You might have noticed that people from all areas (except technology) feel the need to stand up and warn about the crypto bubble. The most popular term they like to use is 'tulip' because Bitcoin resembles the 17th-century flower market so much.
Here are a few reasons why cryptocurrency won't go away in 2018 and why the market won't lose all its value.
1. Scarcity
Here is a quote from James Altucher:
There are 16 million millionaires in the world. There are currently only 16.6 million bitcoins on the market.
If every millionaire wants to buy 1 Bitcoin, there is not enough supply. If other's don't want to sell, prices will keep going up.
I don't know if all millionaires want to buy a bitcoin, but they since they have the funds, why not? And why stop with 1 bitcoin?
But it's not only millionaires. There are 380 million people in the USA and 8 billion people worldwide. If 5% of the American population wants to buy 1 bitcoin, there isn't enough. And what about those 1 billion Chinese? 1% of them could swipe up almost all the bitcoin available...
2. Inflation
Look at Zimbabwe and Venezuela. People are running to Bitcoin to keep some value for their money. If inflation rises in other countries, more people will invest in cryptocurrencies.
Another example is the Euro. It's expected that the Euro will lose some value against the US Dollar after the Brexit agreement is signed (probably end 2017).
If Bitcoin stays strong against the dollar, European Bitcoin holders would see their value increase by 10 or 20%.
We are in year 9 of economic growth. An economic crisis is bound to happen soon and this will bring inflation. I think Cryptocurrencies will see more growth when this happens.
3. Security
Remember the financial crisis in 2008. People that trusted their savings in banks lost their money. Europe bailed out most banks, protecting people's savings, but others invested in an Icelandic bank and lost everything.
Governments were able to bail out the banks last time, but there is no guarantee that they can do it next time.
In times of needs, governments can raise taxes on savings. Banks will cooperate and there is nothing that you can do about it.
Cryptocurrencies are decentralised and the newer ones have privacy features, making it much harder to find out who owns what. They are controlled by no one and no taxes can be raised on anonymous cryptos.
There can be a tax when you try to convert back to fiat currencies and governments will certainly try to force exchanges to raise those taxes.
But decentralized exchanges are already being built to prevent outside control. And raising taxes on conversion to fiat currencies will only speed up the use of cryptocurrencies as a method of payment.
4. Applications
Cryptocurrencies are not only used for storing value or making financial transactions.
Blockchain-based platforms such as Ethereum, NEO, Stratum, Cardano are using cryptocurrency purely as a means of paying for services offered by decentralized blockchain applications running on top of these platforms.
Decentralizes blockchain applications are the new evolution of the Internet for the coming years and although not all platforms will survive, the best ones will be here to stay.
Hey, nice write up. I think for those who are involved - at least on a moderate level - with cryptocurrencies understands that cryptocurrencies will not go away in 2018. The real question that most people need answering to is would it suffer a big crash due to regulations in the upcoming months. The tech is here to stay and will continue to revolutionise many industries but for investors, we are still very cautious.
cryptocurrency was the trade of 2017, they will the best trade for 2018 also, hold yours freind :)
100% agree with you
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STOPDoes that mean you don't think BTC will soon drop back down to a few thousands? Or are you you just writing about the long run?
I don't see a good reason why Bitcoin would lose so much value all the sudden. If large holders of Bitcoin wanted to cash out at this price, they could have done it in the past weeks when BTC was at its top. Even if the miners stopped mining, I think others will take over. That's the benefit of a decentralized system.
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