Bitcoin (BTC -1.88%), the only cryptocurrency to ever exceed a $1 trillion market cap, has firmly established itself as the world’s most widely distributed and accepted digital asset. Despite Bitcoin’s amazing performance and proven history of price appreciation, critics believe it may one day soon be heading towards worthlessness.
Their main reasons usually point to the perceived lack of intrinsic value, lack of utility, and that it resembles a decentralized Ponzi scheme. This combination has led some to believe that the odds of Bitcoin heading to $0 are much more likely than it ever reaching $100,000.
In reality, when evaluating historical and current trends surrounding the adoption of Bitcoin and what it offers users, it becomes clear that the probability of Bitcoin reaching $100,000 is much greater than it ever going to zero.
The $100,000 case
One reason bitcoin is more likely to hit $100,000 than zero is due to increasing adoption, mainstream adoption and the growth of its network. In recent years, more and more individuals and institutions have started investing in Bitcoin, recognizing its potential as a store of value and medium of exchange.
Large companies such as Tesla And block have made significant investments in bitcoin, and more traditional financial institutions such as Black Rock and Fidelity have started offering Bitcoin-related services to their customers. This growing acceptance and adoption of Bitcoin could fuel demand and increase its value over time.
Additionally, if one looks at the history of key metrics related to Bitcoin’s network, it becomes clear that the cryptocurrency is thriving, although its price is still more than 60% below its all-time high. Statistics like the number of addresses with a positive balance, average transaction size, and mining difficulty (a measure of network security and decentralization) are all at or near all-time highs.
The main factor driving this growth and continued adoption of Bitcoin is related to its scarcity. Despite claims by critics that Bitcoin has no intrinsic value, Bitcoin derives its value from the fact that it is unlike traditional fiat currencies, which can be printed at will by central banks, which inevitably undermines the purchasing power of those that they own.
Those who hold bitcoin increase their purchasing power over time, unlike government-issued currencies. This is because bitcoin is limited to a total supply of 21 million coins and the rate at which new coins are created is halved every four years.
Should more people come to this conclusion, Bitcoin could become a real beneficiary thanks to the simple dynamics of supply and demand. As more individuals and institutions seek to invest in Bitcoin, less will become available and this could potentially increase its value. If governments around the world continue to print more fiat currencies in response to economic crises, as they have done in the 21st century, then it’s not hard to imagine that demand for a stable asset like bitcoin could outstrip its limited supply.
Finally, technological advancements and improvements to the Bitcoin network could also contribute to further value appreciation. For example, the implementation of the Lightning Network, a Layer 2 payment protocol that enables faster and cheaper Bitcoin transactions, could make the cryptocurrency more accessible and easy to use, and potentially increase demand as it proves more useful for everyday purchases.
patience is a virtue
Although the future price of bitcoin is impossible to predict accurately, the combination of these factors makes it much more likely that bitcoin will continue to appreciate in value over time rather than reaching zero. Considering this possible future makes investing at today’s prices all the more enticing. Bitcoin is trading at around $28,000 at the time of writing. So if it hit $100,000, that would mean a 260% surge.
There’s no telling when this might happen, and anyone who claims to know is only guessing. But as Bitcoin proves its resilience and attractiveness as a store of value, its potential upside looks very attractive over the long term.
RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin, Block, and Tesla. The Motley Fool has a disclosure policy.
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