Bitcoin’s future is perhaps one of the most widely discussed topics in the crypto community. It has been pronounced “dead” exactly 371 times according to popular resource Bitcoin Obituaries. However, the world’s largest cryptocurrency by market cap has survived every attempt to be dethroned and continues to grow after each down cycle. Leaving behind technical aspects, here are 6 possible reasons why the future of Bitcoin is bright and why 2020 might turn out to be a very good year.
One of the most anticipated events will take place on May 17, 2020 – its halving. Following this event, the rewards that miners get for adding blocks to the network will be slashed in half, hence affecting the overall supply of bitcoins. This will be the third halving event in Bitcoin’s relatively brief history.
The first one cut the reward for a solved block from 50 BTC to 25 BTC back in 2012. The second one took place in June 2016 and cut the reward to 12.5 BTC. Naturally, the upcoming one will see the block reward reduced to 6.25 BTC per block.
As CryptoPotato reported, after each previous halving, the price of Bitcoin has increased substantially. This is not unexpected, as basic economics stipulate that when the supply of an asset decreases while the demand for it remains the same or increases, its price will go up.
Comparison to Gold
Traditional markets have had a rather tumultuous month so far, and an interesting comparison has arisen. The price of gold, the ultimate hedge from the stock market, has been rising significantly, and Bitcoin is not far behind. In fact, many proponents and industry experts have already touted the virtual currency as a “safe haven” from the declining traditional markets.
Facebook’s own cryptocurrency, which will supposedly launch in 2020, has given the community a lot to talk about. Though controversial, it brought a lot of attention to Bitcoin and cryptocurrencies in general. Even though it differs considerably from Bitcoin, the mass media was shown that cryptocurrencies are here to stay.
More importantly, Libra got the attention of regulators. We saw a couple of congressional hearings held on the matter in the US. Furthermore, even the head of the UK’s Treasury said that they don’t intend to stop Libra or blockchain technology in general.
Hyperinflation is a major threat to many countries, with Venezuela and Iran serving as prime examples in the last few years. While Bitcoin is far from mass adoption, cryptocurrencies may be the way out for some countries that are looking for a solution to their economic issues.
One thing that has to be noted about Bitcoin in particular is that it has a pre-programmed inflation rate. It’s 3.74% per annum and can’t change, unlike inflation in traditional fiat currency markets.
As mentioned above, Bitcoin has a long way to go before reaching mass adoption. However, news from New Zealand is promising. The fact that the country allows employers to pay salaries in Bitcoin and that they will be taxed in the same way says a lot. Moreover, there are quite a few marquee companies getting involved in the space, including Facebook, Overstock, and Twitter.
Because of Bitcoin’s first-of-its-kind protocol, only 21,000,000 BTC will ever be mined and come into existence. Since it’s not limitless, it possesses a similarity with silver and gold, which have limited supplies as well, even though their exact amounts are unknown. While potentially similar, Bitcoin can be transferred digitally with just a few clicks. In a digital world, this could be the biggest benefit of them all.
Moreover, as reported by CryptoPotato, Bitcoin is expected to eventually catch up with gold and silver in terms of its stock-to-flow ratio, potentially sending its price much higher.