Without a doubt, 2009 was a memorable year as multiple curious events happened at that time. One of them was the emergence of Bitcoin. The birth of the first-ever cryptocurrency turned the financial world upside down and made the whole planet realise that things would never be the same.
Because regular money experiences significant fluctuations for hundreds of reasons, there was a need for a new form of payment that carried the same functionality yet stood apart from the usual volatility factors. As a result, cryptocurrencies stepped into the game at the beginning of the 21st century.
Nowadays, any person can purchase a token via this site to buy Bitcoin online. Imagine that you earn your money with blood and sweat and now stand at crossroads trying to find the perfect investment strategy. Where should you store your coins? In the light of contemporary trends, you most probably get a lot of advice to purchase cryptocurrency, namely Bitcoin.
Such a situation is understandable, as Bitcoin is on everyone’s tongue. Billionaires, millionaires and regular citizens attempt to win this game and put their costs in the luckiest basket. Furthermore, digital money has identical functions to fiat money, like these:
- Bitcoin is a comfortable mean of exchange;
- Bitcoin can be used just like dollars, euros or hryvnias.
Nonetheless, the price you pay participating in this lottery is unpredictability. You may hardly find a wise man who tells you for sure what awaits Bitcoin in a year or a decade. As well as weather forecast, professionals only make assumptions. For instance, JPMorgan Chase & Co experts believe that this leading cryptocurrency might cost up to one hundred fifty thousand dollars in the nearest future!
Again, this is a hypothesis rather than a strict statement. Now, let’s dive into the ocean of factors that can lead to the success or fall of Bitcoin price.
The determinants of Bitcoin’s price
Anyone who regularly watches or reads financial news occasionally hears about the shifts in the Bitcoin exchange rate. Notably, the bright headlines blame different people and events. Do these reasonings sound unrealistic at times? The answer is yes. Nonetheless, the crypto market is quite peculiar, like a wonderland, where everything is possible.
The supply of tokens
Without a doubt, any person with basic economic knowledge from high school or college understands how supply and demand work. Even though Bitcoin is an innovative notion, it still falls under market laws.
This way, the fewer tokens there are, the higher price for them is. Whenever the miners obtain a new block of tokens, the cost of all the already existing ones automatically goes down.
The thing is, most goods in the world are renewable. On the contrary, the number of Bitcoins is limited. In fact, the estimated quantity of tokens is twenty-one million. Is it few or just enough? Everything is relative, and you have to remember about other factors.
Nobody knows for sure when people retrieve the last Bitcoin, but when this moment comes, the situation is unpredictable. By far, the exchange rate shifts every day, so making assumptions about years to come is exceptionally complicated.
The demand from general publicity
Mining frequency is only one of the influential things on the market of cryptocurrency. In addition, the hype in media is what makes Bitcoin’s price rise and fall. As soon as a celebrity expresses their opinion on the topic of digital money, the true chaos begins!
As a matter of fact, society tries to follow trendsetters, whether it is high fashion or financial decisions. You have probably heard about the changes that Elon Musk causes by his bold statements regarding different cryptocurrencies. One of the latest slumps in Bitcoin price happened right after the billionaire expressed negative thoughts on the ecology.
In short, everyone knew that mining harms the environment as much as a huge city. However, this fact started bothering society only when Musk openly spoke on the matter and claimed his loyalty to Dogecoin. Jokes aside, the pollution problem might be detrimental for Bitcoin in perspective.
As much as this currency stays divided from governments, chances are the tables would turn. Restricting policies have the ability to cause drastic price reduction. Such measures are logical in attempts to save the planet.
The problem with scales
As the fame of Bitcoin spreads through word of mouth, more and more people express their desire to make a fortune in the market of cryptocurrencies. However, the severe expansion of miners may lead to certain troubles. After all, the very essence of the Bitcoin system reckons with the growing complexity of mining.
Consequently, the high speed of transactions which is currently the competitive advantage for any cryptocurrency, can stop being a benefit for Bitcoin. Colossal capacities are a primary requirement for a system to process the operations from millions of users per day.
Because each day the number of Bitcoin fans seems to get only more prominent, a collapse is highly viable in the future. In addition, the competitive cryptocurrencies might push the current leader out of the market as well. Even now, such thing as Altcoin seems to gain power side by side with Bitcoin.
For sure, the mouth-watering possibilities allure the fans of cryptocurrencies from all over the world. Every one of them attempts to repeat the historical success of those lucky beggars who purchased tokens in 2009 or 2010.
Regrettably, entering the world of Bitcoin now means being ready to face the disastrous consequences of minor wrong decisions. Basically, nobody knows what the future holds for modern crypto investors. The number of volatility factors is simply too significant to comprehend, so the tomorrow hides behind a thick fog.
The boom of Bitcoin is as much probable as its downturn, and to have little idea about it is understandable. Humanity only gets acquainted with cryptocurrencies. People sometimes fear or experiment with them. Yet, such a form of payment has the potential to become as familiar and safe as fiat money.