How Bitcoin Paved the Way for the Cryptocurrency Market

Bitcoin has made headlines for over a decade now, being exemplary of growing innovation in financial technology. As economic instability approaches for many individuals and institutions in the UK, more are looking to decentralised markets as a wealth-protecting alternative. But how did we get here?

What is Bitcoin?

For the uninitiated, Bitcoin was the first ever decentralised currency, and the harbinger for today’s brimming cryptocurrency and crypto assets market. It is often apocryphally described as the first digital currency, owing to its unique situation as one of the first new currencies to be traded entirely in the digital sphere. However, previous efforts had been made to coin a digital currency – and fiat currencies like the pound sterling were already being widely traded on a digital basis as ATMs and online banking capabilities continued to expand.

Bitcoin and Blockchain

Bitcoin was not revolutionary for being a digitally accessible and tradable currency, but rather for the bespoke technology that underpinned it: blockchain. Blockchain is a form of peer-to-peer network, that dimly resembles torrent-based filesharing in that a large volume of individual and decentralised nodes make up a wider filesharing and communications system.

Via the blockchain, Bitcoin is ‘mined’; computer systems solve complex mathematical problems, the solutions to which form proof of verification and award pre-determined blocks of currency. The process is much more complex and sophisticated, and new, less resource-intensive approaches to currency mining have since been developed, but the essential principle remains the same: work is done to prove the veracity of a transaction, and a digital block with speculative value is awarded or transacted.

The Cryptocurrency Market

Bitcoin was a trailblazer for what would become a leading international market. Bitcoin was originally designed as a digital alternative to gold, owing to its finite nature; there is a predetermined amount of Bitcoin available to mine, and mining it becomes harder over time.

However, it has not functioned in quite the same, stable way financially, as its value has proven speculative as opposed to intrinsic. This is birthed the creation of thousands of new currencies on similar architecture, allowing investors to mint and trade different currencies with different values on a market free from centralised control.

Crypto and Technological Innovation

These new markets come at a time of intense technological innovation across the fintech sphere. Democratised access to trading information and tools has allowed retail investors unprecedented opportunities; traders can seek to expand wealth without buying assets directly through CFD trading, or communicate readily with other individual investors to form investment hive-minds that mutually benefit.

This backdrop describes the scale of invention and re-invention that fintech and investor markets are seeing, and illustrates a bright future for decentralised currencies free from the unstable movements of nation states and economies. This, as well as the trading of digital art in the form of NFTs, paves the way for a new generation of wealth generation.