Categories: Crypto Currencies

The Future Of Bitcoin: A Profitable Investment or A Big Bubble?

What is Bitcoin and why do we need it?

First of all let’s define Bitcoin.

Digital currency is the kind of money that you can’t just hold in your hand. It is not physical currency and is not accepted by most shops on your streets and restaurants.

Bitcoin is an electronic cryptocurrency (the prefix “crypto” got it from cryptography, or encryption), that is, the same money as euros, dollars : you can make purchases on the Internet (at those sites where it is accepted), trade on exchanges, etc. The main difference between bitcoin and national currencies is decentralization. It does not have its own “central bank” – no one controls it, cannot print it, fake it or devalue it. In addition, the same dollar is backed by GDP, bitcoin – by nothing.

Basically, Bitcoin and its derivatives are simply sets of software codes with which digital tokens are generated and transactions with them are tracked. At the same time, the digital code completely excludes the possibility of forging a token or using it twice. Another point: Bitcoin has value only as long as people agree with it.

Where did Bitcoin come from?

The original Bitcoin program code was outlined in the White Paper in 2008 – a document that spells out all the conditions for a blockchain project. Bitcoin was created by a person or a group of people who used the pseudonym Satoshi Nakamoto, which has become one of the most famous names in recent times. Who is hiding under this pseudonym – until now no one knows, despite several attempts by different people to appropriate it or even take out a loan in the name of Satoshi Nakamoto. Different versions of which the creator of Bitcoin really is are constantly being put forward, but none of them has been fully confirmed. By the way, bitcoin “units” are named after the creator – one bitcoin is equal to 100,000,000 satoshi.

The key idea behind the creation of Bitcoin was blockchain technology – a publicly available and virtually anonymous virtual ledger that records all transactions that take place on the Bitcoin platform.

Also read: Where Does Cryptocurrency Value Come From?

Who performs function of the bank for Bitcoin?

Everything happens on the basis of an agreement on a decentralized network. There is no single coordinating center here. Bitcoin transactions can be made through sites that support the so-called electronic wallets – any user can install an application for a crypto wallet by first depositing funds. Then, when new transactions are carried out, they are connected and form blocks, after which they are broadcast to the network for confirmation by Bitcoin miners.

Why there is a need for Bitcoin?

Even self-proclaimed experts cannot reveal the secret of bitcoin. However, this does not stop investors from investing in what is often called the largest bubble in modern history.

If you happen to ask these investors why bitcoins are needed, most likely you will see only embarrassed looks and raised eyebrows. Gold, for example, is used in mints, in jewelry, as a conductor for high-precision electronics and as a material for medical implants. Determining the spectrum of Bitcoin use is somewhat more complicated. If bitcoin is a true commodity, its value should not only consist of the value of an investment vehicle. So what is Bitcoin used for?

  • As an alternative method of payment
  • As an alternative to a debit card
  • As a permanent register of transactions
  • Instead of fiat currency

Why is Bitcoin valuable at all?

For understanding, you can draw an analogy with gold: it is valuable because it is difficult to mine, and its reserves are limited. Bitcoins – too, there are only 21 million of them – this is how it was originally written in the code. More than 16 million have already been mined. The further you go, the slower and more difficult it is to get them, as the calculations take more and more time.

Future of Bitcoin

Over the years, bitcoin has come out of the underground, the governments of the largest countries and serious financial organizations talk about it, the most influential media in the world write about it.

Bitcoin has every chance of hitting $ 146,000 in the long run and competing with gold. At the same time, the market capitalization of the cryptocurrency should grow 4.6 times from the current $ 591 billion in order to match the total volume of private sector investments in gold. In addition, the volatility of bitcoin must approach the fluctuations in gold prices in order for more institutional investors to believe in the cryptocurrency.

Citibank: Bitcoin will be $318,000 by December  2021

Citibank Managing Director Tom Fitzpatrick is more optimistic: in his opinion, bitcoin could rise in price to $ 318,000 by December 2021. He compared the exponential movement of the bitcoin price in 2010-2011 with the gold market of the 1970s. The value of the precious metal began to grow rapidly after, in 1971, US President Richard Nixon refused to peg the dollar to gold.

In general, predicting the future of bitcoin is becoming more difficult, analysts agree. The rise in prices for it may turn out to be unstable, since now it is mainly caused by rush demand from investors.

But for example the UK Financial Conduct Authority is asking citizens not to invest in bitcoin in order not to lose all their money.

For Bitcoin to become the new gold equivalent, institutional money and regulation must go into it.

European Central bank calling for regulation of BTC. The reason is linking the usage of BTC to global criminality and money laundering.  In the nature of transactions lies anonymity and because of it many criminals rely on BTC. While Bitcoin is largely unregulated across the world, global standards started to emerge (standardized AML requirements).

Also read: Is Bitcoin Cash a Good Investment in 2021?

Deutsche Bank predicted “century of disorder”

One of the largest banks in the world is confident that a new era is beginning in human history, inflation and the influence of the younger generation in society will grow. This could have a beneficial effect on the cryptocurrency industry. The era of globalization is coming to an end; it is being replaced by the “age of disorder”.

Deutsche Bank predicts that inflation will rise significantly in the coming years. Central banks will continue to print money to deal with crises and surging debt. The injection of liquidity into the markets and the economy will lead to a gradual depreciation of national currencies. Such a policy will play into the hands of bitcoin and other cryptocurrencies.  Bitcoin emission is limited to 21 million coins, and the rate of their production drops every four years thanks to halving. This makes the main digital coin inflation proof.

Olivia Chloe

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