- 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.
Table of Contents
- 1 What is Bitcoin?
- 2 Bitcoin in Present Day
- 3 The Crash of December/January
- 4 Usability of Bitcoin
- 5 The Future of Bitcoin
- 6 Scaling Bitcoin Helps
- 7 The Future of Bitcoin’s Price
- 8 My Opinion on The Future of Bitcoin
- 9 Conclusion
What is Bitcoin?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. 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 DayBitcoin 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. 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/JanuaryThere’s an old saying in investing or trading “buy the rumour, 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.
Usability of BitcoinIn 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 it. 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!
The Future of BitcoinThe future of Bitcoin will largely depend on which use case it becomes used more frequently as. 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 ValueOne 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 the 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.
Bitcoin as a Medium of ExchangeAnother 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
SegWitThe 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.
Lightning NetworkLightning 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 PriceThere 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 PredictionsThe 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
Positive Bitcoin ProjectionsI’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 the space’s best thinkers’ BTC price predictions. There’s the realistic, the optimistic, and the down right 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 2019, Bitcoin will have gotten over its recent slump and returned to an upwards 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,
John McAfeeFinally, we go to the 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 2020. 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 BitcoinSo, 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 the 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.
ConclusionSo, that’s it. That’s my article all about the future of Bitcoin. Did you learn something? 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.