Bitcoin once again hit a record high of $7,756 today, just a couple of days after dropping down to nearly $6,000. For the past year this has been the standard trend for Bitcoin – to rise dramatically, pull back slightly, and then push on through to new record highs.
As someone who learned about Bitcoin and the bitcoin network through a libertarian group I was a part of back in 2010, I have first-hand knowledge of just how amazing this rise is. When I learned about bitcoin it already had a market value, but one that was under $1 per coin. As a fairly tech savvy person with a large degree of economic training, I thought it was just not possible for the average person to accept as an asset, let alone a currency. And the fact that I am not a millionaire today is a testimony to just how wrong I was.
Don’t get me wrong – it wasn’t exactly an easy task to obtain Bitcoin back then. The websites that make it possible today did not exist back then, and you likely had to mine the coins, or meet a someone in person in order to get the coins you desired.
My personal theory has always been – either the bitcoin network and cryptocurrencies will fall into a niche category of people attempting to transfer funds from one country to another and each coin will have a minimal value – or it will be more globally accepted as an actual store of value and transactional currency. If the latter were to occur, we would start to see smaller countries accepting it as currency, and the price to rise drastically and steadily.
Bitcoin went to $10, $50, $100 – I ignored each rise as I was convinced this wasn’t going to continue. And then the rise of 2013 began and I said to myself that I couldn’t avoid this any longer. I bought in just as the mainstream media began talking about it when it was $300 per coin. I played around on the now-defunct Crypsy (which I, unfortunately, had coins stolen) and watched as it hit a peak of roughly $1,150. Then the pullback began. This one was real and would last 2 and a half years. As I saw Bitcoin fall from $1,000 to $600 and then to $500, I thought I saw my previous hypothesis – that cryptocurrencies were falling back into their niche and would likely fall back to a minimal value. I figured that the average person who found out about Bitcoin via watching their local finance program didn’t understand it, that they likely didn’t even know what the bitcoin network was. They saw a $1 investment turn into $100, and they wanted in. Once that market was saturated, I figured the bubble had burst. I sold whatever profit I may have accrued at $500, and lost the rest when Crypsy went under.
Now we are brought to 2017 – an absolutely amazing year for Bitcoin. Bitcoin opened 2017 right around $1,000 and is currently at $7,750, resulting in an unheard of 7,750% return on your investment (and quite a bit more if you bought in November 2016). Each time a pullback has occurred, a strong floor has been presented and it just keeps on trucking. Unfortunately, I didn’t realize this until it had already reached $4,000, but it was better late than never when it comes to this party, as my investment has almost doubled in 4 months.
While many are comparing this to a massive bubble, I seem to think this time it is different. According to my two hypothesis, Bitcoin will either fall drastically to a niche market (likely under $100 per coin), or it will continue to rise as more and more industries, economies, and countries begin accepting it as transactional currency as well as a store of value. While it is currently far too volatile in my opinion to be a standardly used currency, it will only be a matter of time before a couple of poorer countries recognize that cryptocurrencies continue to maintain and grow in value, while their paper denominations continue to inflate. Countries like Kenya have been using M-Pesa as their main currency for around 6 years, so I can see cryptocurrencies eventually becoming the standard there.
While my belief in the system is very late to the party, I now sincerely believe that Bitcoin (or another cryptocurrency) will have its staple in mainstream global economies, and will only grow in value as the coins become more scarce and the more people that demand it. Either that or the whole thing is going to crash to the niche markets.
See the full Bitcoin price charts HERE