2024 was a good year for bitcoin. The leading cryptocurrency surged 126%, entered the big finance with spot ETFs, and even made it to the political arena, with a pro-crypto U.S. president and many supportive members of Congress coming into office in 2025.
These developments aren’t mere happenstance. They are the result of 16 years of steady progress in bitcoin’s development, adoption, legal advocacy, and an ongoing public discourse about the nature of money. Controversial monetary policies of the recent years contributed to this success as well. Developed countries realized they were not safe from inflation (something the rest of the world knows all too well), acknowledging bitcoin’s potential as a store of value.
Technological inventions have further strengthened Bitcoin’s position. Improvements in payment systems have helped democratize and promote their role as a means of payment.
Classical economic theory identifies price setting and means of exchange as the two purposes of money. The third is the unit of account, and this is the function that Bitcoin has not yet fully fulfilled. Its current volatility, typical of a young asset, and its limited adoption make it difficult. However, as adoption grows and bitcoin appreciates, its volatility will most likely decrease, following the trend seen in other large, mature assets.
Throughout 2024, key signs similar to bitcoin’s role as a price store and medium of exchange have shown stable growth, indicating expanding adoption. In light of those trends, it can be argued that Bitcoin begins 2025 with a bit of luck positioning itself as a new form of money.
In April 2024, bitcoin underwent its 4th halving, slashing the miner’s reward in half and effectively reducing its inflation rate to just 0.85%. Compared to most fiat currencies, this alone makes bitcoin stand out. Its predictability, diminishing inflation, and increasing scarcity are rare in today’s financial system.
But rarity is not everything. Contrary to what some critics claim, bitcoin is not subsidized for “anything. “It is secured by large amounts of electrical energy that miners use to process transactions and create new coins. In 2024, Bitcoin’s hashrate will increase from 520 million TH/s to 790 million TH/s, an all-time high, as shown via Blockchain. com. This represents a colossal computational effort, as the entire Bitcoin miner network now produces 790 quadrillion (790,000,000,000,000,000) consistent operations per second. To put this into perspective, DNA sequencing requires approximately 1 trillion consistent sequencing. The Event Horizon Telescope network required approximately 180,000 trillion operations to create the symbol of a black hole, an effort that took the team two years and five million CPU hours in high-performance computing clusters. Although the nature of those contradictory statements differs, it illustrates the immense strength behind Bitcoin.
It is very difficult, if not impossible, to know how many people have bitcoins. However, as the leading crypto gains notoriety, more entities, such as public or personal companies, emerge as identifiable holders. Additionally, the launch of spot bitcoin ETFs in the United States in early 2024 has accelerated the expansion of bitcoin-backed funds, whose holdings can also be identified.
These entities expanding their BTC holdings are a smart indicator of Bitcoin’s growing importance as a store of value. According to BitcoinTreasuries, the amount of BTC in corporate treasuries increased by 31% in 2024, reaching 998,374 BTC. This strong adoption by companies has been further facilitated by new guidance from the US Financial Accounting Standards Board, which allows companies to report their cryptocurrency holdings at fair market value.
In 2024, the amount of BTC in the budget increased by 66%, reaching 1,283,812 BTC. New bitcoin spot ETFs have played a major role in this growth, surpassing $123 billion in asset control as of the end of December, according to TheBlock.
Spot Bitcoin ETF AUM via TheBlock, starting 13/01/25
This brought the overall control of the assets of all bitcoin-backed ETFs to $129. 2 billion. This figure is all the more impressive since all gold ETFs have recently managed $128. 9 billion, as Vetle Lunde, head of research at K33, reports.
At the government level, President-elect Donald Trump’s proposal to create a Strategic Bitcoin Reserve could further accelerate this trend, signaling a growing acceptance of bitcoin as a store of value at the highest levels.
The use of Bitcoin as a means of payment is also growing, the blockchain is still quite slow, with a capacity of only 7 transactions per second. This limitation is mitigated through the Lightning Network, a layer 2 solution built on top of Bitcoin. In theory, they succeed in millions of transactions consistent with the second, limited only through users’ network connections and Lightning node capacity. These nodes identify bilateral off-chain channels, overcoming limitations within the Bitcoin chain, and only record transactions on the Bitcoin blockchain when funds are transferred to or from the Lightning Network.
This solution is also much less expensive than mainchain Bitcoin, with average fees less than a cent compared to Bitcoin’s existing average fees of $1. 80. As a result, the Lightning Network is also ideal for micropayments, emerging as the number one payment method within the Bitcoin ecosystem.
While on-chain BTC can be used for payments, Lightning Network is a more reliable measure of adoption. Not only is it better suited for payments, but it also helps filter out the speculative transaction spikes driven by Bitcoin-based projects like Ordinals or Runes.
According to TheBlock, Lightning Network capacity has doubled from $227 million in January 2024 to $500 million by the end of the year.
The capacity of Lightning channels is not a direct indication of how much BTC flows through the network; the exact number must be calculated. Still, it provides a smart estimate of potential traffic, assuming that Lightning nodes only lock budget into the network if they generate a moderate pushback in payment rates.
Lightning Network Capability via TheBlock, dated 1/13/25
The number of traders deciding on BTC is also increasing. 1,400 new venues were added to BTCMap in 2024, bringing the total from 6,300 to 7,700 existing venues. Most merchants settle for on-chain and Lightning payments.
As Bitcoin advances, it is a reminder that cash is limited to fiat currencies. With its unique structure, mechanism and medium, bitcoin now serves as a store of prices and means of payment, potentially adding the role of unit of account in the future. Sixteen years after its launch, Bitcoin is redefining traditional perceptions of money, offering an option to the modern financial system.
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