Hello and welcome to this article all about the future of Bitcoin. In the following guide, I’ll be talking about a range of topics. These include:
- What is Bitcoin?
- Bitcoin's recent history.
- Bitcoin’s current usability.
- Its various use cases.
- The developers of Bitcoin’s efforts to scale the network.
- The Future of Bitcoin with some negative BTC price predictions and some positive Bitcoin forecasts.
- My own opinion on the future of Bitcoin.
By the end of the article, I hope you will have learned a lot about this unique cryptocurrency. I also hope you will understand exactly why Bitcoin is unique and that no other digital coin, however, fast it can perform transactions, will ever be able to create what Bitcoin has.
As usual, we’ve loads to get through. Let us begin!
Table of Contents
- 1. Where Did Bitcoin Come From?
- 2. Bitcoin in Present Day
- 3. The Crash of December/January
- 4. Usability of Bitcoin
- 5. The Future of Bitcoin
- 5.1. Bitcoin as a Store of Value
- 5.2. Bitcoin as a Medium of Exchange
- 6. Scaling Bitcoin Helps
- 6.1. SegWit
- 6.2. Lightning Network
- 7. The Future of Bitcoin’s Price
- 7.1. Negative BTC Price Predictions
- 7.2. Positive Bitcoin Projections
- 8. My Opinion on The Future of Bitcoin
- 9. Conclusion
Where Did Bitcoin Come From?
Bitcoin is peer-to-peer, digital cash. It’s completely decentralized. This means that no authority can create more of it or decide who has what share of it. The network’s rules dictate everything. These rules are impossible to change without all parties agreeing on them. The inability to change the rules is known as censorship resistance. This is a very powerful quality of Bitcoin.
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Bitcoin was created by an anonymous developer or team of developers called Satoshi Nakamoto. The decision to remain anonymous was a good one by Satoshi. The network now exists entirely without leadership – a true experiment in decentralization.
Bitcoin in Present Day
Bitcoin has come a long way in the nine years since it was created. It was originally only known about by a few cryptographers discussing ideas on forums in around 2009-2011. It found an early use case as a payment method for criminals using the dark web, and it was thanks to this use that Bitcoin caught its first mainstream attention in 2013.
However, as more people understand Bitcoin and its potentially revolutionary properties, more people see the value of holding onto it. Since it has a fixed supply of 21 million units, as the demand increases, and the supply stays the same, the price goes upwards.
This attracts more people to learn about Bitcoin and the price continues to rise as they too see the value in holding some of their savings in the currency.
During 2017, this steady growth kicked into high gear. A few favorable news events had Bitcoin making headlines once again. The first was right at the beginning of the year when the Bitcoin price finally crossed $1,000 for the first time in around two years. The bull run was in motion and kept everyone wondering, what's the future of Bitcoin.
Other factors that drove up to the fundamental value of Bitcoin in the period were the settlement of the scaling debate, the activation of the software upgrade SegWit, and the pending launch of Bitcoin futures by the CBOE and CME Group. All these factors showed that Bitcoin was maturing, and it warranted a higher price. However, as more news publications began to report on the Bitcoin price rising, more people started to buy in for financial reasons alone.
Many of these people who bought in during the second half of 2017 barely understood what they were buying. They simply wanted to make money. Without being entirely sold on what a potentially ground-breaking innovation Bitcoin is, they poured money in. This “dumb money” as many investors call it created the bubble of late 2017.
The Crash of December/January
There’s an old saying in investing or trading “buy the rumor, sell the news”. Basically, what it means is that if something positive sounds like it might be happening, you should buy the asset associated with it. When that something does eventually happen, you should sell the asset. That mentality is likely to have caused the crash that the market is still recovering from today.
Basically, a lot of experienced traders anticipated that the CME Group and CBOE futures were not going to be as major a news event as the inexperienced investors had hoped they would. The market had already been inflated into a full-scale bubble by the time they did launch. With the price approaching the resistance level of $20,000 too, there would also most likely be something of a pullback in the future of Bitcoin.
In my opinion, the crash of the end of the year was caused firstly by experienced traders selling close to the top and causing a small drop in price. Had those that had bought in later in the year really known what they were getting themselves into, they would have held their coins through this slip dip and continued to prop up the price.
