Where is Bitcoin headed? No one knows for sure, but a popular refrain is heard in the Bitcoin community: In ten years, either Bitcoin will be worth nothing, or significantly more than today. I believe this is true.
The idea of digital money that you manage yourself is a powerful one, and in the first four years of this monetary experiment we’ve seen explosive growth. It’s easy to see continued growth in both individual users and businesses that accept coins. If it continues at its current pace, the value of 1.0 BTC will continue to rise compared to other currencies.
Eventually, goods and services might be priced in Bitcoin itself, instead of relying on other currencies to judge value. Online shopping might not require entering your credit card information, or signing up for a PayPal account. Your identity wouldn’t need to be revealed when purchasing goods, unless you made that choice.
Another aspect of Bitcoin that I haven’t discussed is the potential for smart contracts, which use the cryptography inherent in Bitcoin to facilitate more complex transactions, such as escrow services, arbitration, or even estate management. If Bitcoin becomes more popular, these services will likely be implemented in the code (as Satoshi originally intended).
But the future is far from certain. There are three primary threats to Bitcoin that I see on the horizon, that could substantially restrain—or even destroy—this new monetary system.
1. Technical. Right now the Bitcoin economy runs fairly smoothly, handling tens of thousands of transactions daily. But what will happen if that hits millions of transactions daily? Can Bitcoin handle the same amount of volume that a major credit card does? There is speculation on both sides of the issue, but no one really knows. If the system isn’t able to handle a large amount of transactions, its value is obviously limited.
2. Governmental. Because Bitcoin can be used for illegal activities (so can cash), and because the Bitcoin system is inherently difficult to regulate, governments across the world might decide to limit their citizens’ ability to use Bitcoin. If this happens, it will obviously inhibit the Bitcoin economy significantly.
3. Competition. Right now, Bitcoin is the clear leader among digital currencies, but it isn’t the only one. Several alternative cryptocurrencies have taken the Bitcoin code, altered it, and launched their own currency. Some of the most popular ones include Litecoin, PPCoin, and Ripple. These aren’t nearly as valuable as Bitcoin, but it is possible that one day another digital currency could replace Bitcoin if it were significantly better.
If Bitcoin can handle large transactions, avoid government restrictions, and beat the competition, I believe it will become the standard currency of the internet. This monetary experiment has evolved from a nine-page paper written in Fall 2008 to a billion dollar marketplace today, with millions of dollars of investment capital flowing into new start-ups, and new services launched each week.
Only time will tell if Bitcoin will be as revolutionary to our current monetary system as email was to the old system of communications. It’s certainly off to a great start, and I hope this guide has helped you to join this grand monetary experiment.
The idea of digital money that you manage yourself is a powerful one, and in the first four years of this monetary experiment we’ve seen explosive growth. It’s easy to see continued growth in both individual users and businesses that accept coins. If it continues at its current pace, the value of 1.0 BTC will continue to rise compared to other currencies.
Eventually, goods and services might be priced in Bitcoin itself, instead of relying on other currencies to judge value. Online shopping might not require entering your credit card information, or signing up for a PayPal account. Your identity wouldn’t need to be revealed when purchasing goods, unless you made that choice.
Another aspect of Bitcoin that I haven’t discussed is the potential for smart contracts, which use the cryptography inherent in Bitcoin to facilitate more complex transactions, such as escrow services, arbitration, or even estate management. If Bitcoin becomes more popular, these services will likely be implemented in the code (as Satoshi originally intended).
But the future is far from certain. There are three primary threats to Bitcoin that I see on the horizon, that could substantially restrain—or even destroy—this new monetary system.
1. Technical. Right now the Bitcoin economy runs fairly smoothly, handling tens of thousands of transactions daily. But what will happen if that hits millions of transactions daily? Can Bitcoin handle the same amount of volume that a major credit card does? There is speculation on both sides of the issue, but no one really knows. If the system isn’t able to handle a large amount of transactions, its value is obviously limited.
2. Governmental. Because Bitcoin can be used for illegal activities (so can cash), and because the Bitcoin system is inherently difficult to regulate, governments across the world might decide to limit their citizens’ ability to use Bitcoin. If this happens, it will obviously inhibit the Bitcoin economy significantly.
3. Competition. Right now, Bitcoin is the clear leader among digital currencies, but it isn’t the only one. Several alternative cryptocurrencies have taken the Bitcoin code, altered it, and launched their own currency. Some of the most popular ones include Litecoin, PPCoin, and Ripple. These aren’t nearly as valuable as Bitcoin, but it is possible that one day another digital currency could replace Bitcoin if it were significantly better.
If Bitcoin can handle large transactions, avoid government restrictions, and beat the competition, I believe it will become the standard currency of the internet. This monetary experiment has evolved from a nine-page paper written in Fall 2008 to a billion dollar marketplace today, with millions of dollars of investment capital flowing into new start-ups, and new services launched each week.
Only time will tell if Bitcoin will be as revolutionary to our current monetary system as email was to the old system of communications. It’s certainly off to a great start, and I hope this guide has helped you to join this grand monetary experiment.
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