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Business’ Black Swans: Bitcoin’s Rise

Houston Arianna Paredes
Bitcoin

Bitcoin has had a series of rises and falls since its debut, as a completely new digital coin, that was to “change the global economy”. With the strike of the pandemic, Bitcoin rose from $5,000 per coin in March to $60,000 per coin in April 2020. A positive gain for Bitcoin thanks to the Business Market Black Swan event. Referred to as a sporadic event that severely impacts the overall global industry and economy as it cannot be predicted. However, given such a negative reputation, how could it have positively made the digital coin rise?


Graph

Black Swans: The term Black Swan has been known since 2007, popularized by Nassim Nicholas Taleb. It is a key term that began usage after the 2008 financial crisis. Black swans are events notable for their unpredictability and the extreme rarity of occurrence. This makes a company’s stability threatened unknowingly for how a company’s successful projectile could be completely shattered, with the cause of one event. They force lasting change throughout the markets and create a hard-time recovery process for companies. Some of the most famous Black Swans considered were World War I (Supposed to last months not years) and the fall of the World Trade Centers (September 11 Attack).


Bitcoin & US Dollar

Bitcoin: Bitcoin was launched in 2009, it is a virtual currency used as a form of payment without the interference of third-party financial transactions. Although widely known, it was not very popular among people regarding the purchase of them. However, a decade later the pandemic arrives, completely digitalizing our world. The pandemic is also considered a black swan, it was an event no one would have ever imagined could have come into existence. The pandemic encouraged remote working and quickly accelerated the use of technology. The adoption of financial services quickly boosted the popularity of Bitcoin for its easy international transactions. For, at the same time, the pandemic caused economic inflation, due to the banks increasing the production of paper money, causing prices of goods to go up.


Crisis

Bitcoin, on the other hand, was considered a chance to escape from inflation. Bitcoin was a great choice for people living off decentralized and underserved banks, as they had a new financial opportunity. In addition, bank accounts were not required to transact with Bitcoin. This certainly grasped the attention of investors, as it was valued for its digital nature. Bitcoin became a spotlight center of investment which created a high demand pushing the price of bitcoins to go high. By 2021, more than 18.5 million Bitcoins were circulating.


Bitcoin has pushed humanity closer to technology. Unlike many market economic crises, Bitcoin had risen towards success. Banks continued to befall for inflation, as Bitcoin continued to gain the fame and trust of its investors. The concept of the Black Swan is controversial, it can lead to benefits as well as losses. Creating a tricky challenge or hope for companies to face unexpectedly.


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References:


Scott, G. (June 2022). Black Swan In The Stock Market: What Is It, With Examples and History.


Kuchar, M. (May, 2021). How Has Covid-19 Risen Bitcoin’s Price?


Mansa, J. (April, 2023). What is Bitcoin?














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