1. Overview
Bitcoin was designed to be a deflationary currency, making it a unique, different type of asset to traditional fiat currencies. A positive stigma in US online casinos and certain sectors of mainstream consumer goods has called for the usage of bitcoin as a payment form. Many online businesses have started to accept bitcoin as an alternative means of money. A large number of people have also shown interest in using bitcoins, especially for doing micro-transactions. This is due to the low and competitive transaction fees. Certain websites, freelancers, and ad revenue payees conduct small payouts which can now be done effectively using bitcoin. With the massive capital inflow over the past few years, the momentum and volume used in trading bitcoin have surpassed established and developed currencies – albeit only periodically. This causes some speculation to arise around global equity stability when the price of bitcoin makes large fluctuations. In third world and less developed countries, people find the storing of bitcoin to be very convenient for it eliminates the need to have a bank account. With third world debt being a major problem, it is easy to access borrowing bitcoins compared to currency with less debt risk of inflation. This method is also a way for people to store currency capital and avoid forex. Finally, simply gold itself is a sort of speculation on currency and world growth. As the first of its kind, bitcoin attempts to be “an innovative tool and system of global financial stability.” The many characteristics and attributes allow for speculation and potential to match or outdo gold in the capital markets. As a recent asset class, it is unsure of the effect that government regulation could have; yet still its lack of ties to debt, liability, and finance-based institutions present it a distinct and direct competitor to gold.
Bitcoin, a digital form of currency, is a decentralized, peer-to-peer, electronic cash system that was invented in 2008 by a group of people who used the name “Satoshi Nakamoto.” It was released as open-source software in 2009. The system is peer-to-peer; users can transact directly without needing an intermediary. Transactions are verified by network nodes and recorded in a public distributed ledger called the blockchain. The ledger uses its own unit of account, also called bitcoin. The system works without a central repository or single administrator, which has led the US Treasury to categorize it as a decentralized virtual currency. Bitcoin is often called the first cryptocurrency, even though prior systems existed, and it is more correctly described as the first decentralized digital currency. It is the largest of its kind in terms of total market value.
1.1. Introduction to Bitcoin
Bitcoin is a digital asset and a payment system. In a more technical explanation, Bitcoin is a peer-to-peer network backed by open source software, which was first intended by an anonymous creator named Satoshi Nakamoto. The Bitcoin system was introduced to the public in 2009, where new coins, in simple terms ‘bitcoins’, were released to the public. We will discuss ‘minting’ later. Bitcoin was known and widely used as an alternative to real money and has been used for various transactions, such as buying tangible or intangible goods. As of now, Bitcoin has been widely used for various purposes, including investing and as an alternative to saving, just like gold. According to research, the number of Bitcoin users ranges from 2.9 to 5.8 million, and the wallets created have been varied worldwide. Since August 2013, the use of Bitcoin in various legitimate shopping markets and certain computer services, both online and offline, has significantly increased and continues to increase. This is consistent with the statement by Mr. Jon Matonis, one of the Bitcoin Foundation’s board of directors, indicating that Bitcoin has entered a new phase of its life. For the next ten years, Bitcoin will be in the phase of becoming a global currency. This could happen as Bitcoin is gaining better recognition today and is considered a competitive currency. When Bitcoin becomes a global currency, its exchange rate will be more stable than today, and the speculative nature of Bitcoin will be reduced. This will affect the amount of price and service that can be obtained with a certain amount of Bitcoin. The stability of the exchange rate and price of a good is an essential thing in the buying decision, and this will increase the use of Bitcoin as an alternative to real money.
1.2. Importance of Bitcoin in the Financial Market
Bitcoin has become a significant industry in today’s economy. It’s a concept that not only has the potential to affect the way the global economy works, but it could also change the wealth of the common man. So we can define Bitcoin as the decentralized digital currency. A decentralized currency is money that is not issued by any central bank or government, but still, it is globally acceptable in the form of goods and services. Decentralized money has the potential to alter almost every aspect of the public’s life. At the moment, our global economy is at the mercy of international pandemonium in huge financial systems. Large-scale changes to how money is issued can have a direct impact on the economic system. Bitcoin is starting to have an impact on today’s global economy. It is also considered to be a key method to transfer wealth across borders compared to the standard issue currency. Particularly offered how cheap it could be to transfer Bitcoin in comparison to expensive bank transfer. It also has the potential to be much less safe than transferring money in a bank. As the young generation grows up, Bitcoin will become more ingrained into today’s society. Later generations will be using and managing bitcoins in an entirely different way than we do today. Then later down the line, the concept of using Bitcoin will seem bizarre as it will be the money commonly accepted.