However, fearing that a crash was coming, this mass of inexperienced investors who were responsible for most of the gains between around $6,000 and $20,000 began to sell suddenly. By fearing a crash and caring more about the price than the fundamental value of Bitcoin, they created the crash they feared.
Usability of Bitcoin
In terms of its usability, Bitcoin has never really been more useful. There are all kinds of things that one can buy using Bitcoin. There are many online retailers that accept them. One of the largest is called Overstock.com.
Just about everything you’d need to go on holiday can be paid for in Bitcoin too. You can buy accommodation, flights, and meals out when you’re there. If you decide you like the place you traveled to, you can even use Bitcoin to buy a house there!
You can also pay for many services from people using Bitcoin too. These include freelancing services of developers, writers, artists, and many more. It’s even possible to pay for strippers in Las Vegas using Bitcoin these days!
For everything else you could possibly need, there are gift card services like eGifter. They let their users exchange cryptocurrencies for gift cards for various companies. These include Amazon, Tesco, Pizza Express, and many more. This makes it possible to use Bitcoin to buy just about anything imaginable!
The Future of Bitcoin
The future of Bitcoin will largely depend on which use case it becomes used more frequently. There seem to be two major examples of use cases for Bitcoin. One is of a medium of exchange and one is of a store of value.
Bitcoin as a Store of Value
One of the biggest use cases that Bitcoin has is as a store of value. This might seem a little silly when we’ve just been talking about it crashing but just hear me out!
Bitcoin actually makes an excellent store of value in its current form theoretically. The only reason it is not behaving like one is down to people’s greed and naivety as to what it is and why it is special. So the value itself plays a key role in the future of Bitcoin.
It’s been likened to “digital gold” by the co-founder of Apple, Steve Wozniak. It actually behaves better than gold in many ways too. It’s easier to store, it’s easier to transport, it can’t be taken from you by force, and the quantity is known. Gold is problematic for all these reasons.
If you’re struggling to grasp why something you can’t see (Bitcoin) can be spoken about in the same way as Gold, then let me explain something about the value that plays a huge role in the future of Bitcoin.
What is Value Anyway?
Value is created by humans. Think about a diamond or gold. It doesn’t do anything. You can’t eat it, and you can’t use it to keep you warm.
You can only really sell it – provided someone will pay for it. If you went to a remote jungle tribe that doesn’t value gold and tried to sell it to them, they’d probably laugh at you.
How about this example. World War III breaks out and suddenly all the bank's collapse and the dollars in your pocket become worthless. Nobody wants this paper with a president’s face on it anymore. Therefore, it carries no value. In this example, food, weapons, and ammunition would be the most desired commodities and their value would go up.
Gold itself is a bit of a dated commodity. As I said, you can’t store it well, you can’t travel with it well, and it’s easy to steal from someone. It’s only valuable because as a global society, we have decided it is. If we as a global society decide Bitcoin is better than gold for this purpose, it suddenly fills that role. Already people are waking up to this reality since the planet has decided to store over $100 billion in the asset.
Bitcoin as a Medium of Exchange
Another use case for Bitcoin is using it as a medium of exchange. As previously mentioned, Bitcoin is already used around the world as a medium of exchange. Could the future of Bitcoin be it becoming the main medium of the transaction?
Unfortunately, it’s not really that good in its current form for use as a medium of exchange. Bitcoin is a blockchain-based digital currency. It was designed to be as secure and immune to attacks as possible. This means it must sacrifice speed for this security.
To maximize the security of the Bitcoin network, it has long times between the creation of each block. Whilst this makes it much more expensive to attack the network for any length of time, it also means that transactions are slow to go through.
Another issue with the blockchain that backs Bitcoin is that there is only a certain amount of space per block. This means that when the network is being used by many people at the same time, not all the transactions that are requested can fit into the blocks. This creates a kind of waiting list.
Since the computers that verify the network (miners) are trying to make profits, they include the transactions that have the largest fees attached in the next block. This creates a situation where people keep upping their fees to try and get the network to notice their transactions.
Scaling Bitcoin Helps
Last year, before one of the much-anticipated scaling updates was added to the Bitcoin network, using Bitcoin was so popular that transactions were costing as much as $20. Clearly, Bitcoin as a medium of exchange doesn’t work quite as well as it can do as a store of value. After all, who wants to wait 20 minutes and pay $21 for their $1 cup of coffee.
