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Is 2016 A Year Of Bitcoin?
The year 2015 has been quite a benchmark year for bitcoin. While there is no denying the fact that it has not been all good, the digital currency has shown that it is here to stay.
The past year saw the cryptocurrency ecosystem hit by another major scam (MyCoin) and bitcoin in particular came under fire for its alleged use by terrorist group ISIS. On the other hand, efforts were in place to regulate bitcoin transactions, and also several companies and banks invested millions of dollar in bitcoin-related startups. The digital currency further achieved prominence with its underlying blockchain technology reaching new heights in 2015 – R3 blockchain consortium and open ledger project to name a few.
Coming to bitcoin price, 2015 has been quite a roller coaster with BTC/USD dropping to 152.40 levels in January and breaking above $500 in November.
The year 2016 has already started and experts opine that this will be indeed very exciting for bitcoin. Wired points out that despite the severe criticism that bitcoin faced, people are still using bitcoin. The number of daily bitcoin transactions hit a record high last year, compared to the same time a year ago, the average number of daily transactions more than doubled. With more and more people entering the bitcoin space everyday, the volume of bitcoin transactions is going to increase much more this year.
Also, the volatility of bitcoin price against major currencies such as US Dollar has declined significantly since 2010, according to data provided by the Bitcoin Volatility Index. The rate of volatility has been decreasing at a consistent pace, falling at an average rate of 25% per year, NewsBTC reported. With bitcoin price relatively stable in 2015, more and more traders and investors in the public markets started purchasing Bitcoin ETFs as a major part of their investment portfolio and going forward, the trend is likely to continue.
In a report published on CNN Money in November, Jose Pagliery estimated that around $1 billion had been invested into Bitcoin-related tech startups in 2015. With the latest hype and growing interest in bitcoin and blockchain technology, more banks and tech companies are expected to embrace the digital currency and invest in this space.
Moreover, with several federal regulatory authorities having laid down their mandates in the bitcoin and blockchain space and outline how they aim to treat digital currencies, we are increasingly likely to see 'regulation by enforcement' this year, CoinDesk reported. With proper regulation, know your customer requirements and other such measures in place, bitcoin is expected to thrive in months to come.
2016 is all the more crucial for bitcoin as mining reward is going to halve this year from 25 to 12.5 bitcoins per block.Daniel Masters, co-founder of Jersey-based Global Advisors' multi-million dollar bitcoin hedge fund, estimates the price of bitcoin could test its 2013 highs of above $1,100 this year and then pick up speed to rise to $4,400 by the end of 2017. The halving of the mining reward will increase the price of bitcoin by around 50 percent from where it is now, he told Reuters.
Also, the bitcoin ecosystem is expected to reach a decision on the much debated bitcoin scaling issue. Tuur Demeester, an independent investor, newsletter writer and editor in chief at Adamant Research, wrote in an article on CoinDesk, “I think 2016 will reveal a decision about how to scale bitcoin for the next few years. There are a number of prudent and effective proposals on the table today, such as Pieter Wuille's 'Segregated Witness', and Adam Back’s BIP248. I expect one of the many proposed solutions to be implemented before the summer, to then later be supplemented by innovations such as pegged sidechains and the Lightning Network.”