1.3. Growth and Adoption of Bitcoin
Though it has seen significant fluctuations in value, Bitcoin continues to be the most popular cryptocurrency. Its security, decentralization and speed are just a few of the reasons why people are still adopting Bitcoin as their currency of choice. As highlighted in this essay, there are still many improvements to be made before Bitcoin is to be considered an alternative to the current financial system. But as long as the demand for financial freedom and the ability to interact with global markets exist, Bitcoin should continue to grow.
One of the most important functions of Bitcoin is that it enables its users to be in full control of their money. Traditional banks and financial services do not allow for the level of control that Bitcoin offers. Using Bitcoin, a person can make an online purchase without the threat of their funds being frozen or taken without their permission. Bitcoin can also protect against identity theft. High-profile data breaches in recent years have resulted in credit and debit card numbers being stolen. These forms of payment can be immediately compromised and the fraudulent charges not be discovered for some time. In both of these cases, it is possible for the consumer to have their funds reimbursed, but it can be a long and complicated process. With Bitcoin, the consumer has the option to store their funds in a secure location that no one else can access.
Since the invention of Bitcoin, there has been a significant increase in the number of Bitcoin users and transactions. In recent years, more and more merchants have begun to accept Bitcoin as a form of payment. This has provided consumers with more options regarding how and where they spend their money. Moreover, for most users, Bitcoin acts like a vehicle that allows them to participate in financial services that are restricted or unavailable in their home countries. This can be especially beneficial for those in low-income countries.
2. Recent Developments
Bitcoin price stability is seen as a positive development in light of the currency’s notorious price volatility. Greg Booty, a bitcoin investor and entrepreneur, states “The price stability is a good thing. It’s showing that more people are using it and that interest is growing”. This sentiment is echoed by other enthusiasts of the digital currency. Erik Voorhees, the creator and founder of Satoshi Dice and the Coinapult platform, also commends the stabilizing price of bitcoin, and states “I believe that the overall trend of bitcoin adoption and usage will continue its exponential march upwards. The price will follow. Over the long run, it’s that simple”. Price stability will in turn produce the conditions necessary for bitcoin to be employed as a general medium of exchange and unit of account, as opposed to a mere speculative investment. Booty adds, “It’s progressing towards being money”. Looking towards the future, Voorhees is optimistic about the long-term effects of bitcoin price stability, as more merchants will “realize they can hold and maintain profits in a digital currency rather than immediately exchanging it for fiat”. This could potentially create a scenario in which merchants will turn to their suppliers and offer to pay for goods at a discounted rate, motivated by the desire to acquire bitcoin at a cheaper cost. Step by step, bitcoin price stability is showing signs of progress towards its envisioned role as a disruptive technology in the realm of finance. Mircea Popescu, who currently heads up MPEx, a bitcoin securities exchange, envisions a world where “banks have close to no cash reserve, their entire operation consists of running Micropayment Channels with each other in order to save on unnecessary BTC<->crypto->BTC translation, people keep their savings in bitcoin and pay small sums for various financial services directly out of their wallet holdings”. This may be far-off speculation and an optimistic view, but every journey must start with a single step forward— bitcoin price stability could be one of the first relevant steps in making this vision a reality.
In the last few months, bitcoin has gained notable price stability at around $600 US per bitcoin, following a large decrease in price due to the deflation of the “bitcoin bubble”. Since Bitpay’s adoption of $1M in payments processed per month in March 2013, bitcoin has experienced price stability in this range.
2.1. Bitcoin Price Movement
The movement of Bitcoin price is quite an interesting study. The digital currency has had a volatile price history since its creation in 2009. The first price hike occurred during 2013 when the cryptocurrency went from around $100 in April to $266 in April, then to $1166 in November. The price crashed in 2014 after Mt. Gox filed for bankruptcy. It reached a low of around $50 till mid-April 2014 and then it started recovering. By obtaining more and more media coverage, the price went to new highs almost at the end of 2017 when it reached a price of about $20,000 per BTC. This was due to the year’s long bull trend as well as Bitcoin futures trading beginning on the CBOE and CME. The price inevitably crashed when the COVID crisis began in 2020, briefly reaching a bottom of $3400 during the mid-March stock market crash. Since then, the price has seen numerous bullish trends and higher highs, despite some micro crashes in between. By mid to late 2020, Bitcoin was reaching and ultimately managed to surpass its 2017 all-time high. Currently, the BTC price is hovering around the $50,000-$60,000 range in early 2021. Overall, Bitcoin is still a young and growing currency. The price has shown a large amount of significant growth and is subject to much price volatility compared to traditional assets and currencies.