High transaction fees are fine if you make one transaction to a safe storage solution and leave it (use Bitcoin as a store of value). However, they’re not great for daily purchases.
Fortunately, there are some ideas to make Bitcoin more useful as a medium of exchange.
The first Bitcoin scalability solution that was successfully added to the network was known as SegWit. This software upgrade works by splitting the data associated with transactions so that not all of it is stored on the blockchain.
This means that more transactions can fit in each block because each one takes up about half the space. When all Bitcoin addresses move to the SegWit format, the network will have roughly doubled in capacity. This is great for the future of Bitcoin.
SegWit was finally activated in August of 2017. You can see how the market reacted to the upgrade in the chart below.
Since SegWit has been active on the network, transaction fees have been gradually falling to levels that make Bitcoin much more usable for medium purchases. Transactions can go through in around 10 minutes and cost less than a dollar. If you’re buying something worth $30 or more, this is a pretty fair amount. However, it hasn’t reduced fees so much that true micropayments are a reality.
One idea the core developers behind Bitcoin have had to scale the network and reduce the number of small transactions occurring on it is called Lightning Network. It’s still being developed but the idea is that users can set up payment channels if they plan to make many transactions between themselves and a single vendor.
Once the channel is opened, they load it with some Bitcoin and can continue making free transactions using that Bitcoin until the channel is closed. When it’s closed, all the transactions are settled as one single transaction and the vendor is paid. A one-off fee is also paid to the network to update the blockchain.
When the Lightning Network is launched, it should help keep microtransactions off the blockchain and thus free up the network, reducing the fees for all users. This could be the start of a new chapter of the future of Bitcoin.
The Future of Bitcoin’s Price
There have been many different price predictions for Bitcoin made over the years. These range from the negative to the highly optimistic. Let’s look at some of the more famous examples. Unlike price predictions for various altcoins around, Bitcoin price predictions are often made by people with either financial or technological backgrounds. This makes them someone more reliable. That said, no one can truly know what will happen!
Negative BTC Price Predictions
The likes of Jamie Dimon of JP Morgan, and Charlie Munger and Warren Buffet of Berkshire Hathaway haven’t really given numerical Bitcoin projections. They are famously anti-Bitcoin, however. If pressed for a number that Bitcoin might eventually reach, it would probably be zero from all three of them.
Last September, Jamie Dimon famously dismissed Bitcoin as a “fraud”. He went as far as to say that any of his staff found to be trading Bitcoin would be fired. Rather amusingly, JP Morgan was later found to be buying up Bitcoin and Dimon was accused of market abuse for his earlier comments.
It's just not a real thing, eventually, it will be closed.
JPMorgan Chase CEO Jamie Dimon
Meanwhile, Warren Buffet probably should take the prize for the most creative insult levied at Bitcoin ever. The 87-year-old billionaire said that the digital currency was “probably rat poison squared”. He has also admitted that he’s not very good at identifying trends in technology.
— Becky Quick (@BeckyQuick) May 5, 2018
Finally, Buffet’s sidekick Charlie Munger has also protested against Bitcoin in the past. He stated earlier this year that it was a “scum ball activity” and didn’t really offer much else in the way of explanation for this opinion.
Interestingly, these three are some of the loudest voices against Bitcoin and they all come from the world of traditional finance. It’s no coincidence that traditional finance is the sector most threatened by the disruptive potential of the Bitcoin network either. It kind of reminds me of that old saying about turkeys always voting against Christmas.
Positive Bitcoin Projections
I’m sure this is the part of this “Future of Bitcoin” article you’ve been waiting for – the positive Bitcoin projections!
In this section of the article, I’m going to look at three of space’s best thinkers’ BTC price predictions. There’s the realistic, the optimistic, and the downright wild!
Our first BTC price prediction comes from an individual with a background in investing and technology. Alexis Ohanian is the co-founder of the social media forum Reddit. He’s also an investor in various blockchain projects.
Alexis is very bullish on Bitcoin and blockchain technology in general. He believes that by the end of 2021, Bitcoin will have gotten over its recent slump and returned to an upward trajectory. In fact, he thinks it will reach its all-time highs of close to $20,000 later this year.
