Exploring the Growing Influence of Bitcoin

Updated 12/21/2024 9:00:00 AM

In mid-December, Bitcoin hit a new historic level, driven by legislative development in the US. Texas introduced legislation that, if finally approved, would permit the creation of a strategic cryptocurrency reserve.

The legislation would also allow the state to accept taxes, fees, and donations in Bitcoin, mandating that the cryptocurrency be held for no less than five years. The Bitcoin rise was also backed by statements from elected President Donald Trump, who expressed interest in establishing a federal strategic reserve of the cryptocurrency.

In this Factsheet, we will delve into the evolution of cryptocurrencies, their recent performance, and Egypt's positioning within this dynamic landscape.

Cryptocurrencies are digital or virtual currencies that use cryptography for security. They operate on decentralized systems, such as blockchain technology, which record transactions across a network of computers without the need for a central authority like a bank.
The modern era of cryptocurrencies started in 2009 with the launch of Bitcoin. Building on Bitcoin's success, numerous alternative cryptocurrencies, known as "altcoins," emerged. Among the first was Litecoin, introduced in 2011, followed by others like Ripple (now XRP) and Ethereum. These altcoins sought to enhance Bitcoin's technology by providing faster transaction speeds, improved security, and alternative consensus mechanisms.
As of March 2024, a total of 13,217 cryptocurrencies exist globally, though not all hold value or remain active. After excluding many "dead" cryptocurrencies, roughly 8,985 are currently active. Globally, about 420 million people use cryptocurrencies, and nearly 18,000 businesses now accept some form of crypto as payment.
Currently, the market capitalization of cryptocurrencies stands at $3.76 trillion. Bitcoin alone accounts for $2.12 trillion or 56.4% of the total market value.
For the first time since its launch, Bitcoin’s price has exceeded $107,000, with experts projecting it will exceed $200,000 by the end of 2025. These projections are driven by Trump’s direction toward creating a crypto-friendly regulatory environment, reversing the crackdown imposed by Biden's administration. The Republican president has also supported the idea of establishing a national strategic reserve of Bitcoin.
The US is not the only country considering Bitcoin reserves, as lawmakers in Russia have also supported the creation of a national Bitcoin reserve as an alternative to foreign currency reserves.
In Egypt, cryptocurrency activities are primarily affected by legal restrictions under Law No. 194 of 2020. This law grants the Central Bank of Egypt (CBE) full control over digital currencies, which directly limits cryptocurrency mining and trading. These regulations play a crucial role in maintaining Egypt’s financial stability and combating illegal financial activities.

By: Amina Hussein