2.2. Regulatory Changes Impacting Bitcoin
On the other hand, countries with an abundance of capital controls and unstable local currency may outright ban Bitcoin. While this may not directly affect the price of Bitcoin in a positive way, it is still a good test to see if Bitcoin can carry out its original goal. If Bitcoin does become a more stable asset and form of currency, with the added bonus of anti-inflation being built into the system, there is a possibility of a speculative attack on the currency to unpeg from the nation’s fiat currency in the hopes of causing a regime change to a more stable form of the currency that they are attacking to finish the transfer and obtain the new currency in a more stable form. This tactic is not a new phenomenon with nations attacking each other using inflationary fiat currency to further self-interests.
Cryptocurrencies have lately been facing regulation from many countries. One of the objectives of Bitcoin is to offer a substitution to fiat currency, and to achieve that it needs to stabilize its price. However, it might be facing some challenges in that goal. Japanese Yen-Bitcoin exchange has dropped from comprising over 50% of total Bitcoin exchange to less than 25% during the previous year. We have heard similar numbers involving the Bitcoin exchange in US dollars. That said, we believe one of the objectives of Bitcoin, to ease global free trade, may still be on the horizon. Countries with unstable currency might look to Bitcoin as a more stable form of currency, sometimes using it as a better alternative to the US Dollar. This could elevate the price of Bitcoin, confirming its status as a more stable asset and form of currency.
2.3. Institutional Adoption of Bitcoin
In recent months, institutional interest has only continued to grow at an accelerated pace. As of the time of this writing, Bitcoin futures volume, price, and open interest are on the rise. Notably, the recent CFTC commitment to approve a Bitcoin futures-based Exchange Traded Fund (ETF) creates an open market for this product and raises its potential appeal to institutions further. In the case of ETF approval, market readiness and capacity may be tested even further. This is a positive note on multiple fronts, as ETFs are a popular investment vehicle, they are expected to increase liquidity in the market and ease price discovery, each of which will lead to better access from traditional investors. In the case of more sophisticated investors, CME Group launching options on Bitcoin futures come early 2020 was met with reported success, suggesting a further migration into our derivatives markets. This, in addition to an increase in price, has been accompanied by institutional announcements signaling an entry into the digital asset ecosystem.
Up until this year, institutional interest was piqued, but it had not translated into widespread adoption, as measured by certain benchmarks (e.g., positions in CME Bitcoin futures or assets under management at digital asset management firms). This lack of institutional participation was due to a number of barriers and considerations. First, Bitcoin and other digital assets were a relatively novel concept and there was a lack of regulatory clarity. Second, traditional custodianship and asset servicing of digital assets have been more complicated and less established compared to many other asset classes. Combined, these factors made investment in digital assets less palatable for many institutions. Changing this status quo required satisfaction of the aforementioned considerations and a continuing trend of interest and comfort with the asset class.
Institutional adoption of Bitcoin refers to the entry of traditional investment firms, companies, and financial institutions into the cryptocurrency space for various business purposes. This is a major change from the early days of Bitcoin when the main way to acquire the cryptocurrency was through mining or individual purchase from a retail source, like an exchange.
2.4. Technological Advancements in Bitcoin
In the past week, Bitcoin Cash has seen a price increase of over 50%, while BTC has seen a 10% increase. Since the fork, BTC’s total market dominance has been decreasing and today it reached as low as 39.5%. The majority of this dominance loss has been gained by Bitcoin Cash. The market’s initial reaction suggests that many see Bitcoin Cash as a viable alternative to other cryptocurrencies. If Bitcoin Cash can continue to gain traction and prove itself as a true contender, rather than just another “pump and dump” scheme, it could have a significant impact on the overall market. If large market capitalizations start moving into Bitcoin Cash, as well as other altcoins, it could take a substantial portion of the capital that has been flowing into BTC. This would be a long-term fundamental catalyst for altcoins.
