The future of Bitcoin
There is a lot of debate about what the future holds for Bitcoin. Some people are doubtful that Bitcoin will become a ‘mainstream’ currency, while some Bitcoin enthusiasts wish they had invested earlier in this cryptocurrency.
There are a number of reasons people are sceptical about Bitcoin but one that keeps being discussed is its lack of regulation. Bitcoin is a ‘peer-to-peer’ system, so it doesn’t involve a financial intermediary like a bank. The decentralised concept of Bitcoin is what makes people doubtful about Bitcoin and its security measures. At the same time, many people don’t trust banks and would like more control over their assets, which makes Bitcoin appealing.
So where is Bitcoin headed and what do the experts say about it?
Well in this article we’re going to answer all your questions including:
- What makes Bitcoin different from traditional currencies?
- What does history tell us about the possible future of Bitcoin?
- Why are some people hesitant about investing in Bitcoin
- Why are some experts doubtful about the future outlook of Bitcoin
- Does the traditional stock market give us an indication about Bitcoin’s future?
- Why do some experts think the future of Bitcoin looks promising?
- Will Bitcoin ever replace cash?
- What are the possible use cases for Bitcoin in the future?
- How can blockchain technology help us in the future?
- Is now a good time to invest in Bitcoin?
What makes Bitcoin different from traditional currencies?
Over the course of history, money has taken many forms from shells to precious metals. In today’s society money is in the form of bank notes, coins and digital money. Bitcoin is a new kind of digital currency that is a decentralised system, meaning that it is not regulated by any government or bank.
The whole idea behind Bitcoin was to create a currency that was separate from banks so that people were more in control of their own assets. Every time we pay for something on our bank card, it goes through our chosen bank, but that doesn’t happen with Bitcoin. Instead, Bitcoin can be received or sent to the person directly called a peer-to-peer digital network. No one controls Bitcoin and this lack of centralisation could lead to increased global equality over time.
Perhaps what sets Bitcoin completely apart from traditional currencies is that it’s a completely transparent trading system. This is because every transaction is stored on the blockchain which acts as a public ledger on the Bitcoin network. If you are part of the Bitcoin network, you can easily find any transaction made since the day that Bitcoin launched. You can see what is happening in real time, which helps to identify if something didn’t happen that was supposed to. We don’t have that transparency with central banks.
What is the advantage of having a peer-to-peer payment network?
A peer-to-peer (P2P) digital network means each user is an equivalent owner and contributor of the network. A user within the network can move Bitcoin from their account to another account without having to go through a financial institution. Transactions are cleared by Bitcoin miners, who secure the network and process every Bitcoin transaction. Each transaction is then recorded on a ‘blockchain’ that anyone can view. People’s names are not listed but their public Bitcoin address is.
What does history tell us about the future of Bitcoin?
We’re seeing paper money disappear. People aren’t carrying cash on them anymore. In our global age, there’s a need for a global currency like Bitcoin and it has the ability to democratise and level the playing field. Anyone with a mobile will be able to access financial services. Currently governments and banks run financial systems making it very inefficient and money isn’t able to move freely.
If we look at countries like Venezuela, people have lost their entire life savings because the currency there is now completely worthless. The luxury of having money in our bank accounts that won’t be taken away from us is something that a lot of people in the world don’t have. There are over 1.8 billion people in the world who have a smartphone but don’t have access to financial services. Bitcoin allows anyone with a phone to participate in the global economy and that could really change things in the future.\
Why are some people hesitant about investing in Bitcoin?
Rather than writing off crypto critics, it’s good to make an effort to understand why people are quick to dismiss Bitcoin. One common reason is that there is an assumption that Bitcoin doesn’t hold any real value, but the same could be argued about money. It is just paper after all. However, because Bitcoin can’t physically be seen, some people don’t trust it.
Another reason is simply that people don’t understand what Bitcoin is and how it works. Bitcoin is still relatively new and a lot of people who have invested in it have an interest in blockchain technology. As with any new technology, it takes some time before people adjust to using it and Bitcoin is no different. It’s about educating people about its potential.
Why are some experts doubtful about the future outlook of Bitcoin?
Some experts doubt that Bitcoin will ever take off and believe it’s a bubble that’s about to pop. The price of Bitcoin has risen and fallen over time, just like regular stocks but some people just think that Bitcoin is a trend that will disappear eventually.
Another reason is that Bitcoin payment confirmations can take around 10 minutes, whereas credit card companies can handle payments around the clock. There were reports that during the height of the Bitcoin craze in 2017 that some payment confirmations were taking hours.
Many people also feel more comfortable when their assets are being overseen by the government, which is why they stay away from Bitcoin. Perhaps people would be more willing to invest in Bitcoin if governments or a central authority were more involved.\
Does the traditional financial market give us an indication about Bitcoin’s future?
