Lots of words have been thrown around Bitcoin recently. Tulip Madness. Silk Road. Ponzi Scheme. While this blog will (rest assured) remain about software development and programming, I had to give my final say (barring whatever crap I may spew on reddit from time to time 😊) SOMEWHERE about Bitcoin. I decided that somewhere was here.
My Promise to You
Let me promise you, I won't post about Bitcoin speculation on this blog ever again. (At least in relation to any sort of price speculation, maybe one day later I will post on some tech stuff)
The most basic key economics of Bitcoin for determining it's price are: 1. there will only be 21 million of them, and 2. The demand for the holy coin is ever increasing, and at least all of 2018, it looks as though that trend will hold. As long as these two key economic ingredients hold true (the 21 million I am 100% sure of, it's baked intp Bitcoin's code), the inarguable bottom line is that the price will go up, no exceptions. We don't even need any technical analysis! There are millions of examples throughout history: something with a limited supply and increasing demand, the "things" price goes up. No exceptions.
First to Market
It's important to remember, Bitcoin was the first of its kind (certainly not the best - many improvements in other coins and blockchain protocols exist - more on that below), Bitcoin has both the largest and majority of the market caps among all the other cryptocurrencies. (Edit: December 19th! Bitcoin dipped just below 49.9% market capitilization in crypto! I built a small bookmarklet called MarkCap for coinmarketcap.com that puts the percent market cap next to the market cap number.)
As cash flows from standard gold to Bitcoin, the market cap could approach the trillions range. With that order of magnitude of market cap, 1 Bitcoin would have:
|Market Capitalization||Bitcoin price*|
|7 Trillion (market cap of gold)||~$389,000|
*(assuming around 18 million Bitcoins - currently 16.7 as of writing this entry - it's accurate enough as of this posting in late 2017; the 18th millionth Bitcoin isn't expected to be mined until October 9th, 2019 - check out my post on medium about the mining schedule until the next halving)
- $20,000 by January 1st 2018 (update: we already made it for a short period of time on December 17th!)
- $50,000 by end of Q2 2018 (i.e. end of June 2018)
- $100,000 by end of Q4 2018 (i.e. end of December 2018)
But... 5 Years Out? 10 Years?
So I have a somewhat non-average view of Bitcoin in the long run (5-10 year) time range (yes, things like THE FLIPPENING I think could happen). The world is still getting used to cryptocurrency. However, as soon as that honeymoon period is over, the world should (not as it always does, I know), realize a few things:
- Bitcoin, while first to the cryptocurrency market, is undoubtedly not the best cryptocurrency on the market. Even as I write this post, transaction times are stacking up, and a single transaction costs over $3. And what happens to the miners once mining stop? That's still a question where I'm not totally satisfied what some of the answers are.
- Litecoin is a copy of (suprised? look at this fork to litecoin from the bitcoin repository by Charlie Lee, the founder of Litecoin) sorry, but I don't see much innovation there
- Other blockchain technologies, like Ethereum, Cosmos, and many more (I have a few personal favorites) have numerous advantages, not limited to:
- a much larger development team
- a much stronger and active code base
- MUCH faster transaction times (Ether, the next closes coin in market cap, processes about 2.5x as many transactions as Bitcoin per day)
Once these aspects of the market are noticed, I believe wealth will slowly transfer out of Bitcoin - when and if enough people will decide that Bitcoin's 'store of wealth' could in fact be invested in the next best thing (i.e. coin/token). Perhaps once Bitcoin does reach such towering numbers of 50 - 100K, it's purpose as a store of global wealth (note NOT the original purpose of Bitcoin) will be met, and perhaps the demand for transactions will taper off. On the other hand, perhaps even a better option for storing wealth in a blockchain could appear. With the rate of speed the tech is moving, its impossible to say, again, only time will tell.
But, for the present, let the following stand:
As of 16:08 UTC, Tuesday December 12, 2017 the mid-market price on GDAX for 1 Bitcoin was $17,450.
My overall thoughts are this: Bitcoin will continue to see a run up into very large numbers in the 50K-100K region, then stabilize as buying rates finally settle down to match that of selling rates. Then, at some point along this stagnation, there will be a slow starting decrease downtrend in Bitcoin's price, then accelerating, bringing the price of Bitcoin back to its pre-boom levels (think: $5 - $10 range). When will this happen? I would say not within the next 5-10 years. But it's my long term feeling.