Bitcoin is booming. As of writing this article, the current value of a single bitcoin is around 60,642 US dollars. It was just 6861 USD exactly one year ago. Apparently, it has grown almost 10 times within a span of a single year. Doing the math, if you invested $100 in bitcoin on 12th April 2020, you will be having almost a thousand dollars now. Crazy right? But, we’ve also seen huge drops in the value overnight.
The drop in the value is not small as well just like its growth. Some say, Bitcoin is nearing its end, it’s just a bubble waiting to be popped. Some say it is the future. The future to a new way of exchanging money without a third party, their fees, hassles, time, etc. in the middle. Even though the recent growth is more likely to be supporting the latter argument, should we still be concerned? Is it too late to take part in this, what seems like a financial revolution? Let’s dive deeper.
Bitcoin was invented back in 2008. We all know about that. Needless to say, like anything else, the beginning was slow. According to Coindesk, on October 3, 2013, which is the oldest price detail available on the website, Bitcoin was worth around 108 USD. So, even after around 5 years of existence, compared to the huge growth it had in the past 8 years, the growth rate was significantly less, or should we say, almost ignorable. So, how did it reach more than 60 times the value in the past 8 years?
Then what caused the surge in the value of the first digital currency the world has ever seen? Well… There are several reasons. The most important one is, of course, people believing in this whole digital currency technology. As more people started investing time in mining Bitcoins, it got harder to mine over time. On top of that, the process known as the “Halving event” that happens once in 4 years cuts down the reward for mining Bitcoins by half also contributed towards the high demand. Naturally, like any precious thing in the world like Gold, Silver, and such, when the abundance reduced, the value increased. In case, you didn’t know, yes, there will only be a limited number of Bitcoins in circulation which will be ever mined, 21 million!
In addition to this, going deeper into “people trusting the system”, many big names has already spoken positively towards the whole idea of Bitcoin. Elon Musk is one of them. They even started accepting Bitcoins as a payment method for Tesla.
When visionaries spoke positively, more and more companies and people started investing in the currency made it even popular, thus more valuable. These are just a few factors, but there is a lot more to explain.
What Decides the Value of Bitcoin?
Unlike the traditional form of payments or currencies that are controlled by governments or banks, Bitcoins are pretty different. The factors that decide the value of Bitcoins are completely different from that of our currencies. Some of the most influential factors that can hugely impact the value of a Bitcoin include the availability of the Bitcoins left to be mined, the cost of mining it, other competing cryptocurrencies, the regulations set by the governance, etc. In fact, as more people start investing in it, it will also help the popularity, thus the trust in the entire cryptosystem over traditional payment methods.
Is Bitcoin the Future?
If we solely depend on the graphs, Yes, it seems like so. But nobody can predict the future. As we already mentioned, for the common people who are not from a business, programming, investing, or analytical background, it can be hard to determine whether it is a good idea or not to invest their hard-earned money in something “virtual” at least for the moment. But when we analyze the growth of the cryptocurrencies, not only Bitcoin but as a whole, we might reach in a conclusion that even though there are some drops once in a while, the prices are booming rapidly.
So, if things are going as it has been over the past few years, Bitcoins or in other words, digital currencies could even replace the traditional currency system we currently depend on. Apparently, it is much faster, secure, less costly, and has a lot more benefits than the traditional systems in place.
Are you Late?
If you compare the current value of Bitcoin to what it was a couple of years ago, yes, you are too late considering the profit you would have made. However, things don’t work like that. We cannot always be sure about how things will be in the future. As the growth in the value of Bitcoin is pretty similar to the minerals available on the planet that is limited in amount, the value will keep increasing as the availability decreases So, as any of those materials don’t have any finite value, Bitcoins also doesn’t.
So, if you have some money lying around which you are not dependent on, it might not be that bad to give it a try. But, you shouldn’t risk anything that you solely depend on just for the sake of profiting from Bitcoin. If you ask our opinion, if we had the chance, yes, we would invest some. Don’t get scammed though.