At the end of the year, Bitcoin will be at $20,000.
Internet entrepreneur & investor,
An even more positive Bitcoin projection comes from Tom Lee. Lee has a background steeped in traditional finance. He previously worked as a strategist at JP Morgan and is now working at Fundstrat.
Lee believes that we will see a $25,000 Bitcoin at some point towards the end of this year. He also believes that by the end of 2021, we will see a $64,000 Bitcoin. What makes Lee’s Bitcoin forecast more credible is the fact that he has been right before. He was ridiculed for his earlier call of a $10,000 Bitcoin at some point during 2017. Of course, the price eventually almost doubled this figure!
Finally, we go to slightly less believable. This Bitcoin forecast for the future of Bitcoin comes from John McAfee. McAfee is famous for his range of anti-virus products and has become something of a cryptocurrency guru in recent years.
In the digital currency space, he’s most famous for his $1 million price prediction. However, it’s not just his extreme BTC price prediction that has won him media attention. It’s what he said he’d do if the price didn’t reach $1 million.
Last year, McAfee stated that he would eat his own manhood, live on TV if the price didn’t hit $500,000 by 2021. Midway through the bull run of 2017, he famously doubled the bet he made against himself whilst keeping the forfeit the same. John either knows something we don’t or is absolutely crazy!
My Opinion on The Future of Bitcoin
So, we’re nearly all done with this “Future of Bitcoin” article. There’s just time for me to add my own thoughts to it. Before I do so, I must remind you that this is in no way to be taken as investment advice. It’s just my opinion on the future of Bitcoin. If you’re wanting to invest in Bitcoin, it’s vital that you do so because you believe in the technology. To fully believe in technology, you must first understand that technology.
Whilst articles like this give you a good basis for your own research, they’re not enough. It’s crucial that you take this as a starting point and do as much study as you can. If you still want to invest, you should do so cautiously and only with money you can afford to lose.
Warning out of the way, here’s what I think of the future of Bitcoin.
Bitcoin is uniquely positioned in the cryptocurrency space. It’s not only got a massive first-mover advantage, but it has some elements that no other digital currency can achieve today.
Firstly, it has no leader. There is no one that any authorities could throw in jail if the currency starts to threaten traditional currencies.
Secondly, it is by far the most censorship-resistant currency. If the network doesn’t want a change to happen, it simply will not happen. This is one of Bitcoin’s most powerful qualities.
Finally, it is truly decentralized. This is largely thanks to its organic growth and this growth is something that cannot be achieved again now that people dive on projects to enrich themselves. Bitcoin evolved into the global beast it is today under the radar. It only emerged when it was ready to do so.
These unique properties when taken together make Bitcoin something that is incredibly valuable to the planet. It’s important for people to have a store of value that is out of the control of potentially oppressive governments and their institutions. Bitcoin represents a future with true financial freedom for all. This is something that many investors are yet to grasp. The true value of Bitcoin will show itself when times are at their hardest and most unfair.
Whilst governments can attempt to regulate against it, any damage that can be done to Bitcoin is only temporary. It cannot be stopped now and any government that wants to take a tool for complete financial freedom away from its people must be questioned and overthrown immediately.
So, that’s it. That’s my article all about the future of Bitcoin. Did you learn anything? Did you find it enjoyable to read? I hope so!
During the article, I’ve covered a lot. It’s probably wise to have a quick recap. I discussed:
- What Bitcoin is?
- Bitcoin’s recent history.
- Bitcoin’s usability today.
- The various use cases of Bitcoin.
- Bitcoin’s developers’ efforts to scale the network.
- The Future of Bitcoin. I looked at both negative BTC price prediction and positive ones.
- My own thoughts on the future of Bitcoin.
I really hope you learned something from this article. It covers many of the most important concepts in cryptocurrency. For many getting into space, Bitcoin might seem dated and like old news. It’s easy for them to forget the crucial aspects that make a digital currency value in the first place.
Bitcoin was created as a reaction to the cruel and destructive practices of central bankers during the last financial crash. It is much more than a way to ping money around the globe or a “get rich quick” scheme.
Anyway, now that we’re all done, what do you think the future of Bitcoin will be? We’d love to hear your thoughts. If you wish to learn more, read this complete Bitcoin prediction guide.