By: First Union | Date:
What's The Future of Bitcoin?
What will happen with bitcoin in the future is a question that many are trying to answer and yet one that many just cannot. To some extent, cryptocurrency is unpredictable, making the issue of its future rather difficult to nail down. While it has skyrocketed in the past few months (with some periods during which its price dropped/), for the most part, its performance has kept investors very happy. But will this continue? Will bitcoin go up in value even more than it already has? Below are a few predictions that experts seem to think could happen where bitcoin's future is concerned.
Will the trend continue?
The simplest prediction is that what we've seen since the latter part of 2020 will continue. As people become more and more invested in cryptocurrency in general, we are going to see bitcoin appear in numerous portfolios, even in things such as pension funds. It could potentially eclipse gold as the national standard. Estimates suggest that by the year 2030, there may be upwards of one billion bitcoin users. Currently, there are well over 100 million and growing.
Because of regulation bitcoin growth slows
Some countries are already taking a tougher stance regarding bitcoin and bitcoin regulations. When it does happen that some companies start to deter people from using a currency—especially a cryptocurrency—this could spell the demise of that currency. And with certain countries resistant to allowing bitcoin, this could be a bad sign for this particular currency. The nail in the coffin of bitcoin could come if the US puts excessive regulations on cryptocurrency. Experts don't think that this is a farfetched idea and could very well prove a stranglehold on it. The ultimate blow however would come if nations unified to try and regulate the cryptocurrency giant—this could have severe implications for the future of bitcoin. This however is probably not a likely scenario given that it is often very difficult to get numerous countries on the same page on certain issues, money being one of them.
Governments intervene and block users
While some governments may be trying to put a stop to bitcoin, most probably will not be able to do so outright; however, there are tactics governments can take to try and undermine the cryptocurrency's value. One thing governments might be able to do to this end is to block users from withdrawing their funds. A potential reality could be for instance that people in the US can no longer access their bitcoin account via a platform such as Coinbase. The government would essentially hold the bitcoin; it would be frozen and thus controlled by them. Though this scenario is probably not going to happen, with something as new and untried as bitcoin, you never know.
Another potential government strategy to exert greater control over bitcoin would be to implement let's say a capital gains tax. The idea has been tossed about of having an unrealized capital gains tax imposed, though no real movement yet in this direction has been seen. One thing that such a tax could do would be to have major investors in bitcoin second guess those investments as the tax implications could be astronomical. The prediction however is that any such tax would be heavily protested and meet with a steep uphill battle. Many experts think that the US in particular is becoming more bitcoin-friendly.
Bitcoin is used more and more often for everyday purchases
Still somewhat of a vague concept yet in its infancy as far as being used instead of cash for everyday purchases, bitcoin could become more and more a fixture in people's "wallets." That is to say, versus just something to invest in, bitcoin could become the go-to currency for many around the world instead of cash or credit. As of yet, only a sliver of people uses bitcoin to buy goods and services. But many predict that by 2030, that could change, dramatically so. This then would mean an incredibly bright future for bitcoin.
The one thing that could hamper any momentum in this direction is the fact that transaction fees could be fairly high, higher than most are willing to pay. However, there may not be a way around such high fees as this is how you get miners to keep mining. So it still stands to be seen whether or not in the future, bitcoin will be used in more "common" exchange scenarios.
The network shows its weaknesses
Most bitcoin proponents believe the system to be invincible. The network can never be hacked is what they claim. And as a result, it is safer than using an actual bank. And while this may seem to be the case, many know that networks aren't infallible. What if bitcoin security is breached in a major way? Beyond just an attack on the network, there could always be a network glitch that shuts everything down. Those defenders of bitcoin say that to take the entire network down is unfeasible as it would require billions of dollars of equipment to do so. But if something like this were to happen, obviously that would be catastrophic as far as the future of bitcoin is concerned.
The only thing we know for sure about the future of bitcoin is that it is relatively uncertain. There are so many unknown variables, so much with which people have not yet really dealt, and so many players, from miners to investors to governments, that the cryptocurrency really can go in any direction over the next ten years.
First Union Lending is here to help. We offer short-term loans, lines of credit, and merchant cash advances among other products. We can get you to cash quickly—some receive funding in as little as two days. Our goal is to see our clients thrive and become successful within their industry. Call today!