With Bitcoin breaking record high after record high in recent times, the obvious question to ask is: Is the growth sustainable?
Clearly everyone has views about where the price of Bitcoin will go in the near and distant future. Now that the 10K level has been thoroughly smashed, commentators are quickly readjusting their price predictions to new levels of say $13K, $15K, $30K by 2018 or $500K in another few years time doesn't look so incredible now.
Future price of BTC is: Logarithmic (non-linear) regression!
A picture tells a thousand word and the best price prediction picture I've seen is this one here:
Source: https://bitcointalk.org/index.php?topic=831547.0
It shows an unbelievable growth path for Bitcoin price versus USD for the next few years when the price heads towards a massive prices of >500K by 2024. But as they say in investing, past performance is no guarantee of future performance. Who knows what tomorrow may bring? Whether you believe this chart or not, one thing that is guaranteed and thats the price action will not be smooth sailing. There will be massive jumps followed by inevitable big dips and then perhaps the cycle will continue or perhaps not.
There are many many challenges faced by Bitcoin from many directions. One thing I wrote about before about Bitcoin is that you would be insane to spend it - at least in the current state of the crypto world. I think about a video I just watched which is of a great presentation by Andreas Antonopoulos in Sweden talking about bitcoin. In the video he mentioned how he ended up paying what is now $12K for one pound of coffee beans in the early days of bitcoin. Not quite as bad a deal as what Mr Laszlo Hanyecz "Bitcoin Pizza Man" got but still very pricey all the same.
The futures may be looking short
But besides the insanity of spending bitcoin to buy your day to day goods and services, there are plenty of other challenges to face bitcoin. One recent development is the imminent availability of cash settled futures contracts for bitcoin. I've said my bit about it when I saw that everyone was generally celebrating it's imminent arrival, personally I saw futures contracts as more of a threat then a boost for bitcoin. There are reasons why bitcoin prices have been going up and up in the past year and other safe havens such as gold and silver have not been doing very much...
While I'm not an expert in the matter, I've come across a really excellent article that examines the whole scenario around these futures contracts and what effect they may have.
When "free" coins are NOT free
One other challenge for Bitcoin I found interesting was the idea of coin dilution. What is this you ask? I'll start by saying this: You know all these free bitcoin clones (Bitcoin Cash, Bitcoin Gold, Bitcoin Diamond, etc.) we've been getting lately? They may be "free" because you didn't technically pay anything for them, but there's still a cost. Do you know what that cost is? The cost is the value and mindshare that it pulled from the real bitcoin (whatever that is?!?!?), with each new fork vying for the use of the name Bitcoin, it ultimately leads to user confusion and actually slow down real-world adoption rather than help accelerate it.
I recommend that anybody with an interest in bitcoin and cryptocurrency take a good read of the article. Even if you don't agree with it, it's always good to examine both sides of the story before you make you your mind.
Thanks for reading
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So where do you see Bitcoin going in the next few months or years? I'd be interested to hear what people think.