Bitcoin had a value in the range of 0.001-0.005 in 2009. It rose 1000-fold to reach $5 by 2011. Now, six years later, it stands to reach another benchmark of $5000 which would place a market cap on bitcoin of $82 billion.
And this unprecedented move for any investment vehicle is true despite the massive headwinds that have attacked bitcoin since the start. In fact, bitcoin has "died" well over 150 times: https://99bitcoins.com/bitcoinobituaries/
Indeed, bitcoin has had many massive corrections:
Another 1000-fold move would put bitcoin at $5,000,000 or a market cap of $82 trillion.
While $82 trillion may seem impossible, let's examine how it could happen, even if the odds are low.
The logarithmic chart below shows the price of bitcoin since May 2012. Log plots make sense over long time frames especially when price increases exponentially. If we take the arrow 'C' with the slowest ascent when compared to 'A' or 'B', we see it took just over 5 years for bitcoin to rise from $5 in June 2012 to $5000 in Sept 2017, or a 1000-fold gain. Another 1000-fold gain in 5 years would put bitcoin at $5,000,000 with a total market cap of $82 trillion.
Based on bitcoin's price trajectory, this could be achieved by 2022. But of course, there are size factors that come into play the larger an asset grows. It is unlikely bitcoin would continue its exponential rise all the way out to $82 trillion. If it ever achieved this valuation, it would probably do so is asymptotic fashion, ie, its rise would slow the larger it became.
But this valuation in the distant future is not an impossibility. Given the massively transformational potential of blockchain technologies, the whole cryptospace should be worth tens of trillions if not more by 2022.
This is not difficult to see when you consider what the world is currently worth:
- Stocks/equities $70.1 trillion
- Real estate $228 trillion
- Outstanding debt $100.2 trillion
- Gold $6.5 trillion
Already we see ICOs offering a decentralized CPU (Golem), decentralized storage (Filecoin), decentralized gaming marketplace (Dmarket), decentralized insurance (Etherisc), decentralized exchanges (Bitshares), and decentralized web hosting (Substratum). We also have ICOs bridging crypto- and real economies by tokenizing shares of any asset (LAToken), unbanking the banked (OmiseGo), and banking the unbanked (HumanIQ).
Now of course, much can happen in the exponentially growing cryptospace over the next 5 years:
Bitcoin/blockchain could become a store of value replacing gold which would add several trillion dollars to its market cap.
Bitcoin/blockchain could start to replace fiat currencies especially given the record levels of global debt at present.
Quantitative easing continues at a record pace. 5000 years of human history shows massive debt has never been repaid. It's a race to zero between the dollar, the euro, and the yuan.
The growth of bitcoin benefits exponentially by following Moore's law.
Bitcoin is deflationary. Already, countries that are used to hyperinflation such as Argentina and Venezuela have been stockpiling bitcoin. The average fiat currency has a life expectancy of less than 50 years. Hoarding bitcoin would only accelerate its price.
Each of the above factors would help bitcoin get closer to $5,000,000.
Conversely:
Major countries such as China could block bitcoin's development or ban it outright. We saw last month (Sept 2017) how China has banned ICOs (though odds are they will come to some agreement with cryptocompanies looking to raise capital otherwise they would just move overseas). China has also restricted bitcoin trading on major exchanges.
Onerous regulatory burden. That said, governments realize companies will just move to jurisdiction-friendly countries if the burden is too great. And smaller governments see the cryptospace as a great way to get ahead. Indeed, major institutions and some governments are embracing blockchain technology.
Another major hack incident such as Mt. Gox. This is unlikely given the level of security now compared to then. And even if so, bitcoin would have a correction, find a floor, then eventually reach new highs once again.
Most cryptocompanies will go bankrupt, similar to dot.coms in the 1990s. Nevertheless, the market cap of the whole cryptospace should continue to exponentially rise.
Whether bitcoin ever reaches 7-figures in US$, one thing seems highly probable barring all-out nuclear war, terminator effect, or the teenage hacker in the next universe up gets tired of this simulation and turns us off. The cryptospace as a whole will be worth tens of trillions of dollars in the not-too-distance future. That would only require a 100-fold gain from where things stand. Last checked, the cryptospace was worth north of $150 billion. A 100-fold gain would put it at $15 trillion.
Image credits: https://blogtienao.com/tai-sao-gia-bitcoin-giam-de-tro-lai-muc-5000-usd/
http://az.co.za/news/bitcoin-price-comes-close-to-5000/
About Dr. Chris Kacher
- Appearances on major television, radio, and print programs https://www.virtueofselfishinvesting.com/news
- Bestselling author of "How We Made 18,000% in the Stock Market"
- Co-founder of Creative Group Trading Inc., a pro bono cryptocurrency platform with proceeds going to various cutting edge technologies aimed at space exploration, environmental protection & remediation, and AI/VR enhanced education
- Co-founder of http://www.virtueofselfishinvesting.com
- Helped to discover element 110 on the Periodic Table of Elements as well as confirm the discovery of element 106 which his team named Seaborgium after his UC Berkeley Ph.D. thesis advisor Professor Glenn Seaborg
- His music has charted on the iTunes music charts twice
- http://en.wikipedia.org/wiki/Chris_Kacher