What if the price of bitcoin will hit $250,000?
I just happened to see an article in Cointelegraph which told about a prediction that bitcoin could go up to $250,000 by 2020.
For some weird reason nobody seems to be doing any back of the napkin calculations. So let's do one to see what would happen.
We need just to check what will the block reward be in 2020. Bitcoin-wiki says it's still 12.5 BTC per block, like it is currently. That means there will be 12.5 * 6 * 24 = 1800 new bitcoins created every day.
If the price of one bitcoin is $250,000, then the Bitcoin network will be paying $450,000,000 every day for miners (plus some transaction fees).
Because the economic incentive is enormous, that will attract big corporations to use every way they can, to capture as big market share as they can. Amateurs are probably going to be so inefficient in their mining that they won't have a big impact. So that will lead to centralization of hashing power.
Another point is environmental. Because the mining markets are highly competitive, nobody can make huge profits. That means most of the mining rewards will be used to pay for electricity and mining equipment. Because there is so much money involved, lifetime of mining equipment will be very short because mining companies will spend huge sums of money to design and produce better equipment.
Why aren't people seeing how destructive Bitcoin will be, if it becomes very popular?
It will be so centralized that cryptoanarchists can't see any value in it. It will be an environmental catastrophy.
Bitcoin is way to your freedom
But do you have any counterargument?
Is it really can happen to reach such high value just in 3 years? Many people usually told us that bitcoin is a big bubbles. I agreed bitcoin had its own value, but I am more afraid if some whale dump their bitcoin, then the price of bitcoin will drop very fast and become nothing.
it's not a bubble jesus. how do you know? ask the next person on the street, what's a bitcoin. they will say.. WHAT? That's how you know it's not in a bubble. Bitcoin is many many years from a bubble.. Expect small peaks like shark teeth but a positive trend for years.
Bitcoin has been becoming important and would affect our lives directly. It's the truth no matter some people deny it. You can see the proof as more and more counties had announced bitcoin as a offical trading currency. And mining device manufacturers had produced professional mining equpiment, and the stock price and market has been affected
Bitcoin is already being used as an excellent store of value (like gold) by the crypto-economy, and I think that is what it will grow into going forward. Slow, expensive and secure. Used for high value transactions. Things like STEEM and BTS will be used as working tokens - fast, do neat things. But BTC will grow into the trillions in market cap as a sort of digital gold.
When the network is centralizing, governance is non-existent, the system is going towards environmental catastrophe, etc. it's quite absurd to see anybody saying that Bitcoin is good store of value.
When people realize that other currencies just are much better in everyday use, they will abandon Bitcoin. Most people do high value transactions very rarely. When they do, it will be much easier to use some other currency which is faster and simpler.
Bitcoin was great invention when it came. But we should be able to admit that it's not perfect and start using better alternatives before anything bad happens.
What is this "if" business?
I'd say Bitcoin is designed to be self-destructive. It can't overcome the problems of fixed block reward. That's why "if".
Bitcoin will never reach $250,000 without a series of major technological overhauls. My money is elsewhere already. For some time, ether has been rapidly appreciating.
Ethereum will face the same scalability challenge as Bitcoin. However, a transition to a proof-of-stake protocol dubbed Casper is in the works within a timeframe of about one year to one and a half.
Before that time, bitcoin will be replaced by ETH.
And the bubble will be broken:) afterward
So what do you think it would take for STEEM to hit $2500?
For bitcoin to move out of the way, and for people to move on from bitcoin.
I have two thoughts on this.
I think mining will become much more efficient as the price of Bitcoin increases. Also the mining equipment will drop in price.
According to my understanding of economics, you seem to have contradicted yourself. You say that "Amateurs are probably going to be so inefficient in their mining that they won't have a big impact. So that will lead to centralization of hashing power." And then you say, "Because the mining markets are highly competitive, nobody can make huge profits." It doesn't seem to be a likely scenario to have both massive centralization AND major competition in the same industry at the same time. Either hashing centralizes to a few former competitors who collude to keep others out of the game, or hashing remains competitive. With cloud mining, it will still be relatively easy for amateurs to get in on the mining profits. That model will also tend to lend itself toward greater decentralization and a wider distribution of profits.
