This is a 2 part question and I will treat it accordingly.
To me price and value are two completely different things. For instance, I think water is more valuable than gold because it’s necessary for all life on Planet Earth. But gold certainly has a higher price than water because it’s not near as plentiful and still has demand. For the sake of your question I will discuss Bitcoin’s value and Bitcoin’s price.
Bitcoin’s Value
What are some of Bitcoin’s traits that give it value?
- Bitcoin is limited to 21 million coins minted by the year 2140. This keeps Bitcoin from experiencing problems like hyperinflation.
- Bitcoin is decentralized. It is ran by several miners and “full nodes” that are under various government jurisdictions and servers. This means that it’s next to impossible to shutdown Bitcoin without shutting down the whole internet and it’s much harder to hack than traditional banks and other centralized institutions.
- Bitcoin is open. Anyone can get a Bitcoin wallet and anyone can build on top of the Bitcoin blockchain without getting permission from a company or government.
- Bitcoin is international. Wherever you go Bitcoin is because Bitcoin is stored on the internet in a blockchain. Anyone who chooses to accept Bitcoin can accept it and it has value no matter what country you travel to.
I can take time to spell out why these features could be so valuable for people but for the purpose of this question I will let the reader think about the implications.
Bitcoin Price
The price of Bitcoin is determined by supply and demand. Bitcoin is a highly limited asset because it will never have more 21 million coins in circulation. There are 46.6 million millionaires in the world; this means there isn’t enough Bitcoin to go around for every millionaire to even hold 0.5 Bitcoin!
With so little Bitcoin available all it takes to make the price go up is demand. The more people that want to buy Bitcoin the higher the price will go. If you want to see the current Bitcoin price checkout OKEx.
Do I Believe Bitcoin is the Future?
Yes, I do think Bitcoin is the future. But I don’t think it’s primary use case is likely going to be a day to day currency unless serious changes are made to the protocol or a high quality second layer solution is implemented. For now Bitcoin is a store of value or a digital gold. I think in the next ten years it be a more popular store of value than gold because of it’s inherent advantages (but I still think gold is here to stay). I think that will end up being Bitcoin’s long term use case but it’s always possible it could become a full blown currency. Only time will tell.
