While it’s accurate to say that Bitcoin's value is solely dependent on how much it is perceived to be worth, the same can be said about most of the world’s currencies. However, Bitcoin exists as somewhat of a hybrid between an asset, a currency, and a technological movement - making it difficult for regulators and the public to definitively pin down. Given that, Bitcoin growth opportunities are often hard to fully understand.Bitcoin combines gold’s use as a store of value with the disruptive innovation that its underlying technology provides. As a result, Bitcoin’s opportunities for growth largely influence its perceived value.
Digital currencies are an unprecedented addition to the financial world, achieving many things that weren’t technologically possible a few years ago. Digital currencies are decentralized monetary platforms that are able to exist both intangibly, and without dependence on any intermediaries.
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For investors, the democratic and largely disruptive nature of Bitcoin presents a variety of use cases that could become increasingly prevalent in the future. Historically, use cases and furthered Bitcoin adoption has driven the currency’s price and courted faith in the platform. With the rising popularity of Bitcoin, the network now experiences slower transaction times and higher transaction fees. Consequentially, Bitcoin is less viable than it once was as a method of day-to-day purchases.However, industry experts and proponents are currently exploring ways of future-proofing the technology in order to ensure that it can handle large transaction volumes while becoming feasible for everyday use. Recently, a scaling solution known as Lightning Network Dameon made headlines when it it secured over $3 million CAD worth of funding and published a mainnet-compliant beta release.As a medium of exchange, speculators have faith that overcoming scaling limitations could lead to growth in Bitcoin’s value.
While Bitcoin is not currently the best option for everyday purchases, there are many factors that make digital currencies like Bitcoin extremely useful for carrying out cross-border transactions or sending funds to those without access to banks. This is because Bitcoin works with a flat-fee, meaning the amount sent does not determine the price of the transaction. This means that the transaction fee is often much more affordable than typical processing fees when sending large transactions. Further, many within the global community do not have access to banks or financial services. Here, Bitcoin’s role as a decentralized payments platform is extremely useful as a way of sending funds to unbanked individuals and communities, since Bitcoin is able to function without relying on banks. In this area, there is a significant growth opportunity for Bitcoin to bring millions of people into the global economy.
One of Bitcoin’s most praised use cases is as a store of value. In order to ensure that Bitcoin had value to holders, it was built with a limited supply.Bitcoins are created each time miners discover a new block and the rate of block creation is slowed down every 2,016 blocks. The number of bitcoins created per block will half approximately every four years. As a result, the total volume of bitcoin in circulation will only ever reach slightly under 21 million bitcoins. Currently, miners have mined 3/4ths of all bitcoin, but the supply is not set to run out until around 2140 due to the block creation rate continually halving. However, the maximum supply of nearly 21 million bitcoins is not to be confused with the total spendable supply, as some of the currency is either lost or destroyed, and will never re-enter circulation. Bitcoin’s controlled supply takes strong influences from gold, and combines gold’s use as a store of value with the widespread distribution, transparency, and security that its underlying technology facilitates.
Since Bitcoin is the original digital currency, and retains the title of being the world’s most popular, one of its functions is to serve as a reserve currency. When new digital currencies launch or are sold through Initial Coin Offerings (ICOs), the accepted purchasing method is typically bitcoin. Investors use Bitcoin to buy many digital currencies, especially those that have recently launched or lack widespread adoption. For a large number of digital currencies, Bitcoin remains the only way of purchasing them, as investors cannot purchase many digital currencies with fiat currencies.
Bitcoin exists in a competitive market with an uncertain future. While this sounds like a negative statement to make about the industry, Bitcoin’s “weaknesses” are actually things that have made it a profitable investment for many in the past. Bitcoin has been an underdog since its inception, and the currency surprised the world with its numerous price hikes. As Bitcoin looks to continue its growth, overcome obstacles, and prove itself as a store of value, its future is anyone’s guess.
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