On December 15 2010 The Underground Economist published an article titled . “Why Bitcoin can’t be a currency”
The writer argued over lack of mechanism in Bitcoin for dealing with fluctuations in demand and that the only thing keeping Bitcoin alive was its “novelty”. The price of Bitcoin back then was $0.23.
In 8 years since the publication of that article the price of Bitcoin has risen to an all time high of $20,000 in December 2017 before pulling back. In this time, Bitcoin has been declared ‘dead’ hundreds of times. You can view some 293-plus articles from the Bitcoin Obituaries on 99Bitcoins.com
Bitcoin has been with us for almost 10 years now, however most people still fail to recognise the key points that make Bitcoin so valuable.
Bitcoin is a fundamental commodity created from tangible proof of work, this is why it has been compared to gold. However where Bitcoin succeeds over gold is in its attribute as a store of value and a better medium of exchange.
Gold has low volatility, it hasn’t moved much in price in past 10 years either. Bitcoin on other hand, while being very volatile has provided returns of 100,000x in the same time frame.
If you want to move your gold it takes time, resource and planning, On the other hand you can move as little or as much Bitcoin as you like anywhere in the world and the transactions are fast and cheep most of the time. While the network can slow down with increase in transaction build up new solutions such as implementation of the lightning network aim to solve these issues.
Finally Bitcoin will remain resilient because it is Permission-less and Censorship resistant.
When you buy a coffee with your credit card you are asking your banks permission to allow you to use your money to buy the coffee. Because of Bitcoins decentralised nature, there is no third-party involvement thus you transfer you Bitcoin directly to the coffee vendor and no one can stop you or block that transaction.
Bitcoins decentralised nature also makes it censorship resistant. There is no figurehead, no central office, the government can not simply come and shut down Bitcoin. The network is spread across thousands of nodes across the world. It would take something drastic such as a global catastrophic event or complete shut down of the internet in order to stop the evolution of Bitcoin.
It is important to understand the underlying technology of Bitcoin. Anyone who decides to join the space should do so with aim of actually using the technology and teaching others. Anyone who holds Bitcoin will agree that the price can be a bit of a roller coaster and so its always fun to speculate. So with all these things in mind, can the price of Bitcoin go to $1 Million by 2020? Considering the past 10 years have been fruitful, many are wondering how high can the price can really go?
Well, as of writing this article, Bitcoins Market Cap is $145Billion. To give you a little comparison here are the numbers showing where some of the worlds largest amounts of money currently resign.
Bitcoin - $145 Billion
Amazon - $402 Billion
Apple - $730 Billion
Gold Market Cap - $8.2 Trillion
Stock Markets - $66.8 Trillion
To put it straightforward, Bitcoin still has room to grow and we are still in the early stages of this shift. As mentioned at the beginning the price of Bitcoin in December of 2010 was $0.23, in December of 2017 the price was $20,000, a x87,000 increase in 8 years. Although it is unlikely we will see the same gains in the next 8 years, one can have not doubt that Bitcoin never fails to surprise.
If you ask Tone Vays who does Bitcoin technical analysis, when is a good day to buy Bitcoin, he will tell you that yesterday was a good day to buy Bitcoin.
But lets get back to the topic, realistically can Bitcoin reach $1,000,000 by end of 2020?
Ofcourse no one knows and everyone who makes their best guess can be grossly off because it is unclear how the markets will react to news that hasn't happened yet. 2 years is a long time in the crypto-verse thus it makes it harder to predict the markets in long time frames.
This hasn’t stopped some top analysts and investors in the space from making their own guesses. What their estimates all have in common is that they put Bitcoin at around $1,000,000 in next 2-7 years. Some estimates even cite Bitcoin at hundreds of millions of dollars in extreme cases such as it becoming a single world currency
But not getting ahead of ourselves, just for fun, lets look at one prediction from John McAfee who said that Bitcoin will reach $1,000,000 by 2020. I picked his prediction only because someone actually made a site Tracking the Price of Bitcoin in comparison to the $1M by 2020 prediction.
As the chart shows we are actually on the trend line for the price prediction, however as we zoom out we can see how far the price has to climb in order to reach $1 Million by 2020.
2017-2018
2018
2019
2020
How the chart works – From the date of the prediction made by McAfee on 17 July 2017, Bitcoin needs to grow at a rate of 0.484095526% per day until 31 December 2020 when it will reach its $1,000,000 target price. As mentioned, we are actually on the price prediction trend line 6 month post prediction.
However the curb gets really parabolic on the longer time frame. It looks like that because it displays fixed percentage per time but is actually a regular Growth Curve.
You can play around with the chart here
One final point to make in regards to Bitcoin is its scarcity. There will only be 21 Million Bitcoins and we currently have 17,035,438 Bitcoins in circulation. As demand grows and number of available Bitcoins depletes, the short term price can go parabolic.
2020 is also an interesting date as it is the year of the next Halving which will occur on 29th of May 2020. Halving is an event that takes place on the Bitcoin network that only happens every 4 years. It results in miners rewards cut in half, meaning miners only earn half as much Bitcoin after the event. It is hard to say how the miners will react to this but the price of Bitcoin has historicity benefited from these events.
Lets meet in the comments section in December of 2020 to discuss this article.