One Bitcoin price was $772 in December 12, 2016 that has touched the height over $17700 as on December11, 2017. During the span of one-year duration, Bitcoin attained around 2192 % gain in price with market capitalization around $296 billion. This was unprecedented gain earlier to this, people never seen neither heard such kind of enormous profit return in a digital world.
Economics of Bitcoin
According to the fundamental law of economics when demand of any commodity is increased than its supply, prices of that commodity will automatically rise. The same phenomena are applied in case of Bitcoin. There is a capped at 21 million Bitcoin. No more Bitcoin will be produced.
Initially, it was easy to mine Bitcoin with CPUs then GPUs & now ASICs miners with heavy power is required to mine Bitcoin. Besides this, after 210,000 bitcoin mining, the reward of contribution to the miner reduces to half.
In the beginning years of bitcoin, the reward was 50 bitcoin that started to decrease each time to half on mining completion of 210,000 bitcoins. Now onward October, 2017, this reward is 12.5 bitcoin & 17 million bitcoin have been generated till now.
In addition to this, 25% to 40% bitcoin has been lost due human error or hackers theft. It reveals that there is a fixed supply of bitcoin but its demand is much more than the available limit of its supply.
Valuation of Bitcoin
It is unregulated currency therefore value of bitcoin cannot be determined by any regulatory body. People confidence badly affected by a global financial crunch after 2007 on fiat currency. When multiple global financial institutions became bankrupt.
Then people started to invest into cryptocurrency, particularly in Bitcoin. This trend of investment increases with ongoing time. There is a significant portion of people who believe that Bitcoin is more valuable store of value as compared to fiat currency.
On December 12, 2017, Bitcoin has surpassed range of $17700 & keep on surging with a market capitalization over $536 billion. It is striving to reach at peak around $20,000 & beyond.
Investors’ confidence on Bitcoin pushing upward its price. It follows the rule of appreciation of money with the passage of time while fiat money faces depreciation of money after certain period of time.
Bitcoin established its supremacy as profit-oriented currency
When Bitcoin started to gain attention of social media, many tycoon of business world & investors opposed it on with the allegation that it is so speculative currency & there is a high risk of loss of investment. Mr. Warren Buffet termed it “a bubble” that would be burst soon.
Another opponent in early days of Bitcoin, Jamie Dimon, CEO JP Morgan, he constantly opposed the very existence of the currency for three years. Let’s view the statement of Jamie Dimon & the price trend of Bitcoin:
On January 23, 2014, he stated, “Bitcoin is a terrible store of value” at that time Bitcoin was traded around $828
On November 05,2015, when the price of Bitcoin slumped at $408, Jamie predicted, “Bitcoin will not survive”. However, with somewhat fluctuations, Bitcoin started to continue rise after two months.
On January 20, 2016 when again Bitcoin reflected a little decrease in price worth around $380, traded with $6.5 billion worth market capitalization, Jamie Dimon bluntly stated that “Bitcoin is going nowhere” Onward to this statement, Bitcoin has gained a huge price gain around $4313 on September 12, 2017 with a total market capitalization of $71 billion. But, he did not ready to accept it wholeheartedly & commented with harsh words, “Bitcoin is a fraud”.
The more he criticized, the stronger image of the Bitcoin continued to develop on each ongoing day. Finally, he has to submit the supremacy of this novel currency on October 12, 2017 when Bitcoin hovered over $4857, saying
I am not going to talk about bitcoin anymore.
Jack Dorsey, CEO Twitter acknowledged potential influence of Bitcoin in technology sector:
The influence of Bitcoin is so persuasive that Bitcoin & altcoin are becoming a part of Business services. Jack Dorsey, CEO Twitter is an advocator of Bitcoin. He twitted that global benefits are clear from cryptocurrencies & the great services & business will built upon it.
Microsoft is accepting Bitcoin as payment mode:
As many giant companies has been using the blockchain technology built at the heart of the Bitcoin. Microsoft has accepted the Bitcoin as payment mode for rendering its services & products.
Roger Ver, CEO Bitcoin.com predicted that Bitcoin price will increase:
Bloomberg reported on December 07, 2017 that Roger Ver a vocal advocate of cryptocurrency who has earned name of “Bitcoin Jesus” & the first investor of the Bitcoin & CEO of Bitcoin.com, stated that Bitcoin is not much fluctuated like past because a bulk number of people now trading Bitcoin which reduces volatility. It is more useful for people due to this fact more people use it. He also predicted that Bitcoin Futures will increase Bitcoin price in future.
Bitcoin has disrupted the global markets. There is still a mix opinion about the future of Bitcoin. Bitcoin is unregulated currency & susceptible to tax evasion & money laundering.
Deutsche Bank considered Bitcoin as one of the biggest market threats in 2018:
Some institutional sector considers the Bitcoin as opportunity while some see it as a threat. Deutsche Bank showed its great concern & ranked cryptocurrency as a risky investment. In the opinion of Deutsche Bank, recent high price gain based on speculation & high volatility that has reached around 80% as it is unregulated, there is chances of risk of loss can happen. Despite of it, the report of the bank stated that no other asset, stock, bond could not perform well as Bitcoin did in 2017.
Goldman Sachs December 2017, quick pool predicted Bitcoin price rise in future.
According to Business Insider’s story reported on December 06, 2017, Goldman Sachs, Chairman & CEO of Lloyd Blankfein, an investment bank used monthly pool to ask their clients within securities division to gauge their opinion about the bitcoin price by the end of the December, 2017.
The findings of the pool depend on views of 1200 clients among which the biggest portion answered that the Bitcoin price will rise by the end of the year. This survey of opinion showed the increasing interest of the institutional investors in Bitcoin.
Early adopters of bitcoin have become millionaire. The emerging influence of the digital currency expanded total market capitalization of Bitcoin that has reached $300 billion apex alone.
Bitcoin Price will continue to rise in 2018:
The reader can better predict its price rise in future at their end while understanding the historic price increase trend of Bitcoin. To reach at any conclusive point, we need to just examine the past two years annual gains in price of Bitcoin.
According to statistics of January 2016, Bitcoin was traded under $400 that jumped over $800 in December 2016. It expressed 100% increase in price. With the beginning of 2017, one bitcoin price was accounted around $970 that has touched to the unprecedent height of $17700 as on December 12, 2017 estimated 1724% all time high price gains recorded & keep on rising the trend with the entering into 2018.
It is hopefully expected that Bitcoin price will continue to surge in 2018 because of its global acceptance.