Cryptocurrencies and the oldest, most traded and most valuable of them all – Bitcoin – are making and breaking fortunes in the investment world.
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From an obscure digital start, Bitcoin has become the market-leading cryptocurrency and a household name worldwide.
With mortgage lenders in the US and UK announcing the development of Bitcoin loans, and El Salvador adopting the currency as legal tender, albeit with a bumpy start, as Reuters explains, it looks like cryptocurrencies are here to stay.
So, is Bitcoin still a worthwhile investment or does the stratospheric growth in value mean that if you haven’t already bought in, you’ve missed the boat?
And can Bitcoin really sustain an upward trajectory over the next decade?
Here’s a look at the contrasting predictions from cryptocurrency experts to evaluate where Bitcoin might head next.
How Price Shocks Shake Bitcoin
To grasp the potential value of any cryptocurrency, we must start by identifying which factors change the price of Bitcoin.
Investment research tool YCharts reports that a single Bitcoin is worth about $51,669 (£38,068) – that is a 15 per cent jump in three weeks ago, but a two per cent drop month-on-month, so it’s clear that the value of Bitcoin isn’t steady.
Here are the primary factors:
- Supply and demand – where demand increases, prices soar
- Circulation caps – there is a limit on the volume of Bitcoin in circulation, currently set at 21 million. With 18 million already mined, there will be no new coins when the cap is hit
- Competition – Bitcoin is one of thousands of cryptocurrencies, and while it is the undisputed leader, it does have rivals
- Production costs – a new batch of Bitcoin is generated around every ten minutes by a computer algorithm. Mining Bitcoin is highly competitive and involves solving complex mathematical equations. The longer it takes to win the batch, the more expensive the process, and the more competition
- Currency exchange availability – the value of Bitcoin revolves around currency exchanges, such as GDAX and Coinbase. Platforms need to provide rate consistency and therefore must manage Bitcoin to an extent.
Another essential element affecting value is regulation, which worldwide governments have struggled with due to the innovative nature of cryptocurrencies. Cryptocurrencies exist online without any government or central bank guidance.
There is a lot of uncertainty about Bitcoin trading, and for many, trading remains a grey area. Any regulatory changes could have a dramatic impact on the value of cryptocurrency.
Bitcoin Price History
Bitcoin didn’t start as a global player and saw its first significant price rise in 2011. Bitcoin started the year worth about $1 a coin.
The currency leapt to $32 a Bitcoin within six months, slumping back to $2 in November.
These wild fluctuations continued, seeing sudden hikes in value, counteracted by corresponding drops due to events such as the economic recession.
Come December 2015; one Bitcoin was worth $20,089.
The boom had well and truly started as investment analysts began to anticipate the potential worth and investigated the prospects of alternative cryptocurrencies elbowing in for a share of the market.
The COVID-19 pandemic was the big global event that transformed the fortunes of Bitcoin?
As the virus trampled the world, financial markets stalled, and economies faltered, Bitcoin came to life.
Fears of inflation and declining US Dollar values meant that big corporations decided to buy into Bitcoin, propelling the currency to incredible heights.
In 2020 alone, Bitcoin values rose by a staggering 224 per cent, and while 2021 remains a period of peaks and troughs, it’s now worth around the $40,000 to $50,000 mark.
What Does The Future Hold For Bitcoin?
It’s tricky to make any accurate analysis of how Bitcoin will move in the next few years since it depends on who you talk to.
- As reported by Blockchain News, Jeremy Liew, who recently announced he is stepping back from investing as the face of Lightspeed Venture Partners, forecasts the cryptocurrency will be worth $500,000 per coin
- The Crypto Research Report in June 2020 determined a valuation of over $397,000 by 2030
- Ask the Winklevoss Twins (Bitcoin billionaires), and they support the $500,000 theory, making Bitcoin as valuable as gold as a global resource
- In an interview with Forbes, Mark Yusko, the billionaire investor and Morgan Creek Capital Founder, pitched the 2030 Bitcoin value at over $400,000.
