Bitcoin, the saviour, the messiah, the game changer, it could make you a millionaire!
I would be extremely surprised if you have not heard of Bitcoin because it is becoming very mainstream in the media.
Understanding cryptocurrency, the magical blockchain technology behind it,
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Benefits is when people start to turn back around and walk away scratching their heads.
I could make this a 100 page explanation about the economy, the history of money, the banking system, cryptocurrency vs fiat but I am going to keep this as short and sweet as I can.
Fiat currencies (Pound, Dollar, Euro etc) have NEVER lasted, they are always replaced with a new monetary system, most people are unaware of this because life has enough distractions and the herd tends to just go with the flow and have a little moan to their friends about the prices rising on shopping and petrol.
The average lifespan of a fiat currency is only 27 years based on the last 775 that were created, there are a couple of exceptions, one being the Great British Pound Sterling that is now over 300 years old but there is one HUGE problem.
What happens over the life span of each one of these fiat currencies?
Now a quick easy lesson in money for you, lets say we create a new currency called DDD and we say there is a total supply of 100,000,000,000 now we start to encounter a few problems as we have gained some debts that we have accrued as a country due to things like war, market crashes, pandemics, unemployment, benefits, fraud, etc.
In order to keep stability in the currency, we need to borrow some money from the central bank or things will start to fall like dominoes, so the central bank say, well how much do you need?
So we tell them 50,000,000,000 DDD to get things back on track.
This is where it gets interesting, the central bank literally start printing more of it (whether on a printing press or figures on a screen in a digital sense) and give it to the retail banks to put it back into circulation.
So now we have 150,000,000,000 DDD in circulation but 1DDD is no longer carrying the value that it had before because it has been devalued by the total circulating supply being bigger than it was originally.
Companies now have no choice but to raise prices on products and services in order to run their businesses and we ON THE SURFACE have to pay more DDD for a service or product that has not changed in any way.
If you buy an apple for 1 DDD then next year buy an apple for 1.5 DDD has the apple changed?
It is still just an apple that grows on a tree that was planted using a seed and watered by a farmer, the DDD currency has lost value because the bank has printed more of it and added it into circulation watering down the buying power of DDD.
What makes cryptocurrencies like Bitcoin so different?
Simple, you cannot print more Bitcoin.
Bitcoin has 21 million coins and no more can be added to it, this is called a finite supply unlike fiat currencies like the pound and dollar that have an infinite supply, the main difference in value is that it cannot be inflated or deflated.
If lots of people buy Bitcoin the price rises because the supply and demand rise, when there are very few Bitcoins left to buy, the price will naturally become more expensive due to its scarcity.
How will Bitcoin hit £100,000 from a technical standpoint?
Take all the money in the world (roughly $80 trillion all told) and then think about what is going to happen to the value of it as inflation continues to rise in every single fiat currency in existence, we are in the beginning of a recession and mid-way through a pandemic meaning we are in a REALLY bad economic situation and face a serious global crash and reset.
People, businesses and investors will have two options, keep it where it is and lose part or all of their wealth or transfer their wealth by investing in other assets as a hedge for safety.
The cryptocurrency market is being seen as a place to do that now, institutional investors and major corporations are putting part of their wealth into this market and that will only continue to increase as people start to lose faith in fiat currencies like the pound, dollar and euro.
The cryptocurrency market only needs to have a market cap of aone tenth of the money in the world and Bitcoin will be worth upwards of £100,000 per coin and this is a reserved expectation on my end.
Tyler Winklevoss one of the first billionaires in cryptocurrency has estimated a $500,000 per coin price on Bitcoin and believes it will take over gold, Tim Draper the venture capital investor estimates by 2022 we will see a $250,000 per coin price on Bitcoin, Mark Yusko from Morgan Creek Investments and a former skeptic of Bitcoin believes we will see a $100,000 a coin by the end of 2021 and $500,000 by the end of 2030.
Bitcoin is priced at the time of writing this on 4th September 2020 at £7864 per coin.
Written by Funsho Ajibade
Co Founder, Coach & Mentor
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