A friend told me there was no way that Bitcoin could go up 10x from $750. So I made this list for him.
Growing use of bitcoin for the unbankable. For example in the USA, the “legal” marijuana industry is a $20 billion industry that operates primarily in cash since marijuana businesses cannot get bank accounts. What if they started using bitcoin for their banking needs. Worldwide probably 3+ billion people are unbankable due to lack of ID, trustworthy domestic banking system, etc. Bitcoin on a phone could leapfrog legacy banking systems for billions of people.
If a Bitcoin ETF ever launches it will create a potentially huge onramp of new investors. The Gold ETF generated $9 MM purchase per day. The less popular oil ETF generated $4 MM purchases of oil per day. The entire trading market for USD / BTC is $10 MM per day right now. Traders estimate that it’s only possible to buy $1.7 of new BTC a day without moving the price. Even that seems really high to me. Either way, if a ETF comes online now, it sure seems likely to inflate a bitcoin bubble for good or ill. See : https://www.sec.gov/comments/sr-batsbzx-2016-30/batsbzx201630-23.pdf for a good explanation here.
Development of smart contracts creates entirely new industries that ride on bitcoin. Work by Rootstock and Blockstream are promising here. Bitcoin could have Ethereum like smart contract ability by 2017. Success here could create payment options for entirely new industries, which would boost demand for BTC.
Bitcoin theft resistance improves. Right now it’s tough for a non-technical person to store bitcoin independently securely. It’s also impossible for central authorities to keep bitcoin online securely. Technology almost already exists to change that though.
Easier access to purchase in foreign countries. Places where BTC is most needed like Egypt, Venezuela, India, etc it’s hard to get.
Bitcoin continues the linear pace of adoption it has today -- no heroic gains but just slow and steady with time. Steady growth of adoption combined with limited inflation or even deflation of supply will lead to price growth.
Commercial / transactional uses emerge that drive more widespread ownership and lower volatility
The world continues to deliver moments that test faith in fiat currency such as the 2008 financial crisis and subsequent bailouts and quantitative easing, paper currency expiration in India, hyperinflation in Argentina, Chinese Yuan devaluation, Cyprus bank confiscation, systemic collapse in Venezuela, etc. Combine those moments with greater access to bitcoin worldwide and belief that it’s a decent store of value.
Bitcoin use as the rails for remittance and cross border transactions. This use is already growing at 100%+ year on year, albeit from a very small base. It would need to grow much, much more to materially increase demand for bitcoin.
Most countries are terrible managers of their own currency. Some countries such as Panama and El Salvador have already given up on the idea of managing their own currency and simply use US Dollars. What if just one of the 190+ countries on earth adopted Bitcoin as legal tender for some or even all uses? For comparison sake, the 55th largest currency, New Zealand has a money supply of $105 billion which is approximately 10x the size of bitcoin’s current market cap. China has a money supply of $20 trillion which is 1800x bitcoin. Bitcoin money supply is currently equivalent to Cambodia and Ghana at around $11 billion.
Bitcoin becomes the replacement of higher-fee processors like Visa, MasterCard and American Express, which have a combined market capitalization of almost $350 Bn today. If Bitcoin were to capture that value, one Bitcoin would be worth almost $17,000. While bitcoin transaction volume is slowly growing, bitcoin is not on pace to get anywhere near visa like transactions at current pace.
Some countries begin to buy Bitcoin for foreign reserves the way they buy gold today.
Bitcoin is increasingly used for crowdfunding and investment funding. This is already happening. In 2016 there have already been dozens of ICOs of startups using bitcoin and ethereum as currency for multi-million dollar fundraisings.
Use of bitcoin for regulation arbitrage grows. For example the growth of bitcoin for prediction markets, internet betting, drugs, darknet trades, etc.
Development of micro payments that ride on bitcoin. There are a few startups working on this such as Brave browser, Yours, 21 but there is no real traction yet. Success here could create payment options for entirely new industries, which would boost demand for BTC.
Increased ability to scale and associated lower transaction fees. After SegWit goes live multiple scaling solutions become possible including the lightning network, other off chain solutions, or a fork to a larger block size. Right now high transaction fees and full blocks are retarding the growth of bitcoin as a payment system. Scaling solutions could and should reverse this though.
The development of a stablecoin which makes it possible for Bitcoin to become the behind the scenes asset for many applications, where the user might not be aware that they are actually using bitcoin.
Some of these things alone could create a 10x price increase. Other things will merely push the price slightly north. What do you think? Anything you would add or remove from this list?
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