Bitcoin stands out from traditional asset classes due to its unique combination of attributes. Over the past decade, it has significantly outperformed classic assets as a store of value and attracted investor attention.
Rise of Institutional and Societal Adoption
Institutional and societal adoption of Bitcoin is increasing. Individual investors are using it to shield themselves from inflation. In 2024, Bitcoin posted a 121% return, outperforming the S&P 500 and leading hedge funds. Corporations, such as the Japanese company Metaplanet, are beginning to include Bitcoin as a balance sheet asset, further increasing pressure on companies to adopt it.
Government Adoption and Economic Impacts
Governments are also changing their approaches to Bitcoin. An example is El Salvador, which became the first country to accept Bitcoin as legal tender. This decision contributed to increasing tourism and improving the country's credit rating. Other potential benefits of government adoption of Bitcoin include increasing international reserves and enhancing economic stability.
Behavioral Dynamics Driving Bitcoin Adoption
Behavioral phenomena such as network effects and the Lindy effect may accelerate Bitcoin adoption. Historically, the number of Bitcoin users and its price have increased according to a power law. There is an opinion that as understanding of Bitcoin deepens, its acceptance will expand, and the implications of reduced supply have a long-term effect on price.
Bitcoin continues to gain popularity among both institutional and individual investors. Considering the limited supply and rising demand, the importance of Bitcoin as a store of value in the global financial system will continue to grow.
