Supply always comes on the heels of the demand - Robert Collier
Bitcoin has remained a mystery for manybecause of its steep price curves. There have been many speculations aboutbitcoins and whether they will remain an underdog or become a hundred-grandcurrency in the next few years.
Experts and futurists are divided oncryptocurrencies. Experts are in favor of treating it as a low-return futureinvestment, while futurists consider cryptocurrency as a form of currency thatwill spread across markets in the coming years.
Let’s discuss this in more detail and see whatpossibilities exist for us shortly.
Veteran bitcoin investor Tim Draper has predicted that bitcoin will become a global currency in the next few years. However, he says that it will take a few short years before bitcoin will become a currency of the world. But when that happens, it will soar to $250,000. And, he predicts that this can very well happen in 2022.
Bitcoin currency has seen a bearish trend in thepast few years. It soared to $20,000 by the end of 2017, and then the currencycrashed to $4000 in the mid of 2018. This has made it an ‘unpredictable’currency in the eyes of many cryptocurrency experts.
Economistson Cryptocurrency Use
Harvard University Professor ofEconomics and Public Policy Kenneth Rogoff has suggested that the sentimentsaround cryptocurrencies are exaggerated, and the currency is not worth what it iscalculated at.
He says the “market capitalization of cryptocurrencies could explode over the next five years, rising to $5-10 [trillion]
.” But he speculates that the currency will be more likely to bearound $100 rather than $100,000 what most futurists have already predicted, aswe have discussed.
Moreover, he says that bitcoin’s useis limited to transactions rather than a tangible material like gold that canbe used as an investment. This makes the currencyvulnerable to a ‘bubble-like’ collapse. Furthermore,the cryptocurrency process is less efficient since it doesn’t rely on a trustedcentral authority.
Even in 2019, bitcoin isstruggling to keep itself stable. This is mostly because of the mining of morebitcoins. At one end, more bitcoins are coming to the market. While, at theother end, the demand for bitcoins is increasing rapidly.
This is what the current graph of bitcoins looks like in one year. As you can see at the start of the year, the value of bitcoin had fluctuated to less than $5K. But since then, as the demand has mostly been stable, it has even touched $10K in mid-September before falling back to $8K.
In comparison, the graph ofbitcoin in 2018 is completely different. It almost touched $20K before fallingsharply to $4K during that period. Experts consider it the first 'bubble-burst'of bitcoins. It is very much similar to the dot-com bubble that led to highspeculations about the prices of the domain and then fell sharply.
With such sharp fluctuations, what if you want to buy a product say a car using bitcoins. There are companies like Autocoincars that provide the facility. But the fear of bitcoin fluctuations still looms high over the general public.
One reason Bitcoin hasnot yet become a global currency and according to predictions of Rogoff isbecause governments of the world have not yet adopted it. Most of thesegovernments fear illegal trade rising sharply if they adopt bitcoins sincethere are no proper measures to track its progress.
Bitcoins have previouslybeen used for a host of illegalactivities such as money laundering, drug peddling,smuggling, and weapons procurement. And, with its mass adoption and without acentral bank will increase the financial crime rate further.
Many powerful regulatoryauthorities such as the Financial Crimes Enforcement Network (FinCEN), FederalReserve, and even the Homeland Security (DHS) Department of the USA areconcerned about the potential consequences. Even in May this year, Mt. Gox, oneof the largest Bitcoin exchanges, was barred from transactions through banksbecause of allegations that it broke anti-money laundering laws.
There are two schools ofthought on bitcoin's future as we have already discussed. Both have theirlogics and both promote a different message. However, data suggests thatbitcoin will remain a strong currency even in the future. Some limitations cryptocurrencywill continue to face is that it is a digital currency. And, it can easily get erasedby a computer crash, or through a cyberattack.
Finally, the BIGquestion: Should you invest in a cryptocurrency? The answer is a mix of two.You have to consider the cryptocurrencies as a long-term investment. But eventhen, now may not be the right time to invest in cryptocurrencies. This isbecause they are still around $10K.
A better situation willbe if you can treat the current “investment” as any other high-risk investment.You should note that since it is not governed by a recognized institution, itis only priced at what the buyer is ready to pay for it.
If you are not ready forsuch high-risk investments, it is better to look for other betteropportunities.
Please share by clicking this button!
Visit our site and see all other available articles!