One of the most notable technological advancements in recent history was the hard fork that resulted in the creation of Bitcoin Cash. This fork occurred on August 1st when a group of miners and developers initiated the fork. At Block 478558, the chain split into two. The purpose of this fork was to increase the block size with the new client. The original chain has migrated to a client that has implemented SegWit, and a block size increase is not part of their roadmap. This has caused a contention between the two chains. Despite this, the price of BTC has steadily climbed since the fork. On the other hand, Bitcoin Cash has also performed well. Its price increased until around the 20th and it started to see increased volume.
Recent developments in the world of Bitcoin have been quite significant. One of the major changes has been the movement of Bitcoin prices. Additionally, there have been regulatory changes that have impacted Bitcoin. Furthermore, there has been an increase in institutional adoption of Bitcoin. Lastly, there have been technological advancements in Bitcoin.
3. Challenges and Risks
Due to the high volatility seen in bitcoin over the years, trading involves a high level of risk. It is believed that due to these significant price increases or decreases, users who seek to spend their bitcoins based on the current high value may find their transaction cost too high relative to what they are prepared to spend. High price fluctuation, which could have been panic selling off due to a market crash, could lead to a feeling by them that they have been mis-sold the service or good at an extortionately high price. Buyers who have an inflexible price point will not be able to purchase items at prices above their stated value. Currently, government-issued currencies generally have stable exchange rates. Unlike the US dollar and other currencies, which can be divided into cents or smaller units, the high growth of the value of bitcoins means that a small unit of bitcoin would need to be changed on a regular basis to pay for required goods and services.
The general public is not always aware of such changes due to not following the news or not having knowledge of how currencies act. Potentially high earnings or losses could lead to the direction of public investment, which is a challenge due to unwanted political interference within a decentralized economy.
The price of bitcoins has gone through various cycles of appreciation and depreciation, referred to by some as bubbles and busts. In 2012, it was noted that fluctuations in price were much higher compared to most other currencies. During the 2012-2013 Cypriot financial crisis, the bitcoin price reached an all-time high. According to the Central Bank of Cyprus reports, savers in Cyprus were hit with a one-time 6.7% levy for €100,000 accounts and 9.9% for accounts exceeding €100,000. This prompted a selling off of bitcoin, which led to a 40% drop in value within 40 hours.
3.1. Volatility and Market Risks
Price volatility is a major hurdle to bitcoin’s becoming a widely-accepted method of payment and a serious store of value. It is often perceived as a get-rich-quick scheme, as the price is driven entirely by speculative trading. This is a result of its relatively illiquid markets, the actual number of bitcoins in circulation being quite low when compared to its amount of trade. When large groups of bitcoin holders begin to sell off some of their holdings, the increased supply allows them to easily find buyers at lower prices. Therefore, the price decline heavily affects the perception of the currency at any given moment. If bitcoin had more price-stable markets, there would be far less opportunity to make money by simply buying various currencies and selling when their value increases. More stable price comparisons to US dollar prices of various goods and services may only come from increased market liquidity. This could be measured by bitcoin’s market capitalization relative to that of another currency or financial instrument it seeks to trade against. Bitcoin has the potential to decrease price volatility if it can identify and leverage price differences across exchanges and across time. Those price differences are sometimes caused by irrational price moves and trading is on those opportunities is giving the market additional liquidity and a chance for individuals to profit while also reducing their own exposure to price risk. Market risk is a familiar concept to currency traders, whereby the risk is derived from the impact of political and economic events on exchange rates. This created risk can be hedged using various currency derivatives, but currently no bitcoin derivatives market is large enough to affect the price or provide effective hedging. The expectation is that more well-capitalized firms will begin to provide liquidity and price stability to the derivatives markets. This will allow bitcoin holders and miners to hedge their bitcoin holdings against a less volatile US dollar price. An efficient and stable price structure is an important step in moving bitcoin towards a legitimate method of storing wealth.
3.2. Security Concerns in Bitcoin Transactions
Safety can be compromised when transactions are being made. For example, if someone were to send another person their Bitcoin address via email that is able to be seen by someone with access to the email account. If the email account was hacked into, the hacker may copy the recipient’s Bitcoin address and change the address to his own, then hope to fool the sender into sending the Bitcoins to the wrong destination. To avoid such situations, it’s best to use a secure method of communication such as the built-in messaging system on the Bitcoin.org website. This way, if someone attempts to hack into the account and view the messages, there’s no useful information that can be obtained. Even with secure messaging, there’s still the risk of the sender entering the wrong Bitcoin address. Once Bitcoins have been sent to a certain address, they cannot be returned without the recipient’s consent. A small mistake can lead to big losses when sending large amounts. This can happen to anyone, even someone technically competent with the process of sending and receiving Bitcoins.
