The value of bitcoin (BTC) has been subjected to both discourse and speculation. Since bitcoin made its triumphant jump from a few dollars to as high as $1,200 late last year – it’s now trading at around the $650 mark – many have pondered where the price of bitcoin might be in the next few years: will it fall and crumble or soar to the heavens?
A lot of bitcoin’s proponents have said that one bitcoin will increase to $40,000, while Chris Dixon, a partner with the successful Silicon Valley venture capital firm Andressen Horowitz, expects it to be worth $100,000.
Critics, on the other hand, say quite the opposite, including former Federal Reserve Chairman Ben Bernanke, Nobel Laureate Robert Shiller and Peter Schiff, a contrarian investor that would be hard to group either of the two men in the same category. They say bitcoin is in a bubble akin to the tulip mania in the Netherlands, considered one of the very first bubbles in human history.
David Z. Morris of Fortune magazine recently pegged the question: could there be a $50,000 bitcoin?
Morris noted of an email that has begun to make the rounds that looks at several hypothetical scenarios and what they would do to the price of the digital currency. In one instance, if Amazon were to adopt bitcoin for all payments as well with a volume of $38 billion and divided by a supply of roughly 7 million bitcoins, it would make each coin worth $5,400.
“If $300 billion in international remittance was conducted in bitcoin, that volume alone would push the price to $42,000,” wrote Morris. “Adding these, along with online poker and gas station transactions, would lead to a total transaction volume of $602 billion – and a bitcoin, even at today’s expanded supply of 12 million coins, worth $50,000.”
There isn’t much realization that bitcoin could very well shoot up to such a high sum in a short amount of time. However, with the number of merchants and vendors accepting bitcoin inching upwards each day, this could increase the volume and give bitcoin a boost in value. Of course, fierce governmental regulations and perhaps even prohibitions could do the very opposite for bitcoin.
Others aren’t really concerned about the price. Instead, many experts are more concerned about how bitcoin will innovate financial markets all over the world.
“When you really think about what we do today in the banking system … it’s kind of stunning that that’s the way we do business in 2014. It seems very natural that things will change,” Susan Athey told the news magazine. “It’s only surprising that they haven’t changed already.”
Opponents who question the validity of these arguments usually retort with: well, if you think bitcoin is going to the moon, er, soar in price, then why not buy buckets full of bitcoin? This is an interesting question, but it is difficult to acquire one bitcoin when it’s still worth as much as the average person’s paycheck – individuals do still need to pay their bills! Until 100 percent of businesses, landlords and merchants accept bitcoin, cash will still be king.
It’s difficult to ascertain what bitcoiners want from the virtual currency. Do they want a reliable, decentralized currency that provides more stability than the dollar? Do they want a no-fee transaction system different from Visa and PayPal? Do they want to shake up the established order?
Since bitcoin is not a community with a monolithic mind that all share the same thoughts, ideas and emotions (yet!), it’s something that the market will have to determine.
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