Can it be that cryptocurrencies are a temporary phenomenon everybody will forget about very soon? Should we all be as excited about Bitcoin as we are? Its highest price in 2010 was $0.39 and in 2017 it’s around $4,500. just imagine if you could go back in time and buy as many Bitcoins as possible back then. But let’s not speculate on the plot of the “Back to the Future” and get back to our current situation. Today it looks like Bitcoin will live forever and its price will increase at an exponential rate. Some even predict that it will be worth $20,000 by 2020. There are also enough of skeptics who believe that Bitcoin won’t last for a long time due to its spoiled reputation and technical drawbacks. So, is there a bright future for it?
Why so Expensive?
Before we go any further, let’s clarify the reasons why Bitcoin costs as much as it does today. Due to the essential logic of economy, high demand causes high prices. You’ve probably noticed that more and more people want to buy or mine Bitcoins to instantly become rich. There are far more people wanting to possess this cryptocurrency than the market can supply. The hysteria around the market of cryptocurrencies will most probably come to an end anytime soon as it won’t be something new and exciting anymore. If you look closely at the development of digital technology, you will come to the conclusion that there will definitely be a place for cryptocurrencies in the future. It is without a doubt a safe and fast way of paying bills and buying goods. With time, the increased volume of Bitcoins will lead to lower volatility. This will reduce the risks and make the currency more stable.
Bitcoin Is Far from Being Perfect
To make Bitcoin popular among our grandchildren, it’s buying process will have to become simpler than it is now. At the moment, everyone has to struggle from the complexity of exchanging money when it comes to Bitcoin. Even the most advanced services are struggling with making the process less problematic. The situation will have to change for the better.
There is also a threat of its regulation by the government in the future. Even though it can be a good thing in that the exchange rate would be more predictable, it has some serious disadvantages and possibility of unfair administration.
Lower volatility will attract more entrepreneurs and businesses to Bitcoin. We will probably face a chain reaction when smaller companies will follow the lead of the top market players and start incorporating Bitcoin as one of the possible payment alternatives. I guess we will see it after the exchange rates stabilize a bit as now Bitcoin is too sensible to every piece of information that gets publicly released.
The current price indicates one interesting thing as well. Bitcoin has good chances to survive as the currency seems to be too big to collapse. It is probable that the growth of cryptocurrencies will lead to the possibility of payments made via websites. Entrepreneurs will use it to pay salaries. There seems to be an endless number of opportunities for Bitcoin. The one thing we can know for sure is that Bitcoin and its analogs will not cease to exist anytime soon.
We all know what would Marty McFly do if he was our contemporary. Going back in time and purchasing Bitcoins for $0.39 would be a great way to become a millionaire without taking any effort. It is difficult to make any predictions as to how much the currency will cost in the next 5-10 years. The probable scenario is that its price will drop to $1,500-2,000 and stabilize. We’ll just have to wait to see which of the scenarios will become our reality as the experts have too many of them now.
Mark Watson is a tutor and specializes primarily in economics homework help. He holds a Master’s degree in International Economics and. Mark lives in Chicago.