6 Reasons Why 2020 Could Be The Best Year In Bitcoin’s History
Bitcoin’s future is perhaps one of the most widely discussed topics in the crypto community. It has been pronounced “dead” exactly 371 times according to popular resource Bitcoin Obituaries. However, the world’s largest cryptocurrency has survived every attempt to be dethroned and continues to grow after each down cycle. Leaving behind the technical aspects, here are 6 possible reasons why the future of Bitcoin is bright and why 2020 might be shaping up as a very good year.
Bitcoin Halving
One of the most anticipated events will be taking place on May 17th, 2020 – its halving. Following this event, the rewards that miners get for adding blocks to the network will be slashed in half, hence reducing the overall supply of bitcoins. This will be the third halving event in Bitcoin’s relatively brief history.
The first one cut the reward for a solved block from 50 BTC to 25 BTC back in 2012. The second one took place in June 2016 and cut the rewards down to 12.5 BTC. Naturally, the one that’s upcoming will see the block rewards reduced to 6.25 BTC per block.
As Cryptopotato reported on the matter, after each halving, the price of Bitcoin has increased substantially. This is not unexpected as basic economic principles stipulate that when the supply of an asset reduces while the demand for it remains the same or increases, its price needs to go up.
Gold Comparison
Traditional markets are going through rather tumultuous last few weeks and an interesting comparison has arisen. Gold, the ultimate hedge for the stock market, has been significantly rising and Bitcoin is not far behind. In fact, many proponents and industry experts already touted the virtual currency a “safe haven” for the declining traditional markets.
Libra’s Controversy
Facebook’s own cryptocurrency which is supposedly coming out in 2020, has given the community a lot to talk about with some controversial aspects. However, it brought a lot of attention to Bitcoin and cryptocurrencies as a whole and even though it differs considerably from Bitcoin, the mass media was shown that cryptocurrencies are here to stay.
More importantly, Libra got the attention of regulators. We saw a couple of congressional debates held on the matter in the US. Furthermore, even the head of the UK’s Treasury said that they don’t intend to stop Libra, and blockchain technology in general, giving perhaps further merit to the notion.
Inflation
Hyperinflation is a major threat to many countries with Venezuela and Iran serving as prime examples in the last few years. While Bitcoin is far from being mass-adopted, cryptocurrencies may be the way out for some countries who are looking for a solution to their economic issues.
One thing that has to be noted about Bitcoin, in particular, is that it has a pre-programmed inflation rate which can’t differ. It’s 3.74% per annum and it can’t change, unlike inflation in traditional fiat markets.
Mass Adoption
As mentioned before, Bitcoin has a long way to go to before reaching mass adoption. However, news from New Zealand shouts a positive headstart towards adoption. The fact that the country allows employers to pay salaries in Bitcoin and that they will be treated under the same regulatory taxation framework speaks a lot. Moreover, we can also see that there are quite a few marquee companies getting involved in the space, including, as mentioned above, Facebook, Overstock, Twitter, and many more.
Scarcity
Because of its first-of-a-kind protocol, only 21,000,000 BTC will ever be mined and will be in existence. Since it’s not limitless, it shows similarity with silver and gold as they have a limited supply as well, even though it’s unknown how much exactly. While potentially similar, Bitcoin can be transferred digitally with the clicks of a few buttons. In a digital world, this could be the biggest bright outcome of them all.
Moreover, as reported by Cryptopotato, Bitcoin is expected to eventually catch up with Gold and Silver in terms of its stock-to-flow ratio, potentially sending its price much higher as well.
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