Bitcoin: Is everything expected to happen?

If you had spent $ 27 on Bitcoin, created by Satoshi Nakamoto in 2009, your investment would now be more than $ 37,000,000.

Recognized as the largest investment vehicle of all time, Bitcoin rose rapidly from $ 777 in 2017 to $ 17,000.

Bitcoin, which has created millionaires from opportunistic investors and left financial institutions open, has responded to its critics at every stage this year, and some believe it is just the beginning.

The launch of Bitcoin futures on December 10, which will allow investors to enter the Bitcoin market through the highly regulated US stock exchange for the first time, marks the beginning of a new era.

What makes Bitcoin so valuable is the limited availability. There will only be a maximum of 21 million bitcoins, and unlike regular fiat currencies, you can’t print more than that at any time. The reason for this is that Bitcoin is working on a proven work protocol: to create it, you need to mine it using computer processing power to solve complex algorithms in the Bitcoin blockchain. Once you achieve this, you will be rewarded with Bitcoin as payment for the “work” you do. Unfortunately, since the inception of Bitcoin, the premium you have received for mining has dropped dramatically almost every year, which means that for most people, the only viable way to get Bitcoin is to buy it on the stock exchange. At current price levels, is it worth taking?

Many believe that Bitcoin is just a bubble. I spoke with Duke Randal, a cryptocurrency expert and long-term investor who thinks the asset is overvalued: “I would compare it to many demand and supply bubbles in history, such as the Dutch Tulip Mania and the dot com bubble of the late ’90s. It’s almost embarrassing when you look at the functionality of the currency as a real currency. ” For those who don’t know, the dot com bubble was a period between 1997 and 2001, when many Internet companies were founded and gave overly optimistic estimates based solely on speculation, which then dropped by 80-90% as the balloon began to collapse. 2000s. Some companies, such as eBay and Amazon, have recovered and are now well above these estimates, but for others, it was the end of the line.

Bitcoin was originally created to draw power from our financial systems and allow people to control their money, cut the average person, and allow transactions between peers. However, it is currently one of the slowest cryptocurrencies on the market, its transaction speed is four times lower than the fifth largest cryptocurrency and its closest competitor for Litecoin payment solutions. The unstoppable privacy coin speeds up Monero transactions, boasts an average blocking time of two minutes, and Bitcoin is one-fifth of the time it can do so, without anonymity. Ethereum, the world’s second-largest cryptocurrency, is valued at just $ 676 per Ether, but Bitcoin already has a higher transaction volume than Bitcoin, at $ 16,726 per Bitcoin.

So why is the value of Bitcoin so high? I asked Duke Randala the same question. “Everything goes back to the same supply and demand economy, there is not much bitcoin, and its recent price increase has attracted a lot of media attention, combined with the launch of Bitcoin futures, which many see as the first sign. Bitcoin is accepted by the mass market, resulting in financial gain for many people. Like any asset, the price goes up when there is more demand to buy than to sell. This is bad, because they enter the market without understanding the new investors blockchain and the basic principles of these currencies, that is, they are likely to burn.

Another reason is that Bitcoin is so volatile that it is known to raise or lower thousands of dollars in less than a minute, which, if you are not accustomed to or expecting it, will panic sales of less experienced investors and result in losses. This is another reason why Bitcoin is struggling to be accepted as a form of payment. The price of Bitcoin can vary significantly between sellers accepting Bitcoin from customers and selling it on exchanges for local currencies. This unsustainable move could destroy all their profitability. Will this instability soon disappear? Not likely: Bitcoin is a relatively new asset class, and although awareness is growing, only a very small percentage of the world’s population owns Bitcoin. Volatility will continue until it is more widely distributed and liquidity improves significantly.

So, if Bitcoin is pretty useless as a real currency, what are its applications? Many believe that Bitcoin has evolved from a secure form of payment into a storehouse of value. Bitcoin is like “digital gold” and will simply be used as a benchmark for measurement and trading for other cryptocurrencies and blockchain projects. Recently, in high-inflation countries like Zimbabwe, there have been stories of people buying Bitcoin to keep the wealth they own, rather than seeing their value fall under the carelessness of the central banking system.

Is it too late to deal with Bitcoin? If you believe what these cryptocurrencies will do for the world, it’s never too late to get started, but with such a high price of Bitcoin, it’s a ship for some who are already floating. It would be better if you look at Litecoin, which is growing 6908% for the year, or Ethereum, which is growing incredibly 7521% for the year. These newer, faster currencies are hoping to achieve what Bitcoin wanted to do for the first time since its inception in 2009 and replace government-run fiat currencies.

Who knows what the price of these currencies will be in ten, fifteen or even twenty years? One thing is for sure, this is going to be a wild walk, so we better shut ourselves up.