Bitcoin – Prospects, Future, Value, Authenticity

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Prospects

Credit Suisse estimates the number of the millionaires in the world at about 35 million although the sources on the number differ. The figure constitutes all “financial and nonfinancial wealth”, including assets, collectibles, and homes.

When compared to the total number of Bitcoins that will ever exist, this is an extraordinary number. There are only ever be a maximum of 21 million Bitcoins, despite that there are roughly 35 million millionaires in the world. That’s right – there will never be enough Bitcoins for every millionaire in the world to own even a single one.

Bitcoin’s daily transaction numbers have been increasing steadily. Bitcoin’s daily trading volume is about 400,000 BTC per day according to Coinmarketcap, while each day only 1728 new Bitcoins are created through mining. The number of Bitcoins mined each day will drop do 864 by the next halving in 2020, and only 432 new Bitcoins will be produced each day by the subsequent halving in 2024. Almost 99 % of all Bitcoin to ever exist (20,671,875) will have been mined by sometime around 2032. After that, people will spend the next 100 years trying to obtain the remaining 1.6 %.

Value

While you try to fully comprehend this, let’s consider what makes Bitcoin so valuable. Besides numerous features, such as global network, an immutable Blockchain and a means to transfer wealth from one person to another with never involving a middleman, what really makes Bitcoin so valuable are two characteristics: scarcity and authenticity.

Scarcity

In terms of value, Bitcoin can be compared to gold: people want it and there is not enough of it to go around. New gold can hardly be created; one has to find a gold mine and go through the arduous, capital-intensive and pricy process of mining and refining the gold. Gold is scarce because neither governments nor factories can create more of it, and this scarcity bestows value.

In earlier societies, many unusual items have been used as currencies or stores of value. One of the more well-known is wampum, a necklace made from a certain type of seashell that was rare in the Americas. It’s not necessary for a currency to be intrinsically useful in order to function, but it certainly has to be scarce.

The reason why counterfeiting has such severe penalties is due to this requirement for scarcity. Moreover, in earlier times, the punishment for counterfeiting was death. By making it less scarce, counterfeiters undermined confidence in a currency, and doing so, at scale, could tear down an entire economy.

On internet it is easy to find 200 years GOLD chart on price fluctuation. Do you think we will have the same charts for Bitcoin after 190 years?

 

 

Authenticity

Gold has an additional feature that’s highly important for any store of value or currency: authenticity. Gold has been used as both a store of value and as a currency for millennia. Due to its scarcity, it has been treasured throughout its history. Gold has been used in jewelry, in crowns and palaces, and in money. It is widely associated with wealth.

It’s easy to write Bitcoin off as inauthentic since it lacks the thousands of years of history, culture and tradition that grant so much value and mystique to gold.

But in a world that’s quickly moving from analog to digital, even a “new” technology like Bitcoin can be authentic. Bitcoin certainly fits the bill when it comes to digital money. It is the very first of the thousands of different tokens that label themselves “digital currency”, which gives it an important claim to the property of authenticity.

There are many excellent altcoins, but none of them were first and none of them can reasonably claim to be the best. None have a higher market capitalization. Bitcoin is the first and it has the largest network effect. It is the most universally recognized and is authentic.

Asset or currency?

Economists and finance experts debate if Bitcoin is an asset or a currency as it slowly moves toward mainstream adoption. This argument couldn’t be more irrelevant in terms of valuing Bitcoin. It doesn’t matter how people use Bitcoin, but why they choose to own it.

Future

The future of Bitcoin is almost certainly a bright one since the Bitcoin market has been gradually edging to a capitalization of almost $80 billion as the result of the activation of the SegWit protocol and early testing of the Lightning Network that SegWit enables. Bitcoin’s market capitalization is now around 50 % of the entire crypto market. It has now exceeded 1 % of gold’s estimated $7 tln market cap and is nearly half of Visa’s $200 bln cap.

(taken on 7.10.2017)

With various analysts and traders trying to guess the value of Bitcoin in the future, some say it might even reach $15,000 in the near term. It is highly likely that at some point people will realize that almost all the Bitcoins ever to exist have already been mined, and there aren’t nearly enough Bitcoins to go around. When this occurs, there will probably be great “fear of missing out” and prices should soar accordingly.

But forget about the near term. Bitcoin’s long-term value is what really matters if it’s digital gold. Bitcoin is rare and scarce and the majority of people don’t own even a fraction of one.

What’s Bitcoin’s potential in the long run? It could easily become so valuable that even millionaires can’t afford a whole coin.