It’s no secret that perhaps the most well-known and expansive area of fintech that has been gaining attraction over the past two years is cryptocurrency. Early this year, billionaire Tesla CEO Elon Musk made an announcement that he purchased approximately €1.3 billion worth of bitcoin and has plans to make it an accepted currency for transactions within his business. This sparked a huge wave of interest in the currency and even led to many large financial institutions such as Mastercard and Visa to issue statements detailing their plans to accept cryptocurrencies and what their guidelines would be at least for the coming year. There are other cryptos that are also widely invested in, such as ethereum and litecoin to name a few, but none have even come close to the reign of bitcoin. But why is bitcoin the world’s overwhelmingly dominant leader of cryptocurrency and how long will it be this way? Many powerful leaders in fintech such as Ajit Tripathi who is the head of institutional business at Aave, Jack Dorsey who is the owner of both Twitter and Square, and Chamath Palihapitiya who is a venture capitalist engineer and the CEO of Social Capital have given their two cents on the issue.
Tripathi has done extensive research into the reasons for bitcoin’s success and has outlined his three main reasons for it. His first is the reliability it has over other crytos, as according to him bitcoin hasn’t been hacked in its over 12 years of existence. He goes on to add that bitcoin is the first cryptocurrency that anyone looking to get involved in the space looks at, and that it has survived all the highs and lows it’s been through so far. His second point is that bitcoin has regulatory clarity. According to Business Insider, “The Commodity Futures Trading Commission has classified bitcoin as a commodity, which the Securities and Exchange Commission has, thus far, not challenged.” Tripathi’s third and final point is the current brand value associated with bitcoin. He makes a good point saying that people have spent most of their time assessing the literal value of the currency and not the value the name Bitcoin has for itself. For example, other reputable brands we usually don’t even question the quality of are Microsoft and Musk’s Tesla itself, maybe not because of the individual products but because of their reputation. Tripathi says “Bitcoin also has an extraordinary brand value. Even Silicon Valley pundits like Chamath Palihapitiya or Jack Dorsey are essentially bitcoin maximalists — they cannot think beyond bitcoin and do not acknowledge other cryptocurrency innovations.”