The bullish case for Bitcoin, price wise, is that in the future, a bitcoin could have a price valued in the millions in the long term. Of course, this is speculation and there are many factors at play.
Speculation of scenarios that would significantly increase the price of a bitcoin include:
- growth in the gold and commodities market
- growth in the real estate market
- growth in the stock and bond market
- growth in the store of value market
- growth in the reserve currency market
- growth in the currency market
- continued inflation and hyperinflation in all countries
- introduction of negative interest rates
- continued corruption and growing dis-trust of specific central entities
- the ever shrinking choice of places to truely protect yourself and your savings
- the era of moving to digitize everything
Many of these markets are valued in the trillions. Bitcoin in early 2020 was valued around $160 billion USD.
Since Bitcoin was released in 2009, it has had 3 notable bull cycles. One in 2011, 2013 and 2017.
In 2011, the price peaked at $31.91 USD and corrected to $2.
In 2013, the price peaked at $1242 USD and corrected to $206.
In 2017, the price peaked at $19, 783 USD and corrected to $3272.
Bitcoin is the only thing on this planet that is both digital and scarce. There will never be more than 21,000,000 bitcoin in existence and that is baked into the code. No central entity can change this. Of the 21,000,000 bitcoin, over 18,369,000 have already been added to circulation. This means over 87.47% of all bitcoin that will ever exist are already in circulation.
It's believed that a few million bitcoin have been permanently lost throughout time due to forgotten passwords, lost wallets, etc.
Over 10,000,000 bitcoin have not moved for over a year.
Below is the popular stock to flow model created by @100trillionUSD. Stock to flow measures the Bitcoin price based on the amount of circulating bitcoin and rate of new bitcoin being added to circulation.
Bitcoin has a predictable issuance schedule of new bitcoin coming into circulation. The issuance cuts in half every 4 years. There has been 2 quantitative hardening events so far, one in 2012 and 2016. The 3rd event will be on May 12th, 2020 and will reduce the issuance from 12.5 bitcoin per 10 minutes to 6.25.
Bitcoin is still a baby in money terms - it has only been around since 2009 and was relatively unknown until 2013. Established monies have been around for hundreds or even thousands of years.
Because of this, it's still in price discovery mode and will be for the forseeable future. It doesn't have that trillion dollar liquidity yet. But the volatility is not just necessary but required for the adoption phase of Bitcoin. This volatility is what brings in new users, investors. liquidity and builders into the space in cycles. It also clears out the scammers, opportunists and "weak hands" when the bear market hits them hard. People should only fear volatility that trends downwards. Bitcoin's price volatility has been trending "upwards and to the right" since day 1 in 2009.
Many people don't see Bitcoin as an investment, they use it as a long-term savings technology. You are selling your fiat for Bitcoin. You are trading something that is infinite for something finite. You are storing your wealth in the worlds most secure, self-soverign bank that exists on this planet.
Find a service to purchase bitcoin here!
- You can buy a fraction of a bitcoin.
- Buy responsibly.
- Store Bitcoin on your personal wallet.
- Some services have DCA.
- Don't day trade, just HODL.
- If you're still asking "what should I buy?", you still don't get it.
Let's try to keep it real, when you buy an altcoin you are gambling. You see tens or sometimes hundreds of random altcoins listed on an exchange. You don't know what any of them do, how any of them are different from one another, who were given a very large stake of coins for free, how many coins will ever exist, etc. If you are one of the few that happen to do research on an altcoin you want to buy, all you will find are other people that pretend to know what they're talking about.
If you do buy an altcoin it's because you saw a really cheap price and want to test your luck.
Everyone and their mother create altcoins now. Bitcoin is open-source which means that anyone can copy and alter the code to create their own coin - enter the altcoins, a.k.a. shitcoins. Altcoins are experiments - there are thousands of them and 99% of them have no utility except for an attempt to make someone a quick buck. Experimentation is great but pre-allocating a ton of the coins to you and your buddies and pumping your bags strictly for profit when your experiment has absolutely no use-case, security, decentralization, network effect, competent developers and is destined to fail is not only disgraceful but rampant in this space now. If it is an experiment, it should be treated like an experiment - the goal is to change the world. If it is something truly remarkable it will sell itself and catch on organically.
Most altcoin proponents spend their time preaching to others on how their altcoin is the next Bitcoin - "it is faster, cheaper and it can do everything imaginable!" Most people are not informed about the limitations or purpose of a blockchain. Fast payments to buy coffee aren't new or special. In fact, a blockchain isn't designed for that and because of how it works, it actually destroys the security model and purpose of a blockchain: digital immutability. It just becomes a useless, boring and ineffcient payment system. The main ingredient that makes a blockchain special is decentralization and using a blockchain for coffee payments removes this.
Most altcoin teams out there build a cookie-cutter website, build up a small cult with puppets, pay off some pundits, spend some money on an advertising team and voila you have the next Bitcoin! In addition, they all have a small central team of developers and a leader of the project.
