Bitcoin - $300k Target Price?
Bitcoin has had an enormous run in year 2020 up to an All Time High of $40000 as of now. From the lows in the March 2020 crash of $4000, valuation of Bitcoin has grown 10X.
Many people started paying attention to Bitcoin. Many giant institutions and companies and banks are starting to own Bitcoin and adopting the digital currency revolution. Even China has rolled out trials of their national digital currency "Digital Yuan" to the public in several cities.
Pegged with news of Bitcoin adoption and insane price of Bitcoin rocketing, many retail investors get FOMO and started to ride the waves as well. I'd say it is still not too late to take a deep look into what Bitcoin is all about and make your decision to HODL (Hold on for dear life) in Bitcoin.
What is Bitcoin?
It is actually very difficult to explain Bitcoin in layman terms. However, if you are in to read the full White Paper article, written by Satoshi Nakamoto, the founder and creator of Bitcoin, you may go ahead and click on the link below.
There are translated version of other languages of the white paper which can be found in the link below.
I have summarised my understanding along with other sources on what Bitcoin is, and writing it in simpler form below:
On the surface, Bitcoin is regarded as a digital currency, a digital form of money. In the deeper level, Bitcoin in fact is more than that. The blockchain system that runs Bitcoin isn't just a system of currency. It is a platform of trust. Currency is just the first application. It is the concept of decentralisation applied to the human communication of value.
The system of money has a very long presence in the history of mankind. It has gone through several phases and changes.
1) Pure barter exchange
2) Introduction of abstraction of value using shells, stones, precious metals, etc.
3) Paper Money
4) Plastic Money
5) Network Money
Money has evolved from a decentralised pure barter exchange (peer to peer exchange without third party verification) to the use of abstraction of value (difficult to judge on valuation and forgeable) and to using paper money & plastic money which we use today which is centralised and controlled by the banks.
Bitcoin introduces a platform which can run currency as an application on a network without any central points of control, a system that is decentralised like the network itself. It is completely global, borderless, decentralised, and open. Besides that, paper money and plastic money in circulation now is not limited. They can be printed and issued by banks and governments if required and this is why inflation happens. Bitcoin however is limited.
Today if you were to transfer a large sum of money to someone else, you may be required to have permission and central banks will be conducting an investigation on your intentions and if you are lucky, the transaction will be completed the next business day. But since Bitcoin is decentralised, you can transfer any amount you want with just a click away and no questions asked. You have complete authority over your Bitcoin. It cannot be seized, frozen, or censored. Your transactions cannot be intercepted, cannot be stopped and you can do so with anonymity.
Besides that, not only does Bitcoin not recognise borders, it also does not recognise people. Bitcoin can be owned by machines, by software agents and machines can pay each other. It is the basis for a market based security system.
Just like how the internet unifies various systems, Bitcoin and the blockchain technology unifies the various systems of money. Today we have systems of money for small payments, systems of money for large payments, systems for payments between companies, and systems for payments between governments.
Currency is not the only application for the Bitcoin underlying technology. You can take the building blocks of the technology and use it to construct other systems that communicate values, such as tokens, reward points, brand loyalty coins, etc. Just like how China has used the technology to create the "Digital Yuan".
Today, Bitcoin is just at the same development level that the internet was at in 1991. But with the internet today, exponential growth has already started. The innovation is exploding at an astonishing rate.
Below is an image of comparison of Bitcoin with Gold and Fiat currency.
How is Bitcoin limited and what is Bitcoin halving?
The supply of Bitcoin is determined algorithmically based on a geometrically declining supply function. Miners are getting paid for their work as auditors. They are doing the work of verifying the legitimacy of Bitcoin transactions. This convention is meant to keep Bitcoin users honest and was conceived by bitcoin's founder, Satoshi Nakamoto. By verifying transactions, miners are helping to prevent the "double-spending problem."
In the beginning, miners are rewarded 50 Bitcoins for every block of the Bitcoin blockchain. Bitcoin halving is an event that happen approximately every 4 years where 210,000 blocks are completed and the miners' reward halves (eg: 50 Bitcoin reward becomes 25 Bitcoin reward upon halving). Whenever Bitcoin halving occurs, the scarcity increases. Based on mathematical calculations, the final Bitcoin to be mined would be in the year 2140.
Is Bitcoin secure and safe?
Bitcoin in itself is unhackable. So, what the news of hacking and stealing of Bitcoin is all about? Since many have not adopted Bitcoin wallet, we use a centralised institutional of custodian control that take other people's Bitcoin and hold it for them.
This is similar to what the bank does. The difference is that banks are regulated and very secure by now that no one will dare to hack into the banking system or break into the bank to steal money. Even the bank themselves will not run away with your money. But many custodian controls of Bitcoin are still not recognised and regulated. If you are not careful in choosing the right custodian, they may just take your Bitcoins and run away. Custodian controls of Bitcoin that has weak security is prone to hacks because it is a jack pot for hackers.
Hence, choosing a strong and reputable custodian control for your Bitcoin is very important. If you are still skeptical, you can get yourself a hard Bitcoin wallet and store it away.
$300k Target Price?
A leaked report from Wall Street giant Citibank has revealed a senior analyst thinks bitcoin could potentially hit a high of $318,000 by December 2021, calling it "21st century gold."
Whether true or not, it does not matter. What matters is that the value Bitcoin is giving to the world is enormous and game changing. So, why not consider to be part of this great innovation and HODL.
So, what do you think after reading all that I have written? Let me know in the comments section below!
** Above information is time sensitive. Please do your own due diligence before taking action.
This post here does not serve as an investment advice, and is not a recommendation to buy or sell. Please do your own due diligence before starting any form of investment. Use the content at your own risk. I do not own some of the pictures and screenshots taken from different source of websites, and the illustrations attached are purely for education purpose.