Without a doubt, the emergence of cryptocurrencies like bitcoin is one of the most groundbreaking events in the past several decades. Their impact on the global economy is hard to overestimate since this form of digital money rewrote the market rules. Indeed, the essence of a cryptocurrency is far different from the nature of dollars or euros.
While traditional currencies heavily depend on gold reserves, inflation, and governmental regulations, digital costs have other factors that influence them. On the other hand, the specificity of cryptocurrencies brings some drawbacks like uncertainty about the future. Even though over a decade has passed since the rise of the first tokens, their perspectives remain relatively unexplored.
Nowadays, the word “Bitcoin” is on everyone’s lips. Even those who are far from the topic of cryptocurrencies most likely have heard about it somewhere, be it television, banners, or newspapers. What do we know about Bitcoin? The first thing to remember is that it’s the first cryptocurrency ever to exist. The initial idea appeared back in 2008. As a result, a year later, Bitcoin entered the global financial market and changed it forever.
Publicity still speculates whether this currency is an invention of one person or a team of programmers called Satoshi Nakamoto. In either case, the experiment had tremendous success, as Bitcoin is now the crypto market leader by multiple indicators. Markedly, in the span of four years, it has risen in price a million times!
Consequently, the lucky people who listened to their intuition and bought the tokens for the minimum price reap the benefits now. Luckily, modern websites offer the opportunity to instantly purchase BTC.
Why does obtaining Bitcoin become more complex with time? In short, a computer has to solve a mathematical equation to get the cryptocurrency, but the number of tokens is limited. Therefore, math problems become more complicated and require powerful equipment to find a solution.
Despite the complications mentioned above, Bitcoin is pretty popular and comes in handy when:
- You pay for online goods and services;
- You pay tuition fees;
- You visit brick-and-mortar stores and restaurants that accept Bitcoin;
- Your country’s currency heavily depreciated;
- You want to open a deposit in a Bitcoin-friendly bank.
Undoubtedly, Bitcoin investors want to know whether they should stick to this cryptocurrency or sell it. The future is vague, so let’s analyze the factors that could provoke the further rise or downfall of Bitcoin.
Will Bitcoin thrive further?
The first thing to remember about any currency is that the exchange rate naturally changes under multiple circumstances. Accordingly, digital money experiences sudden surges and downturns from time to time as well. Bitcoin is the virtual currency that perfectly demonstrates how sharp shifts in the crypto market are.
To point out, its price has been changing so drastically during the last six months that Bitcoin could lose or gain thousands of dollars per day. Are these fluctuations just normal “corrections”, as experts say? What to expect in the future? It is better to analyze current Bitcoin trends to figure it out.
Factors that could boost Bitcoin’s price in the future
To begin with, Bitcoin has a high chance to win the competition with national currencies in the upcoming years. Why is it so? As have been mentioned before, cryptocurrencies have the advantage of being independent of governmental regulations. During the pandemic, multiple countries decided to help their citizens through currency issues. Yet, the short-term positive effect results in long-term depreciation of the national currency.
At this exact moment, Bitcoin enters the stage as something more stable than fiat money. For this reason, residents of more economically challenged countries like Zimbabwe or Venezuela prefer Bitcoin to local money.
Secondly, Bitcoin’s popularity creates something that looks like the “domino effect”. People know this currency as the most widespread since all sorts of media mention it everywhere. As a result, potential investors automatically assume that this asset is the best use for their money. For them, such recognition equals reliability.
At present, more and more businesses start to accept Bitcoin as a form of payment. Moreover, large companies and influential individuals often mention Bitcoin in a positive light, which heavily affects the moods of the general public. The opinions spread with lightning speed, and token prices experience upsurges.
What can prevent Bitcoin from growing?
Nowadays, it seems like Bitcoin’s success is unbeatable and long-term. Nonetheless, the risk of downfall still exists. Some cryptocurrency experts insist that the absence of governmental regulation is rather a flaw than an advantage. A strong currency relies on security. Otherwise, it looks like an economic bubble.
The worries about Bitcoin are understandable since expensive coins have no backup. Therefore, the perspective of losing costs might scare off potential purchasers. Besides, the high volatility of Bitcoin only confirms the assumptions about a possible downturn.
What is more, Bitcoin sometimes could lose the competition with newer cryptocurrencies due to the less efficient transactions. Even though the security level is higher, the frequency of financial operations is lower, and the commissions are more significant than on other crypto platforms. Hence, users’ preferences could shift from Bitcoin elsewhere.
An equally important factor that is able to cause the cutback in Bitcoin’s price is the negative effect on the planet. It is general knowledge that mining leaves a massive carbon footprint. In fact, scientists estimated that Bitcoin mining pollutes nature as much as a megapolis.
The more environmentally friendly technologies are a must, or more and more people could refuse to invest in Bitcoin. Surprisingly, even Elon Musk, who is fond of cryptocurrencies, has recently sold a large portion of Bitcoins to show his concern about pollution problems. In the future, other users might follow his example.
To sum up, the future of Bitcoin is somewhat foggy. The uncertainty emerges from the wide variety of factors that have an impact on the price of a cryptocurrency. In general, buying this form of digital money is similar to gambling because everyone has an opportunity to become a millionaire or a bankrupt overnight. Therefore, experts advise investing only the amount of costs you are ready to lose. Study the subject and become the expert yourself!