It doesn't matter how efficient hashing is. Miners will use their earnings to buy as much equipment and electricity as they are paid for.
When markets are highly competitive, there won't be much incentives for small players to join. It will be dominated by a few big players who have invested the most resources. They will build their own power plants or buy already existing plants so they can have the cheapest electricity. It's called economies of scale.
Of course some of them could be cloud mining operators, but that doesn't actually help with centralization problem because common folks who pay for cloud mining contract are just investors, they don't actually control the hashing power.
Mining will always go there where energy is the cheapest. That alone leads to a certain degree of centralisation. Small miners can easily compete (eg, via pools) as long as their energy is cheap. At some point I think solar will dissimate the environmental FUD argument.
Bitcoin could indeed be hindered by its own success. That is not something Mr Market cannot handle. If Bitcoin reaches $250,000 without changes to the protocol, that would be proof enough that scaling is not the biggest issue facing Bitcoin and that market participants would value Bitcoin for other reasons.
But how long the energy will stay cheap if it's used for Bitcoin mining? If there is cheap electricity and good enough infrastructure to set up a mining operation, it will attract as so much miners that it might very well affect the price of electricity.
Another possibility: Many countries with really cheap energy are developing countries where goverment has somehow price fixed the energy markets. If enough cheap energy will be wasted for Bitcoin, there's nothing left for people. They will suffer from lack of electricity. If they see at the same time how some people will get filthy rich by mining, there will be riots.
Producing all those solar panels will still require a lot of resources. Even if bitcoin miners will use only solar power, other people need electricity, too, and they have to use other alternatives. It means that there will be still huge demand for energy that pollutes.
I don't see that there is anything undeserved in FUD for Bitcoin's environmentally destructive design. The basic premise is that if the price of bitcoin goes too high, there will be huge environmental consequences. So far I haven't seen anybody refuting that argument.
perhaps this could be part of humanity's push to get their asses in gear to properly develop out and integrate free energy tech into the new economy...
If energy was free, it would be all used to Bitcoin mining. And then it would become scarce again.
free energy = abundant.
your logic is flawed. not sure if you're trolling or really don't get it.
"Abundant energy for humans" usually means that there is enough energy for all basic stuff that humans need to do. It doesn't mean there is totally unlimited amount of energy.
If you get something for free and you get rewarded greatly to use it, wouldn't you use it as much as possible?
If bitcoins worth of hundreds of millions of dollars are distributed every day, you can be sure that there are individuals and companies who want to take as much as they can. If energy is abundant, they will use it to generate electricity, mine minerals from the ground to get resources for hashing equipment and continue to do that until they hit some kind of limits.
My guess is that "abundant energy" won't so so abundant in that scenario. But of course, maybe the limitation will be caused something else, like lack of metals to build hashing equipment.
People just can't seem to divorce themselves from the current "value" of the fiat in their pocket.
When someone says that BTC will rocket up to $250,000, you have to grasp the concept that the $250,000 USD in question here will NOT have the same buying power as it has today.
Remember the Ron Paul speech about the silver dime?
Just like when people ask me "What is your Bitcoin up to now?"
And I reply "about 1.0 BTC"
We are talking apples and oranges, them and me...not worth the aneurysm most of the time.
A better response I will soon start giving is "It's doing well. What are your dollars down to now?"
Can't wait for the day when people say. How many millibittes or satoshis do you hold? or 175,000 satoshis to buy this house... That will be the day when I take a step back, drink my jack daniels and say...Damn I'm glad I got in early.
In most cases people are not saying that "the value of fiat currency will dramatically drop". They really mean that "the purchasing power of bitcoin will rise enormously".
I saw that article too crazy that would be insane that would mean almost all of us are millionaires! What would the value of steem be then? $1,000 a coin? It is at $2.50 now and Bitcoin is at $3,000 Steem would probably be worth a lot to and Ethereum Dash and Monero probably. I think what will stop it from getting that high though is it will get too expensive and people will turn to other cryptos that are cheaper or governments or large corporations will try and come up with something to stop it from making Fiat worthless.