BETTING ON BITCOIN – WHY YOU CANNOT LOSE
One of the most regularly asked questions on the internet is about the future of Bitcoin. The simple truth is that nobody can really tell for certain what the future holds as there are many factors that determine what will happen in the next hour. However, a dispassionate analysis of current trends suggests that cryptocurrencies will become widely accepted as means of exchange and store of value in the future. As Bitcoin is the leading cryptocurrency today, it is reasonably safe to bet on the fact that it will remain significant into the future. Let us break it down to the crucial figures.
Limitation of Bitcoin
There are presently 17,285,262.50 Bitcoins in circulation with a total dollar value of USD113,041,295,434.38 which equates to Bitcoin to USD price of USD 6,539.75 per BTC. This sounds pretty much if you consider that USD 113 Billion is not exactly a small sum. Right? Let us compare this with some other fields in the global financial market.
The global foreign exchange market handles average daily turnover of no less than USD 3 Trillion according to a Reuters report from 2017.
The Derivatives market worldwide is valued at USD 1.2 Quadrillion. This figure is over 15 times the multiple of the global GDP which currently stands at USD 78.28 Trillion according to the World Bank.
Meanwhile, the market cap for the entire cryptocurrency world as at September 2018 stands at a paltry USD 186 Billion (60% of which is Bitcoin). Without a doubt, when compared to the established and more developed markets, cryptocurrency is still very marginal. This is not a sad story as it only shows that there is so much room for growth.
How High Bitcoin Can Rise
Recall that the simple truth is that nobody can predict the future of Bitcoin with any certainty. However, as the total number of Bitcoin that can be in circulation cannot be more than 21 Million which is the total number that can be mined, every additional investment in Bitcoin will continue to drive the price up. Assuming Bitcoin becomes so widely acceptable that total investment in it reaches USD 5 Trillion, the value of BTC will rise to USD 238,000!
In comparison to today’s fiat money, which is no longer backed by anything worth more than the paper or metal it is printed on, Bitcoin has a kind of intrinsic value as it has a fixed amount. Due to this limited supply, should the number of people who buy Bitcoin continue to rise, the currency will retain value and continue to grow. The result will be that more and more people will trust Bitcoin as a store of value which will further increase demand thereby pushing price up. The much fantasized million-dollar Bitcoin is not far-fetched in this scenario.
How Low Can Bitcoin Fall
For all of Bitcoins relative success to date, only a small fraction of the global population owns a cryptocurrency. Suppose that for some reason (e.g. new technology or government crackdown) the demand for cryptocurrencies crash, the price can fall to zero and all of that store of value would be gone. The future of Bitcoin is therefore hinged on sustaining the demand for it.
Sustaining Demand for Bitcoin
We are only ten years into the Cryptocurrency era. Therefore, Bitcoin and her sister cryptocurrencies are still in their early days of development. Already, many retailers and commercial entities have started accepting Bitcoin for specific real life transactions and even some big corporations are investing in blockchain technology. A multitude of fintech companies are also springing up daily deploying the power of blockchain technology to provide solutions to one real life need or another. All of these movements are gradually diversifying Bitcoin away from just being held as valued investment as holders of Bitcoin can now utilize it as means of exchange for real life transactions.
In support of this, organizations like Express Bitcoin Postage now make it possible to pay for your mail delivery, parcel shipment, USPS stamps, USPS shipping labels etc. with Bitcoin. From the comfort of your home, you can pay for your stamps and label, print out the physical form and stick them to your box before mailing. This is already in existence and the market is expanding rapidly!
With more entities like Express Bitcoin Postage offering opportunities to pay for mundane everyday transactions with Bitcoin, in the next decade or two, it is expected that utilization of cryptocurrencies will become more ubiquitous as means of exchange. Therefore, while agreeing that no one can reasonably predict the future, it is a safe bet to expect Bitcoin to retain its growth prospect into the foreseeable future.