Bitcoin has attracted headlines again in early 2021 as it broke new ground on the 3rd of January – reaching $34,000 (£24,870) only hours after hitting $30,000 for the first time. The last surge in Bitcoin price was seen in 2017, when speculative investors rushed to the cryptocurrency and drove each coin to $20,000 in price. Amidst the global economic uncertainty with the COVID-19 pandemic, UK-EU relations and the U.S. economic recovery, Bitcoin has continued to climb in popularity and value – growing 280% in price overall in 2020. Amidst all of this, investors are looking to the year ahead and wondering what 2021 holds for the Bitcoin tech market. Here, in this industry report you’ll find a useful summary of the latest growth, trends and forecasts for the next 12 months regarding Bitcoin tech.
Bitcoin technology: market overview
Bitcoin has now passed its 12 birthday and its price, value and prominence continues to go from strength to strength. In 2019, the bitcoin technology market (BMT) was valued at $293.66m, yet by 2025 it is expected to reach $477.05m – a CAGR of 8.3% between 2020-25. Due to the finite nature of Bitcoin, excess currency is not possible and thus inflation is near-zero, bringing clear benefits to sellers, buyers and investors. The largest and fastest-growing market is in America, but other countries are increasingly bringing Bitcoin into recognition. In 2017, for example, the Japan Financial Services Agency implemented a new law on the 1st of April which made it legal for Bitcoin to be accepted as a payment method.
Major financial institutions and players are beginning to recognise Bitcoin as a valid currency, setting it upon a strong foundation for 2021. BlackRock BLK’s CEO, for instance, has recently said that Bitcoin could become a worldwide market asset in the near future. Square SQ and PayPal PYPL, online payment companies, have also introduced protections on their platforms so that users can offset some of Bitcoin’s risks. The stage is now set for large businesses such as Amazon and Shopify to allow transactions using the cryptocurrency – following in the steps of other giants like Microsoft. Bitcoin, in other words, is starting to move closer to the centre of the global economic system and is becoming a more sensible investment for more people.
How Bitcoin could evolve from 2021
Bitcoin is increasingly recognised as a method of payment, store of value and investment asset. Yet the blockchain technology it rests upon has the potential to transform economies across the globe. One firm, Technology consulting firm CB Insights, has highlighted 27 ways that Bitcoin could radically change industries and processes, including:
- Banking. Large, established firms are already experimenting with how to integrate blockchain into their backoffice functions and settlement – including Swiss bank UBS and UK-based Barclays. This could eliminate $20bn in middleman costs.
- Voting. For democratic elections to work properly voters’ identities need to be checked and their votes need to be accurately and securely stored to establish the victor. As a decentralised, transparent “ledger”, blockchain could be the perfect system for casting, tracking and tallying votes in the future – reducing the chance of fraud.
- Critical infrastructure security. Much of the global economy rests on the internet, which still possesses an architecture which can be easy to hack. Critical infrastructure such as transportation (e.g. traffic lights) and power stations require highly-secure connected sensors to operate and keep the public safe. Although the blockchain ledger is public, it sends data communications using advanced cryptographic techniques. This helps to ensure that intercepts cannot happen and that data emanates from the correct sources. Blockchain could, therefore, play a critical role in reducing the chance of hackers getting their hands into critical infrastructure. Sage Security is a good example of this in action, where industrial device networks rely on the tamperproof ledgers of blockchain.
- Education & academia. To work effectively, academic credentials (e.g. student records and teacher qualifications) must be accessible and widely recognised. Verifying these can be cumbersome and even open to abuse when based on a manual process. Yet the blockchain approach could streamline all of this significantly. Sony Global Education has recognised this potential and partnered with IBM to launch a new educational platform which checks student records using this technology.
- Cloud storage. Data needs to be stored somewhere. Traditionally, we might think of saving files on a hard drive. Yet the huge surge in data volume over recent years has led to the development of cloud storage – where physical storage spans multiple servers. Yet this can lead to vulnerabilities. After all, what if a server containing your data is hacked? This is where blockchain holds out real promise. As a decentralised system, blockchain allows for cloud storage solutions which are less prone to attacks. Filecoin is a good example of a company which is putting this concept into action. Known widely as the “Airbnb for file storage”, Filecoin attempts to provide a decentralised version of Amazon Web Services’ S3. Storj is a similar blockchain-based cloud storage network, allowing lower costs to store data in the cloud with the higher security involved.
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