We have seen how Bitcoin has increased its value during the last year. It moved from $950 up to $20.000 dollars. Now it is being traded around $14,000 as the New Year celebration passed. There are different views whether Bitcoin could reach a higher value or whether we are in a bubble. We do not have an answer to this. But there is a paper that predicts that Bitcoin could keep increasing its price and reach $5.8 million dollars.
Does Bitcoin Have Intrinsic Value?
One of the main questions is to know which is Bitcoin’s intrinsic value. Does it have intrinsic value or not? According to this paper, the famous cryptocurrency has intrinsic value: the ‘blockspace’ behind it.
The paper reads as follows:
“It is widely believed that “blockchain” is “the technology behind BTC”, but in fact the two have a mutual relationship. BTC prevents the blockchain from malfunctioning. Blockspace (created by a healthy blockchain) gives BTC its intrinsic value.”
Bitcoin Worldwide Adoption
In the next pages, the author of the paper, named ‘MrGameAndWatch’, says that Bitcoin could be widely adopted. He gives several reasons to think in this way. First, he says that merchants prefer to use one currency and not two. And why would they prefer Bitcoin over the US dollar? Well, the second reason is that there is a selective intolerance towards the US dollar.
Let’s explain what ‘selective intolerance’ means. There are some USD users that would like to become BTC users, but there are many BTC users that do not want to become USD users. That applies to criminals, tax avoiders and other individuals and enterprises not following the law.
There is a third important reason to believe that Bitcoin can be widely adopted. As we are living in a more globalized world, people tend to travel more and move among different countries. The US dollar and other fiat currencies are only accepted in specific countries. Bitcoin could easily be accepted everywhere.
Bitcoin Price $5.8 Million Dollars – Is That possible?
The paper keeps explaining how Bitcoin could become the dominant world currency. The study takes the value of all the world’s money for a specific year and converts that to Bitcoin and its supply. Bitcoin should be worth in 2017 $5.85 million dollars if it would be the world’s dominant currency. Its price would be $11.22 million dollars in 2027 and $25.94 in 2037.
Whether this is plausible or not, we are not able to determine it. How would bitcoin be able to deal with all the transactions? At the moment, the Bitcoin network is facing different problems with its fees and transaction times. The Lightning Network (LN) could give Bitcoin the possibility to scale outside its own chain, but this solution is not available right now. Besides that, it is not clear if with the LN the network would be able to handle so many transactions per second.
What do you think about this Bitcoin value prediction? Will it one day become the world’s currency?