How Bitcoin Emerged as the Most Popular Cryptocurrency in 2017, A quick Recap and What Lies Ahead

The year of 2017 has proved an unforgettable journey for the cryptocurrency markets as the idea to bring virtual digital currencies to the mainstream has succeeded to a large extent. A lot of important events occurred over the past 12 months in the crypto markets, right from its adoption by several different businesses as a mode of payment, to a few governments either banning it completely or granting it an illegal status.

Much of the spice to the crypto market has been added in the second half of 2017 when the markets witnessed a very active participation from several institutional investors that boosted the valuations of the market at an unprecedented rate. Moreover, the ICOs market was also quite lit up as the combined value raised by all the startup for their decentralized is said to be more than $4 billion. Over a 100 new cryptocurrencies have been added to the crypto indices through ICOs.

Over the entire year, Bitcoin has been sweeping the attention of a majority of investors and financial professionals with altcoins like Ethereum, Litecoin and Ripple gaining some popularity and doing the final fireworks for 2017, in this very last month of December.

However, the journey for Bitcoin ever since it started the year at $970, has been quite a bumpy one. Along with the meteoric rise in its popularity and the price of Bitcoin, the cryptocurrency has been subjected to an equally growing criticism coming from different corners of the globe. However, with a huge support from several retail investors, Bitcoin as on the current price has given 1500% return to its investors in just one year.

The first major trigger for the cryptocurrency markets and specifically for Bitcoins came during the second quarter when Japan passed its Virtual Currency Act (VCA) which recognized Bitcoin and Ethereum as a legal currency and legal form of payment. This gave the cryptocurrencies a big boost and visibility in the global sparking worldwide interest within global investors to participate in the crypto markets.

The third quarter Q3 also played a deciding role in determining the market momentum further. First of all, in August 2017, a new and the first Bitcoin derivate known as Bitcoin Cash or BCH was created as a result of the hard fork in the Bitcoin network. The hard fork was created as a difference of opinion between the developer and the miner community pertaining to solving the scalability issue of Bitcoin network. As a result, members of both the communities got separated and a Bitcoin offshoot was created.

In addition to this, the major jolt came in September 2017 when China - previously a hotbed for cryptocurrency traders announced a crackdown on all the cryptocurrency exchanges operating within the country. All the regulations were imposed in a very short period of time with a complete ban being imposed on cryptocurrency trading as well as the ICO markets. This was the time when the bearish sentiment had gripped the market with investors looking quite perplexed and Bitcoin price started to corrected majorly.

However, soon when it was clear that China has pulled itself out of the global cryptocurrency markets, investors chose to rise above the odds by putting the bygones behind and looking forward. During this time, investors from the U.S. and other Asian countries like Japan and South Korea contributed majorly to getting the optimism back in place. Although later there were a few countries too who followed China’s path of banning the cryptocurrencies, their minuscule dominance on the crypto markets did little to stop the wave.

As Bitcoin price continued to inch towards new highs, it was the time when a lot of big financial institutions from the Wall Street started to seriously consider Bitcoin as a future mainstream currency and were swayed by its phenomenal journey.

The major punch in the Bitcoin saga came after CBOE and CME Group’s announcement of launching Bitcoin Futures contracts by the year-end. Both these exchanges being the two biggest derivative marketplaces in the U.S, their word was taken quite seriously as investors started pouring heavy sums of money in the Bitcoin market.

Since then, there has been no looking back as Bitcoin prices continued to rally at an unprecedented rate like a boss and turning all its critics down. The only time when Bitcoin corrected considerably was during the cancellation of the SegWit2x hard fork in November. However, this jerk was soon absorbed by the supporters and Bitcoin continued to rally to its all-time high just below $20,000 till the past week. In the past one week, Bitcoin and the overall cryptocurrency market has entered major correction and is currently seen consolidating around $15,000 levels.

During this period Bitcoin was started to be perceived more as a store of value than a means of payment. Initially created as a means of payments and although accepted by many businesses, Bitcoin’s extremely volatile nature prevents it from being considered as a daily currency in use. However, following the launch of bitcoin futures contracts, many financial institutions are planning to launch several Bitcoin-related investment products, in the next year 2018.

The latest proposal put forward by firms is Bitcoin exchange traded funds (ETFs) that will bet on the momentum of the Bitcoin futures. Analysts believe that arrival of more Bitcoin product in the market will certainly bring legitimacy and stability thereby reducing volatility. Such a move is expected to pull more investors to the crypto markets.

Also, the major challenge that lies ahead of the development team is to solve the scalability issues relating to the Bitcoin network. Well, the work for the same already has started this year in the form of several hard forks taking place in the Bitcoin network thereby creating different Bitcoin offshoots. The first hard fork took place on August 1st creating Bitcoin derivative - Bitcoin Cash. Bitcoin Cash offers a larger block size which permits more number of transactions to go through in very short time and at reduced costs. For this reason, many investors consider Bitcoin Cash as the real Bitcoin. After Bitcoin Cash, a few more hard forks have occurred and some are even scheduled in early 2018.

Moreover, one of the biggest expectations from the developer community is the successful full-fledged launch of the Lightning Network for easy interoperability between different blockchains. We still have three more days to bid adieu to 2017. However, knowing the volatile nature of cryptocurrencies, it will be difficult to predict how will the crypto markets end with currently the market being in correction mode. But overall it can be said that the year has proved a lot successful for digital currencies and the next year of 2018 will be seen forward with a ray of hope and optimism.