Future of Bitcoin
Starting its journey in 2010, Bitcoin reached an important milestone when Laszlo Hanech made the first real transaction, buying two pizzas in Jacksonville, Florida, for 10,000 BTC. Since then, Bitcoin has become an official legal tender in one country, and has received massive institutional support in many countries around the world.
Since Bitcoin and blockchain technology have already changed the way we store and use money, it is almost impossible to imagine a future without Bitcoin and cryptocurrencies. Huge predictions have been made about the future of Bitcoin, which makes the next decade very important for its evolution.
And so, what is the future of Bitcoin?
After four long years of waiting, the Bitcoin community has received a Taproot update that has improved the privacy and scalability of the network. In addition, the Bitcoin network is now able to support smart contracts.
Thanks to its trailblazer advantage, it sets the pace for much of the crypto industry. The following are the likely changes that await Bitcoin in the future on its projected path to universal distribution.
Greater financial inclusion
The ease of use of Bitcoin and its decentralization have contributed to its rapid growth, especially among the younger generation. However, the goal of the MTC – to achieve global distribution, cannot be achieved until the digital asset becomes part of the financial industry.
In 2021, Bitcoin has reached some significant milestones, gaining the largest number of institutional investors than ever before. In addition, countries such as Japan have recognized Bitcoin as legitimate property under the Payment Services Act (PSA).
According to forecasts of global financial experts, starting from 2022, the trend of Bitcoin adoption and inclusion in the traditional financial sector is expected to increase. According to the deVere Group, one of the world’s largest independent organizations in the field of financial consulting, asset management and fintech, five more countries may make Bitcoin legal tender in 2022.
Regulation is one of the main factors that influenced the inclusion of BTC in the financial industry. However, as more and more countries are ready to regulate this industry, the International Monetary Fund has called for the creation of a single global structure to regulate it and other digital assets. With a favorable unified structure, the adoption of Bitcoin can accelerate, approaching the achievement of mass use.
According to Citi Bank, and in light of the latest laws introduced in the United States and the upcoming signing in the EU, Bitcoin may be on the verge of widespread recognition and will become the preferred currency for international trade in the next decade. If the issues of storage, security and efficiency of capital are resolved, then BTC will be able to be widely distributed.
Solving the scalability problem
According to the data Coinmarketrate.com Currently, Bitcoin processes 5 to 7 transactions per second (TPS). Since Solana is capable of handling 50,000 TPS, and Ethereum plans to increase the speed to 100,000 TPS with the upcoming transition of the network to Proof-of-Stake (PoS), the Bitcoin network must become significantly more scalable to compete with these advanced blockchains.
To compete and possibly replace traditional payment gateways capable of processing thousands of transactions per second, the Bitcoin network needs to become more scalable.
More network upgrades
Although Bitcoin still does not seek to develop its design as Ethereum does, there will still be updates that improve the network’s performance. Since it is a decentralized network, updates should be discussed and agreed upon by the Bitcoin developer community.
Although Taproot has opened up the possibility of creating smart contracts both at the level of the main Bitcoin protocol and at the Lightning Network level, this functionality has not yet been fully used. As a result, some of the proposed improvements to the Bitcoin network are aimed at harnessing the potential already inherent in the network and the Lightning Network.
For example, Eltoo is a proposed enforcement layer for LN that allows any later channel state to replace any earlier channel state. Eltoo, if adopted, will reduce the amount of storage space used on the network, creating space for more transactions.
The Bitcoin network can now support the execution of smart contracts after the Taproot update. Smart contracts are at the heart of two major trends in the crypto industry today – decentralized finance (DeFi) and non-interchangeable tokens (NFT).
Although these features are not currently available, Bitcoin can support them through the execution of smart contracts. Bitcoin’s entry into the DeFi space is so anticipated that DeFi Prime reports that 25 protocols currently use BTC.
Widespread institutional adoption and Bitcoin Spot ETFs are inevitable
After a long wait, investors received the first Bitcoin ETF futures, which debuted on the New York Stock Exchange in October 2021. However, in recent months, the U.S. Securities and Exchange Commission (SEC) has rejected offers for spot Bitcoin ETFs from several investment companies.
While approved futures ETFs mimic the price of the underlying asset (meaning investors don’t have to go through a complicated trading process), a spot ETF would allow investors to trade directly with the Cue Ball itself.
Although the SEC has postponed approval of the Bitcoin Spot ETF, more and more funds are starting to apply for this type of fund. Thus, it will not be long before investors fulfill their long-standing desire to get direct contact with the BTC.
Although we are seeing a huge influx of attention from institutional investors, especially in 2021, this trend is expected to continue this year.
Sustainable mining
The Proof-of-work consensus mechanism, which requires miners to secure blockchain networks such as Bitcoin, has been heavily criticized for being too energy-intensive and harmful to the environment. To solve this problem, the Bitcoin Mining Council was created in 2021.
According to a survey conducted by BMC, BTC miners have confidently switched to rational use of electricity. The Council reports that the global mining industry using renewable resources to mine Bitcoin has grown from 1% to a notable 58.5%. In order for Bitcoin to stand the test of time, especially while maintaining the POW blockchain model, mining must be more sustainable and less harmful to the environment.
Where will the Bitcoin price be in the future?
The price of Bitcoin cannot be separated from the asset itself, since it is one of the main factors that attracted investors. Since 2011, there have been many huge jumps, followed by a price pullback.
Although we have seen Bitcoin repeatedly reach new historical highs and currently stuck amid a strong drop, expert forecasts and technical analysis remain optimistic about the future of the world’s largest cryptocurrency.
Although the price is something that cannot be predicted with high accuracy, many experts agree that the number one cryptocurrency will reach the $100,000 mark. Many analysts believe that this mark can be reached by mid-2022.
Although there is no certainty in predicting Bitcoin, Anthony Scaramucci, founder and managing partner of the New York investment company Skybridge Capital, and Katie Wood of Ark Invest believe that the digital asset can trade at $500,000 per coin.
According to Forbes, a group of 50 cryptocurrency experts believes that by 2025 the price of BTC will be 250,000, and by 2030 – $5 million.
Although Bitcoin was originally launched as a mechanism to facilitate cross-border transactions, “Bitcoin as a store of value” is currently one of the most commonly used terms in the industry. However, volatility is a plague that investors continue to endure.
With the arrival of institutional players in Bitcoin and the announcement of this asset as a valid form of payment for goods and services by the countries of the world, the volatility of the asset is projected to decrease in order to become suitable as a payment mechanism.
With increasing institutional adoption and an increasing number of investors considering Bitcoin as a store of value, the asset price may become less volatile. In addition, the growth of its use in the real world, as it is included in the financial industry, is also a factor that can stabilize the value of Bitcoin.
In conclusion
One of the most frequently asked questions about Bitcoin is possible options for its use in the future. Given that the crypto industry led by Bitcoin has caused changes in traditional finance, BTC could become the world’s reserve currency in the next 50 years.
However, if it fails to match emerging technologies, Bitcoin could become just one of the many digital assets that have made many people rich.