The difficulty here is that it is impossible to make an absolute judgment, given the uncertainty about what the future holds over the next nine years.
Sceptics believe that Bitcoin is a bubble and will burst in the decade to come, rendering current investments worthless.
A lot depends on market attitudes and whether confidence remains that more governments and economic leaders, in preference to conventional assets such as gold, will adopt this alternative value store.
The benefit of Bitcoin investment, and indeed any commodity that isn’t currency, is that it offers a hedge from inflation.
If Bitcoin continues to grow along this rocky road of continued increases, it may well prove to be more valuable than gold by 2030, with rates of return that you’ll find nowhere else.
What Will Bitcoin Be Worth in 2030? FAQ
Bitcoin is the leading form of cryptocurrency – a currency that exists only online as a virtual or digital asset. You can’t buy a physical Bitcoin, only a digital representations.
However, Bitcoin works just like any other currency, and you can use it in an increasing number of places to spend money or receive payments.
New Bitcoins are generated through mining, where users process transactions through specialist hardware and collect new coins when they solve a complex problem.
Coins are produced at a fixed rate, although this is not infinite since there is a circulation cap of 21 million, with 18 million already in circulation.
It’s worth noting, though, that it’s expected to be over 100 years before the Bitcoin network produces the final token.
As miners are likely to spend years receiving a tiny portion of the final Bitcoins, a dramatic decrease in the rewards available may see considerable changes to the mining process.
In essence, each Bitcoin is a computer file. When you spend or receive Bitcoin, the file changes ownership on a central database called a blockchain held on a network of peer-2-peer computers.
Each Bitcoin transaction is stored on the blockchain, which is openly accessible to all users.
That means you can’t spend Bitcoin you don’t own, as the transaction can be traced back to the individual PC or phone, and the exchange reversed, using the unique ID codes called keys to identify the valid owner.
Bitcoin offers more flexibility for traders and investors because the Bitcoin economy is decentralised and not controlled or managed by any regulatory body or management structure.
However, this freedom is also one of the biggest challenges since many countries won’t allow Bitcoin trades, given that they have no control over how the cryptocurrency is spent.
It is even banned in some places, whereas others are adopting cryptocurrencies as legally recognised tender, and you will soon be able to buy a house or take out a mortgage on the strength of your Bitcoin account value.
This scenario is unique and means that much of the future value of Bitcoin depends on how widely it is adopted and if any regulatory structures put in place.
Appraisals for the future of Bitcoin vary between experts, most of whom have grown sizable personal fortunes by buying into the cryptocurrency in the early days – and they have a lot to gain for talking up the market.
Assessments for Bitcoin value from several authority figures in the cryptocurrency world range from $500,000 to over $1 million, so it’s anyone’s guess who will prove correct.
However, it’s worth revisiting past predictions to see how close to the mark they were.
• Tim Draper, the billionaire venture capitalist, and Mike Novogratz, Bitcoin investor, guessed at a $10,000 valuation by 2018 – and both were correct.
• Ronnie Moas, the founder of Standpoint Research, gave an approximation of $50,000 by 2027, and Bitcoin has reached this level already.
Other calculations proved a little too enthusiastic.
Estimates of values from $91,000 by 2020 to $110,000 by 2019 were all a little ahead of their time.
Therefore, it’s worth taking predictions with a pinch of salt since any significant global events, such as recession, political instability or another health crisis, could mean that even the most seasoned investors make a bad call.
Like any investment, there are potential risks and rewards to examine if you’re thinking about buying Bitcoin.
In 2021, prices continue to rise, and it’s an exciting market to be in, with huge variances even from day to day.
However, any investor should be aware of the substantial volatility around all cryptocurrencies and understand that any purchase could end up being loss-making if the Bitcoin value suddenly dives.
Most forecasts see Bitcoin worth well over $100,000 by 2025 and potentially much more, but these are only estimates and not necessarily reliable forecasts for making critical investment decisions.
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