In recent news, Bitcoin and alt coins have been dubbed as “speculative trading.” The real value of these cryptos are not with their pricing but in their Blockchain technology and the mass adoption of this tech in the real world. With that being said, what will Bitcoin be worth in a couple of years from now? In order to establish this, we need to take a look at which factors are for and which are against Bitcoin.
Animal spirits are when investors make an investment decision depending on what other investors and institutions are doing at the moment. Sounds like peer pressure, doesn’t it? This is directly linked with positive media coverage in the sense that if investors see a golden opportunity they are more likely to jump on board and this will increase the price of Bitcoin. The opposite is also true that in the event of negative publicity, investors may lose faith in Bitcoin and the price will decrease. This is one of the biggest influencers of Bitcoin’s price.
Political risk or uncertainty can really impact a country’s economy and currency. It also affects the price of Bitcoin in the sense that if investors feel uneasy about keeping money in a particular country that may be faced with political turmoil, they are more likely to invest those funds in an alternative platform such as Bitcoin.
Threatening Tax Regulations
What makes Bitcoin a favourable investment option is due to the fact that it is decentralized. In other words, it is not controlled by any government or organisation that can tax Bitcoin holders. However, every now and then some governments make announcements that they are looking into taxing Bitcoin holders and investors get a fright. It has happened in the past that the price plummeted when China announced it is considering banning Initial Coin Offerings (ICOs) and close down a number of Bitcoin exchanges. In the event that a government announces that Bitcoin could become a legal tender in a specific country, the price can increase drastically.
Governance Of Cryptos
Even though the idea behind Bitcoin is not to be governed by anyone, aka being decentralized, difficult decisions sometimes have to be made by key role players in the industry. One such a case was during recent upgrades of the Blockchain or hard forks. Bitcoin’s software was created by developers and miners run it.
Together they had to vote for a possible solution to Bitcoin’s scaling issue. The software has become slow to perform transactions. The society voted and a hard fork took place in August 2017. Those who had Bitcoin at the time of the fork were rewarded with some free cash or fork money namely Bitcoin Cash. It is interesting to note that Bitcoin Cash can perform transactions four times faster than Bitcoin itself. Afterwards a second fork took place and Bitcoin holders were rewarded with Bitcoin Gold but the third hard fork was cancelled. This had a major impact on the price of Bitcoin, as everyone was trying to get their fair share of the free money.
The demand for Bitcoin has grown significantly since 2013, especially in Asia. This became evident in May 2017 when the Bitcoin price in South Korea reached 5 million won, which was the equivalent of $4 500, whilst its US dollar equivalent was $2 700 at the time. South Korea even put regulations in place that limits the numbers of Cryptocurrencies and this has also led to a high demand. Did you know Ethereum’s largest market is the Asian market? In Japan, Bitcoin is already recognised as a legal tender. In the fourth quarter of 2017, Bitcoin’s price reached a record high of $17 000. Some claimed this was due to the demand for Bitcoin that increased. The minute Bitcoin reached $10 000, it became widely known and more people wanted to get into Cryptocurrencies. An increasing number of investment companies now also offer clients Bitcoin investment options, which in turn, leads to an increase in the price. The opposite is true that if it was not for these factors, the price would decline.
Trust in Bitcoin
As more people learn about the benefits of Bitcoin, the number of individuals and investors who come to trust the Cryptocurrency increases. This also increases the price of Bitcoin. People are starting to trust Bitcoin, as a form of payment or to transfer money anywhere in the world. The number of companies who accept Bitcoin as payment is increasing by the day. Some governments have announced that they would support Bitcoin by implementing it in various ways in their countries. This helps drive the price of Bitcoin. In case of a security breach, people will not trust the coin and the price will likely decrease.
Experts and analysists have said that Bitcoin’s true value lies not in its US dollar price but in its Blockchain technology and the endless possibilities it holds. Blockchain technology is set to revolutionize the way we do everyday chores. Blockchain tech has been developed that allows your motor vehicle to refuel using a specific Cryptocurrency. Your fridge can buy milk with another Cryptocurrency and you can produce your own renewable energy to sell to fellow tenants. Sensitive or personal information can securely be stored onto a Blockchain and is only accessible to a person who holds the private key. All of this eliminates costly third parties.
What Will Bitcoin Be Worth In 10 Years’ Time?
According to an analyst from Saxo Bank, Kay Van-Petersen, Bitcoin could be worth well over $100 000, ten years from now. This is the same analyst who predicted that Bitcoin could be worth $2 000 early in 2017. According to an annual report that was released in December 2016 entitled “Outrageous Predictions”, Van-Petersen made this prediction and he was spot on. Looks like the crypto world is in for a wild ride.
In conclusion, it is in fact Bitcoin’s true worth, meaning its technical value that will determine how high its price will go.