Bitcoin Prices ?
Bitcoin has turned to be one of the happening investment commodities of all time. We so far haven’t seen any such commodity with much price fluctuations yet gain immense traction. A decade ago, you could really have purchased a bunch of Bitcoins for not more than a dollar. But now? One Bitcoin costs around 9, 000 US dollars. Still, there are people who are worried that Bitcoin’s price has reached its peak and investing now would be losing thousands of dollars. Sorry, I completely disagree.
Wondering I disagree? Well, digging deeper and deeper only shows that the Bitcoin is just started to pick up its steam and will reach a value in the future that you can never ever imagine of.
Please, I’m not the only one who is arguing that Bitcoin price will rise significantly over the years. If were to randomly choose a year in the future, then I would say that by 2020, one Bitcoin price would be somewhere between $35, 000 to $45, 000. You think I’m being too much generous? Honestly, the current available predictions say that these numbers appear to be on the cautious side. Various respected cryptocurrency consultants are predicting that Bitcoin will hit $50, 000 by the year 2020, a reasonable prediction.
Future of Bitcoin Prices?
Of course, nobody has seen the future. And that is why it is extremely important to learn and understand the hidden factors which could cause Bitcoin’s price to increase in the years to come. There are hundreds of other cryptocurrencies that were introduced after Bitcoin but failed to gain the traction and apparently have stayed in the dark. This is enough for us to understand the fact that Bitcoin is very much different from other cryptocurrencies whose value rose to thousands of dollars from literally nothing. Understanding what this means is important for a fruitful investment in Bitcoin.
The flow of Bitcoins
If you know what Bitcoin is then you would probably also know that the total number of Bitcoins supply is limited to 21 million, unlike every nation/government who can print their own money when they feel there is more demand. But in the case, the supply of Bitcoins that already entered the market and the ones that are about to is tightly controlled and ultimately limited to a specific number. Once it reaches the number (21 million), then there will be no more Bitcoins to create.
Not only is the number of Bitcoins that can be an issue limited, but also the supply of new Bitcoin that are entering the market is taking slow steps as the Bitcoin mining is becoming more and more complex. Earlier, when you wanted to create blocks, you could have been able to utilize your home desktop system, and you will be rewarded with a bunch of Bitcoins in return. But now, the scenario has completely changed. You will either have to purchase highly specialized equipment (Mining rigs) or join a mining pool (You need to link your personal PC with other computers).
New Bitcoins will continue to slow
The number of Bitcoins that people used to get rewards for solving a block is reduced almost by half in every four years. Back in 2012, people used to receive nearly 50 Bitcoins per blockchain. Currently, 12.5 Bitcoins are awarded for every added block. In future, the number of rewarding Bitcoins will further drop to 6 or 5 probably. This is one of the essential elements of Bitcoin, at least from the investor’s perspective.
The father of Bitcoin, Satoshi Nakamoto, believed that by slowing down the new Bitcoins entrance in the market would increase the value over a period of time. Of course, this certainly would address one of the biggest condemnations of usual fiat currencies that have consistently expanding supplies and thus declining value.
Wondering why the supply of Bitcoin has that a great impact on its value? An easy way to think of any currency is as a “Pizza.” When you create more and more currency, the size of the pizza remains same. It doesn’t increase. Instead, more and more slices are created which means that the slices will become even smaller than they already were over a period of time. Well, the complete story and theory behind Bitcoin and other digital currencies are a little difficult, of course, this fundamental rule holds true.
If you take a brief look at the prices of Bitcoin, it has an upward trajectory over time. Of course, the yesterday cannot predict tomorrow but the trends are essential to learn, observe, and consider. In the month of December 2017, the price of Bitcoin was $16, 064. And exactly 10 days later, its price was $17, 163, a significant increase.
Right from day one, Bitcoin prices have always been fluctuating. In the last quarter of 2013, Bitcoin reached a peak price of $1, 000 and then started to falling later. During all this while, people have thought that the Bitcoin was overvalued due to the mere speculation. However, speculations occur in every time of financial/commodity market and Bitcoin was no exception. At times, increasing prices can set off some sort of avalanche. As the value increases, people think that they have to purchase before the prices go up even further. This kind of trend sets some sort of feedback loop where more and more people jump into the investment pool. But the prices in situations like these can become artificially inflated. In the end, this sort of artificial inflation has to end at some point and when it does happen, hard crashes occur.
Forget the last Bitcoin bubble
So yeah, Bitcoin was overvalued back in the year 2013, and it had to fall eventually. Whenever value increases more than it should have in a short span of time, you need to extremely careful with your investments whether it is purchasing stocks, real estate, or anything else.
Not only speculation but you also have to be aware of hype. Back in 2013, when our favorite cryptocurrency, Bitcoin was receiving a tremendous amount of hype, more and more people started buying Bitcoins and joining the Bitcoin community. Bitcoin literally made the headlines and continued to stay in the news for quite some days. Many huge companies started to consider Bitcoin as a potential business opportunity. Now, this kind of bizarre hype can spur the demand and rising demand leads to rising prices.
Is Bitcoin a safe haven for investors?
Just one last thing you need to be aware of in case you want to invest in Bitcoin. Currently, the share/stock markets are being highly turbulent. So when the share market is hit then Bitcoin could indeed become a safe haven for investors across the globe. When stock markets witness a major decline then investors easily tend to lose faith in both financial systems and fiat currencies.
For example, during the recession period in 2008, the gold prices took peak point as people fled fiat currencies and shares and invested in gold and other physical assets instead. But as I said earlier, it is difficult to predict what happens tomorrow but when stock market takes a hit then obviously Bitcoin prices could spike. Since Bitcoin is now considered as an alternative currency and because every nation’s government tend to utilize incitement strategies which can deflate the value of their respective currencies during recession periods, Bitcoin will certainly become a safe haven for investors. This means that the Bitcoin prices will take off swiftly and that is something every Bitcoin investor should take into consideration.
The present scenario of Bitcoin
As of now, there is no hype or speculation. The Bitcoin market is very much matured and the prices are moving at a moderate speed. Of course, the prices of Bitcoin are witnessing a substantial growth, faster than various stocks. As a matter of fact, these gains are very much within the province of reason.
These balanced and sensible gains should continue in the future as well. Of course, this is not wishful thinking instead I’m taking into consideration of the slow supply of Bitcoins in a combination with the rising authority of the currency and its expanding adoption by people around the globe.