Bitcoin Risk at All-Time Low: Here’s the Explanation

Once viewed as a speculative experiment, Bitcoin has matured into a secure and trusted digital asset.

Here’s a closer look at why the risk associated with BTC has reached an all-time low.

Why Bitcoin Risk Has Never Been Lower

Proven Technical Robustness

Early doubts about Bitcoin’s technical foundations have been dispelled. Satoshi Nakamoto’s engineering decisions have proven effective, including the one-megabyte block size and ten-minute block frequency. The network has mined over 846,448 blocks without a critical hack, showcasing its resilience and security.

Moreover, many protocols are exploring ways to leverage Bitcoin’s security to enable staking across different blockchain platforms. Implementing BTC, a Proof of Work (PoW) asset, in a Proof of Stake system, will help strengthen other networks’ safety.

“Questions early on persisted around Satoshi’s engineering prowess. Was one megabyte block size a good idea? How about the 10 minute block frequency? Will the cryptography suffice? Is it hackable? But with time, Satoshi’s programming competence had been vetted” Komodo Chief Technology Officer Kadan Stadelmann told BeInCrypto.

Read more: How To Buy BTC and Everything You Need To Know

Bitcoin’s hash rate, a measure of its computational security, continues to reach new highs. This increase in mining power reinforces the network’s security, making it more stable against potential attacks.

Regulatory Acceptance

The initial uncertainty surrounding Bitcoin’s regulatory status has been addressed. In 2014, the IRS designated it as property, removing fears of taxes on unrealized gains. The US Commodity Futures Trading Commission followed suit in 2015, declaring BTC a commodity. This regulatory clarity has provided a stable environment for the OG cryptocurrency to thrive.

Once BTC’s regulatory status was clarified, attention shifted to the potential threat from copycat digital assets. This led to the emergence of numerous altcoins. However, the presence of altcoins has only strengthened Bitcoin’s position. Today, BTC and the broader cryptocurrency market are viewed as distinct industries, with Bitcoin standing out on its own.

Institutional Endorsements

The perception of Bitcoin shifted dramatically when institutions began investing. In August 2020, MicroStrategy purchased $250 million worth of BTC, signaling confidence in its stability.

“Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy,” MicroStrategy’s CEO Michael Saylor states.

Saylor’s endorsement of Bitcoin as a powerful, decentralized asset has further bolstered its reputation. Following MicroStrategy, Tesla and Square invested significantly in BTC, increasing its credibility.

Read more: Top 11 Public Companies Investing in Cryptocurrency

Adoption by Nation-States

Three years ago, President Nayib Bukele’s decision to make BTC legal tender in El Salvador garnered global attention. On September 7, 2021, the “Bitcoin Law” took effect, making El Salvador the first country to adopt it as an official currency.

President Nayib Bukele was recently sworn in for a second term, reaffirming his pro-Bitcoin stance. The country has continued to purchase Bitcoin, acquiring up to 30 BTC per month. As of May, El Salvador had over $70 million in unrealized profits from its crypto investments.

Despite some criticism, surveys show significant awareness and usage of BTC wallets, indicating successful integration. Kadan Stadelmann notes an in-person survey of 1,800 representative households, the findings of which were validated by a blockchain analytics firm, researchers found nearly 68 percent of potential users knew about Chivo Wallet and 78 percent of that particular group at least attempted to download the app.

In 2022, Central African Republic (CAR) echoed El Salvador’s move. A mineral-rich nation, one of the poorest in the world and mired in an ongoing Civil War, also adopted Bitcoin as a legal tender, arguing that it will secure an independent financial future for the country. 

Growing Investment Potential

The US Securities and Exchange Commission’s (SEC) approval of the spot Bitcoin ETF marked a massive shift in the regulatory field, indicating a growing acceptance of digital currencies within traditional financial systems. No wonder sovereign wealth funds and other major financial entities are beginning to view Bitcoin as digital gold.

Wall Street mogul BlackRock has been educating these institutions about Bitcoin, anticipating their entry into the market. The ongoing interest from large-scale investors suggests a stable future for Bitcoin.

“Many of these interested firms — whether we’re talking about pensions, endowments, sovereign wealth funds, insurers, other asset managers, family offices — are having ongoing diligence and research conversations, and we’re playing a role from an education perspective,” said Robert Mitchnick, BlackRock’s head of Bitcoin and crypto.

Read more: How To Trade a Bitcoin ETF: A Step-by-Step Approach

While government and corporate adoption are not essential for BTC’s success, they contribute significantly to its legitimacy. With inflation concerns and the search for secure alternatives, Bitcoin’s appeal as a hedge grows. Its established security and increasing mainstream acceptance suggest that Bitcoin’s experimental phase is well behind it.