Critical determinants of Bitcoin's future. Image credit: AdobeStock
Humans have used Bitcoin since 2009 when Satoshi Nakamoto introduced it as the first digital asset powered by blockchain technology. The goal was to have an electronic or digital alternative to the conventional payment system. But Bitcoin has become more than a payment method.
While some people use it to pay for services and commodities, others see it as a crypto asset. Thus, they purchase Bitcoin and hold it in their crypto wallets, waiting for its value to increase and selling it at a higher price for profits.
Over a decade after its introduction, Bitcoin has become one of the most popular digital assets. Also, it has given rise to a new asset class called altcoins or alternative coins. There are now more than 5,000 cryptocurrencies in existence. But Bitcoin still dominates the cryptocurrency world.
Some countries, like China, have developed their cryptocurrencies. Today, the Chinese people can trade digital Yuan. However, Bitcoin has dominated the crypto industry since its inception. According to bitcoin-motion.cloud when people invest in Bitcoin, it is usually because they intend to keep it for a long time.
Its price has seen wild swings, making it a volatile asset. Despite these fluctuations, many experts believe Bitcoin still has a bright future. Here are some of the key determinants that will shape Bitcoin’s future.
One of the critical factors that will determine Bitcoin’s future is its use cases. Currently, people and organizations use Bitcoin as a store of value, payment method, and investment vehicle.
The use case that has generated the most buzz lately is Bitcoin as a store of value. Its increasing demand and limited supply make many believe Bitcoin can become digital gold. Some even refer to it as digital gold.
One of the key benefits of Bitcoin is that it’s not subject to inflation. The supply of Bitcoin can’t exceed 21 million tokens, and about 18.5 million are in circulation. This limited supply makes Bitcoin a scarce asset, similar to gold.
Demand for Bitcoin is also increasing as more and more people become aware of it and its potential use cases. Institutional investors are also starting to invest in Bitcoin. For example, Square, a payments company, invested $50 million or 1% of its total assets in Bitcoin.
Other companies such as Tesla and MicroStrategy have also invested in Bitcoin. These institutional investors are helping to increase the demand for Bitcoin, which is one of the key drivers of its price.
More companies might invest in Bitcoin, and more people to use it as a store of value. And this will help to increase the price of Bitcoin and make it more mainstream.
Another vital factor determining Bitcoin’s future is its role as an investment vehicle. Some people see Bitcoin as a digital asset with high potential returns. And this has made it a popular investment for retail and institutional investors.
Investors are attracted to Bitcoin because it has performed well in the past. For example, in 2017, the price of Bitcoin increased from about $1,000 to almost $20,000. And this was a return of over 1,800%.
In 2020, despite the COVID-19 pandemic, Bitcoin’s price increased from about $7,000 to over $11,500, a return of over 60%.
Investors are also attracted to Bitcoin because it is a new asset class. And this means there is a low correlation between Bitcoin and other asset classes such as stocks, bonds, and commodities. And this makes Bitcoin a good investment for diversifying a portfolio.
Bitcoin will most likely continue to be an attractive investment vehicle for retail and institutional investors. The increasing demand will help to drive up the price of Bitcoin.
Another use case for Bitcoin is as a payment method. Currently, a limited number of businesses accept Bitcoin as a form of payment. But this is changing.
As more individuals become aware of Bitcoin, we can expect more businesses to start accepting it as a form of payment. And this will help to increase the demand for Bitcoin and drive its price.
In the future, we can expect more and more individuals and enterprises to use Bitcoin as a payment method, which will help make it more mainstream and increase its price.
The key determinants that will shape Bitcoin’s future are its use cases, investment potential, and payment acceptance. As more individuals learn about Bitcoin and its potential uses, we can expect the demand for Bitcoin to increase. And this will help drive up the price of Bitcoin and make it more mainstream.