Bitcoin’s creation was made possible by Satoshi Nakamoto’s white paper, and the mining of genesis blocks. The first bitcoins were sold at $1c USD each.
What is Bitcoin’s current worth?
The Bitcoin price has experienced dramatic gains in the last three years. This has fueled intense media speculation and hype, which has helped to create a sense of mystery and suspense about digital currencies. The Bitcoin price dropped significantly in 2018, and the token has been trying to find support and break down resistance in the markets.
From where does Bitcoin’s value come?
The recent price rises in Bitcoin might give the impression that cryptocurrency is a vacuum where new money appears to be “created out of thin air.” Investors can “get rich quick” investing small amounts into Bitcoin and seeing large returns.
But, this is not always the case. Bitcoin’s value depends on the investments and the use of its community. This is done by the distribution of new Bitcoins to the market via the process of mining.
We have seen in Is Bitcoin Money? that the main factors that create value are the ability of any currency as a store, a means of trading, and a unit of account. The US Dollar would be worthless if everyone around the globe stopped using it tomorrow.
Bitcoin price surge
Bitcoin experienced its first major surge in 2011 when it reached a value of $1 USD to 1 BTC. Media coverage attracted new users, which led to the price rising to $30 USD per 1 BTC. Then came a huge crash that saw it plummet to $2 USD.
Bitcoin has seen (arguably) three major price rises. Typically, Bitcoin is purchased by new investors. This allows the cryptocurrency to rise in USD terms as it gains popularity. With a plan for exit strategy.
An investor may have bought Bitcoin at $1 USD and sold it when it was $30 USD per coin. After exiting, the investor would have expected a return of 30x on their initial investment.
This has been happening in the past. Media around the globe have tuned in to see Bitcoin’s peaks, valleys, and technological foundation. The cryptocurrency’s novelty, attractive technological foundation, and willingness of investors to buy it has created what could be described as a publicity-price-loop. As Bitcoin becomes more widely accepted (or more public), we can expect the cryptocurrency’s value to increase in the future.
The use of Bitcoin will determine its value. Bitcoin is a digital gold that investors can use to purchase shares (Bitcoins), and then sell them later for profit when their value has increased.
Bitcoin is a peer to-peer currency network. However, it could be most beneficial when used as a traditional currency to buy goods and services. We’ve seen large companies like Microsoft and PayPal accept Bitcoin as a tender in recent years. This means that the cryptocurrency may gain greater value or ‘worth’ as it becomes accepted as a currency of exchange.
What is the future value for Bitcoin?
The question of Bitcoin’s future value has been a topic of debate for investors and pundits all over the globe. We may not be able to pinpoint a reliable value for Bitcoin.
Bitcoin’s nature of a peer to-peer currency network with its foundation in cryptography classifies it as a speculative asset. It will be up to investors, governments and institutions around the globe to decide the ultimate value for Bitcoin. They can signal their intention to buy or use the currency.
Bitcoin offers a huge potential to be a global decentralized network that parties can use to transact and settle transactions in an average time of 15 minutes. Bitcoin is independent of central banks and governments, so it is not subject to the same political pressures as fiat currencies.
The Bitcoin Consensus Value
Bitcoin’s value is, in fact, determined by consensus. The agreement of parties around to adopt it as a storage medium and exchange means will determine what bitcoin’s actual value.
Many people have different perspectives. John McAfee and other billionaire investors have stated publicly that one Bitcoin would be worth one million dollars by 2020. Warren Buffett, for example, has claimed that Bitcoin is just a bubble and will not be worth significant amounts in the near future.
Individual investors can also devise their own exit strategies, where they will be prepared to leave the market or ‘bank’ any profits made from their investments.
These factors, along with constant publicity over the time, will eventually determine the future worth of bitcoin. People around the globe can either adopt bitcoin as a standard or abandon it completely in favor of another cryptocurrency or established fiat currencies.
Bitcoin will fail
In the future, Bitcoin’s value could plummet and it’s worth be forgotten. The cryptocurrency may also become a ‘fringe currency’ that is used in conjunction with fiat currencies or adopted by parties around the globe as a global payment standard.
The biggest factors determining Bitcoin’s value in the near future are the willingness of parties and central banks to accept it as tender.
The next part of our Bitcoin guide will explore and how to buy or sell Bitcoin.