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When we were talking about cryptocurrencies with other people, very few asked about the security and the potential social and economic impact of the time-stamped distributed ledgers. Instead, they usually asked, “Should I hold some bitcoin?”
You may doubt whether it’s the Internet currency, or you always feel it’s not stable enough with high technical content, but if you want wealth appreciation or preservation, you’d hold some bitcoin.
This is a bitcoin chart since 2013, which can hardly be seen.
The fluctuations of the original charts are very large, but this chart has exactly the same data although it’s drawn by the “logarithmic scale” (usually used when there is a large range of differences), which alleviates the fluctuation peaks so that the trends can be better understood without any distortion.
News websites usually need charts with high fluctuation so that the bitcoin prices look more exciting, more dangerous, and more lively, but here we only focus on its trends.
Price will change, but the trend won’t
In the “moderate” chart above, there are 1000% soaring and 80% plunging, forged transactions, manipulation, speculation, fraud, fear of missing, and terror as well as other activities you may encounter in many financial assets.
Obviously, the price is almost always on the rise. It’s simply on the rise. In the first 5 years, the price rose from US$0.003 to US$135, and in the next five years, the price rose from US$135 to US$10,000.
Let’s put all of this aside and just assume that you know bitcoin is a speculative investment and you have US$100 in your pocket. What will happen if you invest it in bitcoin?
- 1: The trend of bitcoin has stopped and history has not repeated. Finally, the price of bitcoin becomes zero and you lose US$100.
- 2: The trend of bitcoin continues and history is repeating. Bitcoin has risen by 1000% and you get US$1,000.
Option 1 has never happened but option 2 always happens. Which one is more likely?
No one can predict the future, and it’s not impossible for bitcoin to stop rising. Even US stocks can’t guarantee a 7% annual rise (some experts even call for a return to market stagnation in the 1970s).
Bitcoin has been overrated before seeing the overall situation
People may think it’s crazy to spend US$10,000 on “fake currency” that nobody uses, but it would be normal to invest US$306,000 in the stock of Berkshire Hathaway under Buffett.
As a holder of both assets, I believe that Warren Buffett’s company can never capture all the wealth in the world, but bitcoin possibly can.
The “world wealth” worth hundreds of billions of dollars is likely to be recorded on the blockchain and exchanged by means of bitcoin. With the development of the bitcoin network, it will continue to capture more and more wealth.
In the past decade, developers have made bitcoin technology better, cheaper, and more practical. The number of users and transactions keeps increasing, and so does the number of bitcoin wallets.
Some giants like Microsoft have used bitcoin’s blockchain technology to solve some practical problems and services. Moreover, they haven’t slowed down the pace of iteration.
Recently, Fidelity and Bakkt were first approved to sell investment products of real bitcoin rather than paper equivalents. These companies have more follow-up plans to attract more customers with marketing and advertising.
One day in the future, more and more merchants and enterprises will accept bitcoin, even Ohio State, USA, has now accepted bitcoin as taxation payment. Does this mean the bitcoin network will continue to expand?