Back in 2009, a pseudonymous developer Mr Satoshi Nakamoto gifted the world its first decentralised cryptocurrency, Bitcoin. Since then, Bitcoin has gained immense popularity, with over 18.5 million coins currently in circulation.
Surprisingly, the cryptocurrency that was almost worthless in 2009 is now recognised as one of the most viable asset classes. However, this journey has not been a smooth sail for the beloved cryptocurrency, with Bitcoin navigating a cycle of bubbles and busts.
The digital currency experienced an unprecedented boom in late 2017, subsequently becoming a victim of cryptocurrency crash in 2018. Bitcoin has not been able to catch up with its 2017 levels. However, its astonishing recovery from the 2018 crash (over 300% up) has left the world in awe.
The progressive value gain delivered by the digital token has lured many investors to the cryptocurrency trade. Besides, Bitcoin’s acceptance as a legitimate mode of payment and its potential to reward significant short-term profits appear to be steering its craze.
Significantly, Bitcoin salaries are also becoming a new norm in multiple jurisdictions, including Kiwi Land.
But what does the future hold for this ‘magic internet money’?
The exceptional growth in Bitcoin’s value over the past few years has sparked an intense debate about its future.
One cannot overlook that Bitcoins were originally designed with the aim of limited and finite supply. In aggregate, only 21 million coins can be mined by people online, which leaves just 2.5 million Bitcoins to be introduced in circulation. Existing estimates indicate the prospects of all Bitcoins to be mined by the year 2140.
Bitcoin’s fixed supply coupled with burgeoning demand for crypto assets is expected to drive its price in the future. Additionally, Covid-induced surge in debt-to-GDP levels and policymakers’ massive stimulus packages can push Bitcoin prices higher in the near-term.
While stiff competition prevails in the crypto market, Bitcoin’s finite supply can offer it an upper hand over other crypto assets where supply outstrips demand. However, there is a possibility of modification in Bitcoin’s protocol, which may enable larger supply and turn the tables around.
Some experts regard the current value of Bitcoin as purely psychological; driven by greed, speculation and irrational exuberance. If this turns out to be true, Bitcoins may lose their value in the future, falling prey to another bubble explosion. Although, the likelihood of the same seems a long shot in the present.
The current scenario bends towards a promising future of the Bitcoin, which is anticipated to enjoy its dominance in the crypto market over the near to mid-term. However, widespread acceptance of Bitcoin as a regular currency still appears to be a long way off.