The "next Bitcoin" motto has been around for over a decade now. Unfortunately, some new people fall for it all the time and get burned. The loud-mouth scammers or bag holders pretend to believe it and can sound convincing. But they are just pumping their own bags. Once you have been around these altcoin proponents for long enough, you begin to realize they are all the same and it will most likely continue for a while longer (maybe forever but to lesser effect). They are feeding off of the uneducated and the greedy. One day you should be able to spot these people and altcoins quite easily.
Altcoins have been around in every bull market cycle. Each new bull market cycle has more new shitcoins than the previous bull market and the top 10 (nevermind the top 100) altcoins from the last bull market are no longer the top 10 or top 100 of the next bull market. It's a very fast game of musical chairs.
The last round of altcoins have to compete with the "new and improved" altcoins of tomorrow. We are already seeing this process take place as the 2017 bull market unwinds. Focusing on the top 10 altcoins, they are all flip-flopping and swapping their leading spots in the top 10. Most trend towards $0, over time and all lose their value in terms of bitcoin.
Remember, when Bitcoin's price corrects after a bull market, you can bet the altcoins are going to crash much harder and are not guaranteed to come back. If Bitcoin goes to $0, everything is going to $0. Most altcoins from previous years you probably haven't heard of because they are completely irrelevant now.
As time went by and altcoin after altcoin piled in - we have learned that market caps are a very poor method of calculating a coin's dominance in the overall ecosystem because it's a sea of useless 5000+ shitcoins. Most of the altcoins have a supply cap in the hundreds of millions, or billions. We don't even know the supply cap of some of the top altcoins!
Almost all of the altcoins had a pre-mine for the developers and a set allocation of coins for founders, etc. and sometimes there are even covert pre-mines that break the supposed hard limit cap of the project (the latest example is "private bitcoin"). Some other projects have weird time locks on a large amount of the token supply or a super cheap pre-sale before the project is released. The project just needs to sell 1 token for $1 and if the altcoin has 10 billion tokens, it now has a market cap of $10 billion dollars with that one trade. Hardly a sign of market dominance, innovation, organic adoption or success of a project
World class developers, protocol specialists, top cryptographers, cypherpunks and pioneers that aided in the creation of the internet have and continue to think of every aspect of Bitcoin over and over again - attack vectors, trade-offs, scaling, supplemental technologies, privacy, game theory, fungibility, etc.
A passenger of an airplane should not tell the pilot or engineer how to fly or build an airplane. Protocol engineering is no different. Everything that Bitcoin does, it does for a very important and technical reason. Bitcoin takes a slow and "do not break things" attitude for protocol changes - the utmost importance for a protocol dealing with over 150 billion dollars worth of value.
Having gone through all that - if Bitcoin needs to implement a secure, innovative, thoroughly tested code from an altcoin it can be integrated. Bitcoin is code. It is adaptable. Bitcoin is the next Bitcoin. The media has claimed Bitcoin is dead over 300 times now - yet it's still here and thriving. Attacks on Bitcoin only make it more resilient. There's a reason why Bitcoin is called anti-fragile.
So be warned, dabble in altcoins at your own risk. Some people need to touch the stove and get burned to learn.
- Why Bitcoin is Different than other Cryptocurrencies (Article)
- The Ultimate Bitcoin Argument (Podcast)
- Why Bitcoin is Different (Article)
- Bitcoin's Immaculate Conception (Podcast)
- Why Altcoins are Doomed (Article)
- The Problem with Altcoins (Article)
- Bitcoin Minimalism (Article)
- "Altcoins are created to take your Bitcoin" (Tweet)
- "[Bitcoin] has been profitable for over 92% of days you could have bought" (Tweet)
- extremely illiquid
- Manipulated and fake market cap valuations
-Highly inflated token amounts
- Centralized network
- Fast payments aren't special or new
- Insecure in more ways than one
- Has a leader
- Has a marketing team
- Each altcoin risks being replaced by the so called "next Bitcoin" in a few months
- High pre-mined allocation
- Pump and dumps
- Incompetent developers
- Little to no developers
- Disloyal developers
- Buggy code
- Absolutely no use case
- They trend toward $0 in the long term
- All altcoins lose their value to bitcoin relatively quick
- Impossible to replicate the fair, honest, organic growth and distribution of Bitcoin
- Developers / pundits misunderstand or intentionally ignore the limitations and purpose of a blockchain
- They're all just penny stocks
- Easy for big holders to game the market in their favor because it is so illiquid and coins were pre-allocated
- In the past decade, the top 50 altcoins have come, gone and swapped spots
- "The next Bitcoin" motto has been around for over a decade
- 99% of traders lose in the traditional markets, 99.9% of traders lose in this space.
- Altcoins have a "move fast and break things" methodology which is counter-intuitive to being used as a reliable money.
- Bitcoin is not the first attempt to make a better money or solve digital immutability. Many attempts failed in the past, all mostly from being centralized. (In other words, Bitcoin is not the "MySpace")
“The Federal Reserve simply does not have authority to supervise or regulate bitcoin in any way.”