and investors.
Boaz Sobrado, a London-based fintech analyst, said that Bitcoin has changed from being a currency favored by political dissidents and criminals who engage in illegal activities “to something that central banks have to remember and think about”.
“The IMF has established political policies against crypto in discussions with countries that may need their support. It has gone from being an academic question to a practical, real one and one that central banks are thinking about now,” Sobrado told Al Jazeera.
In January, the US Securities and Exchange Commission (SEC) approved Bitcoin ETFs (exchange-traded funds), allowing investors to have financial exposure to the stock market for the first time.
In an October report, the US Treasury Department referred to Bitcoin as “digital gold”, noting that it is used as a store of value.
Several countries have made big bets on cryptocurrency.
El Salvador has acquired $600m worth of Bitcoin and is one of the few countries, along with the Central African Republic, to recognize the asset as legal tender.
Other countries, including the US and the United Kingdom, have made large Bitcoin fortunes thanks to the confiscation of assets linked to criminals.
The US has confiscated at least 215,000 Bitcoins, worth about $21bn at current prices, since 2020, according to an analysis by crypto firm 21.co.
With Trump back in the White House, Bitcoin supporters are hopeful that the cryptocurrency will receive unprecedented approval after years of government-led crackdowns on the sector.
Despite once calling Bitcoin a “fraud”, Mr Trump has emerged as the world's most powerful advocate for the economy.
After promising to make the US the “crypto capital of the planet”, he has appointed many crypto enthusiasts to join his leadership, including former PayPal CEO David Sacks as crypto tsar and Paul Atkins as SEC chairman.
Trump's pro-crypto views have found allies in the US Congress, such as Senator Cynthia Lummis, a Republican from Wyoming, who earlier this year introduced the BITCOIN Act of 2024, which would include Bitcoin among storage products such as gold and oil for a long time. – a gem store.
Under Lummis' plan, the government would buy about 200,000 Bitcoins every year for five years, and hold the stock for 20 years as a hedge against inflation.
“If we were to do this with five percent of all Bitcoins that will ever exist – which is about a million – we could cut our debt in half for 20 years,” Lummis said in an interview with Fox Business.
On Wall Street, derision and derision have also provided positive test methods.
The CEO of BlackRock Larry Fink, who once described Bitcoin as a “disposal of money”, in January said that the asset “has not been different from what gold represented for thousands of years” and “a group of things that protect you”.
'Critical money'
Bitcoin's most revolutionary feature is that it separates money from the government, according to Max Keiser, senior Bitcoin adviser to El Salvador's President Nayib Bukele.
“This is the first time in history that this has happened – money exists that does not have the power to control it. This is what makes it unique, very powerful,” Keizer told Al Jazeera.
“Now there is a growing opinion that the 21st century will be the age of Bitcoin.”
Keizer saw the potential of Bitcoin early and advised people to buy it when the price was only $1 in 2011. That year, he and his wife, television presenter Stacy Herbert, called Bitcoin “the resistance currency”, and predicted that it would exceed $100,000.
One of the reasons why Bitcoin has gained strength in value is the poor performance of economies such as Argentina, where inflation last year rose more than 200 percent, according to Gerald Celente, founder and director of the New York-based Trends Research Institute.
“People were seeing their money getting cheaper… People were saying: 'All my money is going away, what should I do?' They can't afford to buy gold, so they started buying whatever they could in cryptocurrencies like Bitcoin, so they stayed strong,” Celente told Al Jazeera.
Since Trump's election, the price of Bitcoin has increased by 50 percent and with the pro-crypto movement, Celente is predicting a huge rally.
“(The price) may go through the roof, but we don't see (Bitcoin) going down that much,” he said.
Crypto supporters argue that Bitcoin's best chance is that its global presence is at 21 million.
Unlike central banks that can print money forever, the supply of Bitcoin remains constant despite demand, which has helped increase its value against the dollar.
Armando Pantoja, a futurist and tech investor, believes that Bitcoin will appreciate in value “forever”, comparing the purchase of property to buying a place in Manhattan.
“Bitcoin has value not because of money, but because of the technology that drives it, blockchain technology,” Pantoja told Al Jazeera.
“In the Bitcoin blockchain, there is a version of Bitcoin that comes out every 10 minutes, and every four years they cut it in half. Over time, a little bit of Bitcoin is produced.
“When it reaches its peak, it can't be made again… That's why it will continue, every four years when they cut it, it must respond positively. It must continue to meet demand. “
Keizer predicts that Bitcoin will reach a value of $1m in the coming years, with a market value equal to gold worth $20 trillion.
“That would be a $1m investment. I think it will be a steady estimate of the cost over the next three to four years,” he said.
Bitcoin's meteoric rise, however, hasn't convinced anyone.
Despite its recent rally, the stock continues to be volatile.
After hitting $107,000 earlier in the week, the stock by Friday had fallen below $97,000.
Many economists continue to see Bitcoin as a bubble that will not support its incredible rise.
“The more resources America misallocates to #Bitcoin and #crypto-related businesses, the less resources will be available to provide the production we really need,” Peter Schiff, chief economist at Euro Pacific Capital, said in a post on X last month. .
“The result will be large trade deficits, a weak dollar, high inflation, and low living standards.”
While Trump's positive views on Bitcoin have excited crypto enthusiasts, some pro-crypto governments have been reluctant to support the sector.
El Salvador announced this week that it will hide or close its cryptocurrency wallet “Chivo” as part of a $1.4bn loan agreement with the International Monetary Fund (IMF).
The Bukele government also agreed to accept Bitcoin and businesses voluntarily, in steps to assuage the IMF's concerns about the risks associated with Bitcoin.
Central Bank Digital Currency
Some crypto supporters see governments and central banks taking a bigger role in the global march towards digital currencies by creating their own currencies.
Celente of the Trends Research Institute said that the US, for example, could create its own digital currency as a way to pay off the federal debt.
“There is no way the US can pay their $36 trillion national debt. They can come up with a new cryptocurrency as part of CBDCs (Central Bank Digital Currency),” Celente said.
“You see a lot of central banks talking about CBDCs, they're going to go there,” Celente added.
They will use this as an excuse to come up with a coin because they can't pay off their current debt. They will say, 'This (digital currency) is more valuable than the dollar, the yuan, the euro,' and they will use it to pay their debts.”
Some observers have warned that the introduction of CBDCs will open a Pandora's box of problems related to public administration and the management of public funds.
Trump's choice for secretary of commerce, Howard Lutnick, is the CEO of Cantor Fitzgerald, which manages US Treasuries that back Tether, the largest stablecoin on the market.
Stablecoins are cryptocurrencies that are pegged to traditional assets or currencies so that the value remains stable. They have reached a total market capitalization of over $200bn.
Sobrado said that there could be an opening for Tether to become a nationally accepted CBDC in the US, and for smaller countries such as the UAE, Hong Kong, Singapore and Switzerland to issue their own CBDCs.
“The Fed's pro-crypto message and key words have never been louder in the White House,” Sobrado said.
Celente said he has no doubt that the future of money is digital.
“There is no question at all,” he confirmed.