Similar to online banking, Bitcoin customers use mobile apps or their computer to initiate Bitcoin transactions. The recipient of the payment often provides the customer with their Bitcoin address to enable them to receive the Bitcoins. The customer then enters the recipient’s address in the Bitcoin wallet on their computer or mobile and authorizes the transaction. When the recipient logs into their wallet, they will see the customer’s transaction. Transactions are usually received quickly and are confirmed in a matter of minutes. Once a transaction is included in a block, it becomes part of the public ledger (referred to as the blockchain). This confirms that the transaction has taken place and helps prevent double spending or spending Bitcoins you don’t own.
3.3. Environmental Impact of Bitcoin Mining
In order to recognize the environmental impact of Bitcoin mining, we must refer to the value creation of the digital ecosystem. The use of Bitcoin as a method of transacting value off the blockchain appeared initially as an efficient and transparent method over traditional systems, banks, and centralized currencies. “By using a verifiably secure global ledger to record all transaction outputs, Bitcoin users are able to see exactly when, where, and how they receive new funds. This method is, of course, a substantial improvement over the current record-keeping conducted by most banks and other financial institutions.” The act of attempting to replicate these services midway into the future of Bitcoin’s existence served as a driving force for the movement of value onto the blockchain. This act has been a double-edged sword – while the act of moving value in forms of various assets onto the blockchain has validated Bitcoin as a method of value transference and created a new frontier of possibility for the current and potential asset economy, it has shifted the focus away from Bitcoin’s own economy.
Table of Contents: 3. Challenges and Risks 3.1. Volatility and Market Risks 3.2. Security Concerns in Bitcoin Transactions 3.3. Environmental Impact of Bitcoin Mining
4. Future Outlook
A decentralized mode of transacting appears to be the most powerful aspect of cryptocurrencies. Since Bitcoin is still in early development, there are a few concerns regarding its potential to scale effectively and take on a mass volume of transactions relative to global commerce. These concerns have often centered around the internal scalability of Bitcoin’s blockchain, and its ability to serve these transactions in an efficient way. It is perhaps a fault of human nature, to be content only once a problem is realized. The capacity to scale has faced heavy scrutiny ever since problems began to manifest in 2015, and it is expected that this will intensify as Bitcoin gains popularity and acceptance as a mainstream currency. As an immutable asset with a set limit of 21 million coins, it is understandable that one may be meticulous about Bitcoin’s ability to scale effectively and serve the world in its entirety. Step by step, Bitcoin has been working on a layered approach to scale. The Lightning Network is the most promising scaling solution for Bitcoin. It is a second layer protocol that runs on top of the current Bitcoin network and aims to enable near instant, low fee microtransactions. It does this by opening direct payment channels between users, which can create an infinite amount of transactions that are not broadcast to the network until the channel is closed. This aggregating of transactions vastly reduces the load on the blockchain, giving the network its capacity to serve the world in its entirety. Each channel effectively opens a tab between two users and settles outstanding debts at a later stage, with the channel being closed by broadcasting the new balance as a single transaction to the network. The implementation of segregated witness was the first step in this scaling plan, making it easier to deploy the Lightning Network and also fixing transaction malleability, which is required for the Lightning Network to function.
