This situation forces me to ask “What is the future of crypto & its technology?”
I won’t pretend to know the answer, but it does beg for some speculation. After consulting with a couple friends and colleagues, they all seem to be under the impression that crypto currency, such as BitCoin, are in a bubble.
What is a Bubble?
A bubble is a type of investing phenomenon that demonstrates the most basic type of “emotional investing”. A bubble occurs when investors put so much demand on an asset that they drive the price beyond any accurate or rational reflection of its actual worth*.
(*sourced from https://www.investopedia.com/features/crashes/crashes1.asp)
If this is true, then we would assume that the value of BTC is driven by investors dumping money into these crypto exchanges, therefore driving the price to such high levels. That would seem to make sense for most of us. However here is the other side of the equation. BTC is not only driving its value from investors, its driving its value from its day to day use.
Company hires a remote worker, when a company goes to pay the remote worker we find that transacting with BTC (technology) is easier, cheaper and more accessible than systems like western union and bank transfers. Therefore driving more volume and demand for Bitcoin.
The Value of Crypto
As more companies and people begin to use crypto technologies to transact payments into Fiat, I speculate that crypto will continue to increase in volume. The value of crypto currencies like Bitcoin will be worked out later in the future if and when the economy demands that everyone require BTC to buy and sell.
What a Bitcoin Future could look like? (this is all speculation and just for fun)
- Lets say theres 7 billion people in the world and everybody got a piece of BTC it would equal 0.003
- Now lets give it economical value, by saying that .003 BTC would have to equal a years salary
- that is .00025 a month, which would equal 0.0000576923 a week, (coincidental that A Satoshi unit is the lowest transacted BTC is 0.00000001 BTC)
- So lets take .003 and equate it to an average world persons salary of 18,000 USD
- So now lets look at the value of BTC as it relates to our equation
- .003 = 18,000 USD of economical value:
- Divide 1 / .003 = 333.333, then 333.333 x 18,000 USD = 1BTC = 5,999,994
- One BTC might equal 5,999,994 USD, assuming that the 21 million coin cap stays in place.
As you can see it wouldnt take a lot of BTC to hold a meaningful amount, if these crypto currencies somehow happen to take the place of Fiat currency, its not going to happen overnight, its going to happen slowly. As with all new technologies, they are fun to hold, play with and learn about. Its pretty cool I can download a file onto my PC and it have actual value.