In 2019, a report from Digital Asset Data showed that over a three month period, Bitcoin was moving in tandem with gold. While no one can say whether this is significant or not, it does provide evidence that there is a maturing view of Bitcoin as a store of real value along with gold. Perhaps it could also signal that people are investing in Bitcoin as a safe-haven asset during global uncertainty compared to traditional stock markets.
Bitcoin vs gold in 2021
Many people start buying gold during periods of economic uncertainty, such as a pandemic and last year that trend emerged again. However, is Bitcoin seen to be as stable as gold? Well, it seems people do see Bitcoin as a safe investment because both gold and Bitcoin prices have gone. In fact both reached a monthly average correlation of 70%, which is an all-time high.
Gold and Bitcoin have continued to rise sharply throughout last year, driven by fiat currencies being printed by governments and central backs, in a bid to keep their economies afloat in the wake of the COVID-19 pandemic.
DBS Bank said in a report on cryptocurrencies that a “pandemic-led acceleration of adoption” of Bitcoin will happen. People are concerned about the value of fiat currencies and are wondering whether they should hold onto their Bitcoin in addition to gold as a safe-haven currency.
Why do some experts think the future of Bitcoin looks promising?
When cryptocurrency first came on the scene, many people didn’t think it would take off and thought it was a joke or some kind of financial scam. However, Bitcoin is still around today, and it’s shown the naysayers that it’s here to stay. The more people have learned about Bitcoin, the more they have discovered that it is credible and an exciting asset to add to their traditional financial assets. Other people see it as a reliable way to make an income and unit of exchange.
Blockchain technology’s characteristics include automation, decentralisation and transparency and this can be applied to many different industries. For example, blockchain technology could be leveraged in healthcare to securely store patient medical records with the confidence that those records cannot be changed. It is not only Bitcoin that is promising but the technology behind it.
Will Bitcoin ever replace cash?
In 2020, a cashless world was accelerated by the COVID-19 pandemic. The use of ATMs significantly dropped, and many shops were not accepting cash at all due to the fear of passing on the virus from exchanging money. While cash certainly isn’t disappearing completely any time soon, if people were to start using Bitcoin to make payments, infrastructure would have to be developed to facilitate that.
Governments would also suffer as they will no longer have the same level of control over their country’s currency. The thought of a cashless world is a real prospect, but it will take time for things to change.
What are the possible use cases for Bitcoin in the future?
Detecting criminal activity
While Bitcoin has received a bad rap in the past from the media as being used by criminals for money laundering and tax evasion, it can be used as a force for good to catch criminals. This is because criminals are beginning to learn that Bitcoin isn’t really anonymous since money trails are recorded in a blockchain which can be accessed by anyone who is a Bitcoin user. This history is permanent and has a list of all your transactions. Some companies are working with governments and crypto exchanges to identify cases of fraud and money laundering.
Bitcoin is a great platform for donations because it’s highly transparent, so donors can be sure that their contribution is going to the person intended without banks or governments taking money without their knowledge. There are currently humanitarian aid efforts in countries like Venezuela and Rwanda where Bitcoin is being used to make sure money is being given to the people who need it most.
Bitcoins are great for international payments because blockchain technology allows it to be securely sent. Intermediaries often make this process time consuming and automating the process on the blockchain makes it much more efficient. It’s also cheaper to do international payments with Bitcoins because there are no bank fees.
How can blockchain technology help us in the future?
Blockchain technology has the potential to stop election fraud and increase the number of people who vote, as each vote would be stored as a block on the blockchain. This would be incredibly hard to alter votes and provides greater transparency in the electoral process. Voting using blockchain technology was tested during the November 2018 midterm elections in West Virginia.
There are many applications that blockchain technology could be used for within healthcare including tracking drugs in the supply chain, managing patient data and increased security. Hackers often target hospitals because of the value of their data and reliability of the data they store. Using blockchain technology could significantly improve patient care, increase progress in medical discoveries and ensure medication circulating is authentic.
Improve food industry
If an outbreak of a foodborne illness happened, blockchain technology would allow grocery stores or restaurants to track affected items back to their original source and remove those contaminated products immediately from their shelves, menus and supply chains. It would also allow companies to verify how authentic their products are to correctly label food as “organic” or “local”.
Is now a good time to invest in Bitcoin?
As with any market, nothing is for sure. No one can say with absolute certainty whether the price of Bitcoin will go up or go down. Since Bitcoin came into being, its value has generally increased quickly, followed by a slow decrease until it stabilises. While some people think it’s only being used in the darkest parts of the web, it’s becoming more mainstream now and for people who don’t trust banks or their government, Bitcoin offers a great alternative. In March 2017, the price of Bitcoin momentarily surpassed gold and more than 260,000 stores in Japan now accept Bitcoin as payment. The future is looking bright for Bitcoin.
Are there other cryptocurrencies worth investing in?
Yes, Ethereum is another popular cryptocurrency especially among enterprises. Ethereum is used in payment systems, crowdfunding, gold investing and cloud computing. Users of Ethereum include Accenture, Microsoft, Intel, some banks and several blockchain start-ups.