4.1. Potential for Bitcoin to Become Mainstream Currency
If Bitcoin is to become a major currency, it’s possible that it could have a significant impact, both good and bad, on the global economy. In a recent blog post, I described how the deflation that results from a fixed money supply is one of the key obstacles holding Bitcoin back from wider adoption. Since Bitcoin’s volatility is already very high, and since the deflation is also very high right now, I don’t expect there to be significantly more impact from the adoption of Bitcoin now than there would be from the same rate of adoption at a later time. However, if Bitcoin were to become a major global currency, there would necessarily be more price stability and less deflation than there is now. If we assume that the deflation caused by the fixed money supply is going to be equally spread out over the next twenty or more years, this means that a significant portion of the Bitcoin economy is actually future consumption in disguise. This is because if someone expects the value of their money to go up, they will not spend it unless they feel they are getting very good value for their money, as they can always just wait till tomorrow and let the value of their money go up more. This will create an awkward transition between the time when Bitcoin is adopted and the time when Bitcoin had already been adopted because the people who are selling their products or services only did so because they too expected greater value of their money in the future and may even become savers themselves once their revenue is Bitcoin. Ideally, when Bitcoin has already been fully adopted, people will be spending all of the money they earn and only keeping enough to have a nice safety net. Another important factor is the impact on monetary policy. National governments with fiat debt-based currencies will try to inflate the debt away through increasing the money supply and lowering nominal interest rates. Faced with deflation and a relatively stable exchange rate of value of Bitcoin to their own currency, these methods will not be effective whilst Bitcoin is in competition with their own currency. This could lead to a Keynesian “pushing on a string” scenario where the government is a call to change this into a graphic of cutting scissors with a national currency on one side and a Bitcoin on the other with a big red cross through the Bitcoin. The conclusion – governments would likely try to ban Bitcoin. This could range from mild forms of regulation aimed at making it hard to use Bitcoin to outright declaring its possession or use to be illegal. This is a negative scenario where Bitcoin has caused a resistance to a policy that wasn’t necessarily bad for an economy, it’s just that it would be quite a shock if a government that had a lot of debt and high inflation tried to inflate away the debt into a world where the debt could no longer be inflated, and a Bitcoin ban would be a sign of an outright failure to handle such a changing economic landscape.
4.2. Impact of Central Bank Digital Currencies on Bitcoin
An outlook on the impact of central bank digital currency on Bitcoin would likely vary depending on where Bitcoin is being viewed through. From the lens of libertarian economics, it would be seen as a rival to the fiat system in a new type of “currency war” and it would act as a force to split the state and the economy/market, similar to the separation of church and state. In Europe, where the Sovereign Money movement has gained significant traction, it might be viewed favorably given that it can realistically emulate the banking environment that it aims to change without the need for a radical monetary system policy (which is something that can be seen as a risk). Steps have been taken to take on a larger role in the development of Lightning, with the recent study of a new “streaming money” protocol showing its intention to innovate its own ecosystem and bring a more versatile form of money and finance to the world. Overall, the main issue could possibly be said that it’s an attempt to this kind of monetary competition cost the state money or currency and parallel the state money market with increased competition of the banking system.
This has been translated by many as a prediction that ultimately, the state will seek to monopolize the money supply. While the scenario that Keynes describes might be somewhat extreme, it opens the doors to a variety of changes in the role of banking and money in the economy.
China’s new central bank digital currency (CBDC) has gained significant attention lately. There are concerns that it will provide central banks with the tools required to crowd out bank deposits and take on a much larger role in the financial system. As Keynes famously stated: “If, however, the public prefer to hold cash, the banks will have to stand on their own feet and will be left to fend for themselves in the open money market. It is in fact, the acceptance of the state (or semi-state) money and not of bank money, by the business world and the public which paralyzes the banking system… when the state is the unit of account, and its currency, fiat money, the banking system as a whole will be in a position to force the state to make it an under the table subsidy.” (pg 164, A Treatise on Money)
4.3. Innovation and Development in the Bitcoin Ecosystem
There have also been ongoing developments to financial products built on the Bitcoin network. This includes developments to the current Bitcoin banking system and the P2P lending market. The goal is to provide similar financial services to that of the current established banking system but on a Bitcoin network while maintaining security of customer funds and providing transparency. Spinoff innovations of Bitcoin such as the development of smart contracts and other cryptocurrencies provide a wide range of opportunity for financial product development in an environment that is still in its early stages.
One of the most important aspects of innovation in Bitcoin is the ongoing development of software to increase the effectiveness of the network. This includes increasing the speed and cost efficiency of the network and ultimately making the network more accessible to a larger number of users. An example of this innovation is the development of the Lightning Network, which is a second layer network that sits on top of the Bitcoin network. Lightning Network payments are instant and have very low fees, which has the potential to provide a global micro payment system, replacing credit card companies and money transmitters. This has the potential to significantly increase the number of Bitcoin users and transactions, and it is a crucial step in increasing network accessibility.
Innovation and development of the Bitcoin network is a key attribute that will determine the success of the cryptocurrency for the future. Innovation in software, financial products, and security is occurring at a rapid pace, and it is essential for the decentralization of these developments in order to continue to build and secure the future network.
