The first virtual currency appeared back in 2009. It was Bitcoin, that still remains the leader on the cryptocurrency market, where there are already more than 1600 different coins. Today The Coin Shark will tell about the possible future of the virtual currency market and what famous businessmen and experts think about this.
How it all started: brief overview of Bitcoin rate
World’s first decentralized payment system was launched in 2009 and enabled users to make fast and secure transactions using Bitcoin cryptocurrency. The project was based on the blockchain technology where the information about transactions is recorded in a chain of connected blocks. During the first year Bitcoin was not traded on exchanges, because there were actually no cryptocurrency exchanges, and did not have a clear rate. In the summer, 2010, Mt.Gox exchange was opened, and Bitcoin exchange rate hardly reached 10 cents. In 2013 Bitcoin started with a price of about $15, but finished with almost a thousand dollars. The cryptocurrency managed to step over a thousand dollars mark in 2017.
Closer to the end of the year, Bitcoin rate reached its all-time hight of almost $ 20,000 per coin. Just in several weeks of December, it managed to increase from 10 to 19 thousand dollars. Bitcoin started the year 2018 with a sharp fall together with the whole cryptocurrency market. The rate experienced serious corrections and in the first quarter of 2018 Bitcoin cost fluctuates around 7-8 thousand dollars.
What do experts and entrepreneurs think?
It is interesting that most of the fiat money is currently also virtual – it exists on bank accounts. However, the ways of transferring assets within the framework of this traditional system have their drawbacks. Cryptocurrencies offer a new way of transferring assets. In May 2018, a well-known venture capitalist Tim Draper told Forbes, that in 2017 his forecast for growth of Bitcoin rate to $ 10,000 was based on the fact that he believed Bitcoin would be easy enough to use in the future and that people would use it as means of payment and a store of value. That’s why he himself decided to invest in virtual currency. Today Tim believes that Bitcoin’s liquidity will soon increase and people will be able to easily spend digital currencies. In addition, the number of Bitcoin users will also grow. His new forecast is 250 thousand dollars for a coin until 2022. In the long run, he is even more optimistic. In an interview, Tim says he believes the cryptocurrency will be used instead of fiat money in the future. “We will get to the point where we will go to buy coffee with fiat and the barista will look at us like we are crazy”- says the entrepreneur.
However, such a forecast may seem too optimistic for many people. Even Vitalik Buterin, the developer of one of the most popular virtual currencies Ethereum said that “cryptocurrency assets can depreciate to zero at any moment”. Bitcoin has many technical problems, for example, the scalability issue. The more users are there in the system, the more time it takes to process transactions in blocks. Small payments – the key to the massive adoption of the cryptocurrency – are currently not profitable.
Of course, it’s nice to have a million or so in your wallet, but what is its real value if you can not use it? It’s not that bad with Bitcoin but still not that good also. There are also various altcoins that try to find solutions to these problems.
Moreover, the relatively small capitalization of the cryptocurrency market makes it easy to speculate. This can affect the development of the system that many people consider to have a potential to change global economy. In addition, Google capitalization exceeds the capitalization of the entire digital currency market by more than two times.
Starbucks chairman Howard Schultz said he believes there is likely to be one or several legitimate and trusted virtual currencies in the future. Jim Reid, credit strategist of Deutsche Bank, that current debt crisis is a very serious challenge that fiat currencies are facing today. Perhaps we should consider alternatives. However, the cryptocurrency is obviously not yet ready to replace the entire traditional financial system.
Anyway, people created money many times and in different places. It was a result of a consensus on the equivalent of value and always met the requirements of its time. Will cryptocurrency meet the requirements of today? Or will the drastic changes in the traditional economy and financial system go on another direction? The time will show.