The most important cryptocurrency, Bitcoin, has suffered a lot of fluctuation since the historical date of December 2017 when it peaks at $20,000. These days, the Bitcoin price somewhere rise from $9,000 to $11,200.
This brings to the question, are Bitcoin and cryptocurrencies going to obsolete or is it a step back before a “new storm” of Bitcoin price in the near future?
We can’t answer directly. However, let’s check for current facts and events about the Bitcoin market together so that you can draw a personal conclusion.
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Every group has its reasons to speculate on the future of Bitcoin. However, which group is correct? We should delve into the current state of Bitcoin, its value, technological improvements, and transaction data to see the complete picture.
Network Hash Rate - A great indicator of the network health
We know that the hash rate is a measure of the processing power of the Bitcoin. Every time a Bitcoin block is mined, it is completed with a “hash”, before adding other growing blocks. The hash is created by solving a difficult puzzle by super-powerful computers. The hash rate shows how many times the Bitcoin network can complete the puzzle every second. Simply speaking, the higher the hash rate, the network is safer and getting more protection.
Photo: Bitcoin hash rate chart from 2009 to 2019 - source: https://www.blockchain.com
Currently, the hash rate of Bitcoin is 114 exahash per second (27th September 2019), which is nearly 10-folds compared with the highest peak in 2017, the time Bitcoin value reached $20,000 as you still remember. In other words, the Bitcoin network is gaining a lot of strengths and protections than it has ever been before.
The value of the Bitcoin transaction after the December 2017 event was crashed. However, during the whole year of 2019, 2020, this value gradually rises and becomes steady.
Photo: Bitcoin transaction chart 2018-2019 - source: https://bitinfocharts.com
When translating the transaction value per day in USD, again we see the stability of the whole Bitcoin Network.
Lightning Network - a scaling approach
As we all know, the Bitcoin transaction is rate is currently about 4 transactions per second (TPS), which is relatively slow compared to others. For instance, Ripple (another cryptocurrency) can process about 1,5000 TPS. VISA, on the other hand, does up to 24,000 TPS. Therefore, it is essential to find a scalable approach to make Bitcoin transfers faster and cheaper. At the moment, Lightning Network is a solution for Bitcoin Network scaling. The premise is to have one transaction on the Bitcoin blockchain to begin a series of off-chain transactions. On Lightning Network, users can transfer Bitcoin nearly in real-time.
Photo: Lightning Network size presented by active amounts of nodes
Bitcoin improvement proposal (BIP)
Developers have put great efforts to test, develop newer scripts to make Bitcoin codebase more compact and better. While this area is very technical and complicated for a casual person to understand, what we have observed is that there are hundreds of activities in improving Bitcoin encryption, safer privacy, and faster transaction.
2019 has been a great year for Bitcoin and other altcoins, showing steady growth and even more maturity in both the coin real value and technological improvements. Bitcoin is far from dead, it is just growing and getting acceptance from the mainstream.
Nowadays, a lot of countries are now accepting Bitcoin as a “ real money transmitter”, rather than just a digital commodity. Currently, Japan, Singapore, South Korea, Malta, Luxembourg, Switzerland, and Belarus validate Bitcoin and develop a regulatory framework to protect users and to attract more institutional investors in this sector. At the same time, the US Congress declares to put Bitcoin into a more streamlined approach to regulate the coin in the whole country. The regulatory will eventually protect the coin and bring more investors into the market.
Technological advancement also plays a major role in Bitcoin Network. At the moment, the transaction with Bitcoin is quite slow when comparing with VISA, Paypal, etc. However, developers are now initiating a new technology called Lightning Network to facilitate a faster transaction time and reduce the cost of payments with Bitcoin. With this new technology, Bitcoin transfer time can be nearly real-time.
Lastly, we are approaching the Bitcoin Halving Event (expected May 2020), which will have a giant effect on Bitcoin price. In the past, similar events happen twice in 2012 and 2016, and the coin value soars up greatly a year after. 2020 is believed to be a ground-breaking year for Bitcoin and cryptocurrencies again.
Bitcoin halving events - 2012, 2016 and 2020 - source: https://capital.com
Bitcoin value in the long-term
Bitcoin plays an important role in crypto-markets. In the long term, Bitcoin is expected to have enormous value and utility, besides fiat currencies. Moreover, important macroeconomic factors such as trade war between the U.S and China, no-deal Brexit, etc, will affect the Bitcoin value. The reason is that these events might eventually lead to a monetary easing policy to keep economic expansion.
As a result, major reserve currencies are at risk of devaluation. Bitcoin will alternatively become an important investment channel. A lot of well-known investors, policymakers anticipate that Bitcoin will evolve and in the long-term will become a “digital gold”, and eventually will grow even bigger than the gold market over time.
Is Bitcoin dead? Definitely, Bitcoin is not dead, it is just evolving and growing to reach its maturity. Even the Bitcoin price now is merely half of its highest record, we strongly believe in the future, a “great storm” will come for the Bitcoin price.
Should you invest in Bitcoin now? The answer depends on your belief of the crypto-future. What we can certain at the moment is that 2020 will be an important year for Bitcoin and cryptocurrencies.
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