Some people said that 1 bitcoin could get to value more than $ 1 million!
Others say that the coin it set to go on its way to zero. What should we believe and what are the possible scenarios here?
Before we can see some scenarios about the BTC value, we have to talk a little about a simple term: market cap. This term can also be used when talking about a single company, or about a whole market, like stock markets, gold, or cryptocurrencies. If we are talking about a company, the market cap basically means the price of the whole company. It is calculated by multiplying the total number of shares in circulation with the price of one share.
When it comes to gold, the market cap is the price of one kilogram of gold multiplied by the total amount of gold in the world (measured in kg). In bitcoin, the market cap is the price of 1 bitcoin multiplied by the total number of mined bitcoins.
I have two examples, of gold and bitcoin, let’s see how these two compare, at 18.06.2018:
- Gold Market is $7.8 trillion (that is $ 7.800 billion)
- Bitcoin market cap is $ 111 billion
- Crypto market cap (approx. 1.500 coins) – $ 278 billion
- The value of all the money in the world – $ 90.4 trillion
The world started talking more and more about crypto last year, but as you can see, the market value of cryptocurrencies is tiny compared to other markets like gold, stock market, or money. Even at its peak in December 2017, the crypto market was around 700 billion, or about the wealth of the top ten people in the world.
We are talking here about assets with high functional value and with great potential, used worldwide. It is important to understand that in the global economy, for an asset to have value, it must have a limited margin and be useful. Bitcoin really has a limited reserve. There will never be more than 21 million bitcoins. Unlike money, which is printed at the discretion of governments.
When we talk about functional value, bitcoin is net superior to both money and gold. The main features of a coin are:
- Storing value
- Exchange asset (easy to use for payments)
- Measurement unit – can be divisible and countable
At each level, bitcoin is incomparably better than classic money (fiat) and better than gold. Considering these things, I have no doubt that we are just starting out with bitcoin adoption. By the way, less than 0.5% of people today have bitcoin.
Wherever you look, beyond the temporary decline in price, absolutely normal in any young market, the trend is growing.
One of the most important catalysts for the bitcoin price is the value of investing in new projects in the cryptocurrency space. It is in an exponential growth, which means that smart investors and visionary entrepreneurs see the huge potential of this technology.
As they will help develop better products and services in this area, the value of bitcoin and other solid cryptocurrency will grow enormously. Also, some of the best software developers in the world are leaving companies like Facebook, Google and Apple to work on blockchain projects. I expect that in the years to come, money from other markets, such as gold, shares or derivatives, will massively migrate to the cryptocurrency market, and this event will send prices up a lot.
Probably the next boom will during this year, when it comes to regulating cryptocurrencies.
Governments are now trying to understand these assets better; they look for ways to legally fit them and set rules for charging profits made in this space. Plus they try to protect amateur investors, which will lead to the disappearance of fraudulent cryptocurrencies that have invaded the space in the last months.
Regulation is a good thing because once this process is completed, all financial institutions that are now waiting will have a legal framework to pour massive amounts of funds into the crypto space.
In the first stage, governments have not paid much attention to cryptocurrencies and ICOs have flooded all of our Facebook feeds (about 80% of them have failed). Now we are in the second stage, where they can no longer be ignored and the regulations are in progress. There will be a third stage, where massive amounts of money will enter the crypto space.
Those who will be well positioned before that moment will make true fortunes. If you know where to look, things are obvious:
We are just starting out and the bitcoin value can rise far from today’s level.
But how much?
Nobody knows exactly.
At this point nobody should bet his house on bitcoin, but he should not even ignore it; because the reward can be huge. There is also a risk that a strong growth in the crypto market may mean a surplus of classical money and a strong devaluation. Some say it’s even possible to completely eliminate physical money and everyone to use cryptocurrency.
That will not happen tomorrow.. But given the clear preference of the young generation for cryptocurrency against classical money…
As more and more people will buy crypto, money will decrease their value. But cryptocurrencies will appreciate even more and become more stable. Those who do not have any coins and value their money in physical money will panic and they will rush to get rid of money and buy some. Until the physical money gets to be good either as hygienic paper. This is not a SF scenario. It’s already happening in some countries like Venezuela or Argentina.
Maybe soon enough I will write about the first government announcing the renouncement of the national currency and the switch to crypto. In conclusion, I see a small risk and a possible enormous reward for those starting today to buy bitcoin.