If you are one of those people who are doing HODL or have bought when the price was well above the current level, I recommend that you continue reading this article, where I will try to analyze the future of Bitcoin by 2020.
Many people have bought or are thinking about buying and are wondering if Bitcoin is a good investment. In 2017, the price of Bitcoin increased by 2,000%, and what everyone wants to know is whether it will perform similarly in the coming years. What will happen to the BTC in this 2018 and 2019 does not matter so much, but what it will finally do in the long term.
The idea of this post is to give an overview of the current situation of Bitcoin, where it is located, and then move on to a brief explanation of those important aspects to consider before investing heavily. If you have already invested, do not worry, this type of information will also be very useful to make a good decision.
If you have already read other articles on this website then you will know that you always recommend doing your own work, and this one in particular does not try to go against that, but to be a starting point where you understand and are informed of basic aspects that guide you to acquire more knowledge, either in this blog or in another.
To close the guide we will see some of the most popular predictions for the year 2020 concerning Bitcoin, and also what is my personal opinion. Finally, we will analyze some developments for the coming months that may be of vital importance for the value of the first cryptocurrency.
WHAT IS BITCOIN?
Many will already know what Bitcoin is about, I will not tell you anything new. But we cannot analyze the evolution of its price if we do not know the basics of this cryptocurrency. Those things that anyone should know before embarking on an investment like this, and unfortunately few people seem interested.
Bitcoin was created in January 2009 by one, or several people, called Satoshi Nakamoto. This was the first cryptocurrency to see the light, allowing people to send and receive funds without the need for an intermediary as in traditional monetary systems. In turn, one of the most important aspects for Bitcoin enthusiasts is the fact that it is a decentralized payment system.
This implies that the network is not controlled by anyone in particular or any institution, not even a central bank. Instead, transactions are validated by a community called miners who use their computers and hardware equipment, that is, their computing power, to solve complex mathematical problems. For this work they receive rewards, either for new BTCs created or for the commissions that people pay for transactions.
All this is thanks to a technology that has been on everyone’s lips in recent months that is blockchain technology. If we wanted to draw a parallel with something that surely everyone already knows, we could say that the blockchain is like a great accounting book where transactions are recorded. That has several interesting features, but without doubt the most important is that of immutability, which prevents anyone from modifying a confirmed transaction.
Other aspects that we should know about and are important in Bitcoin blockchain technology is the fact that it is made up of blocks, so in Spanish it is called blockchain. Each of them contains transactions that once they are validated, the block is added to the rest, forming a large chain that grows continuously.
Each block is created once every 10 minutes approximately, and is capable of processing up to 7 transactions per second. The commissions that are paid to send a transaction will depend on how many people are using the system, or what is the same as saying that the blockchain is saturated.
Today we can say that the Bitcoin project has achieved great success, although it still has a long way to go. From its beginning until 8 years later, at the end of 2017, the price increased from the penny to $ 20,000. And this may not be the greatest achievement, but to provoke a whole revolution that has caused more than 1,600 altcoins (alternative cryptocurrencies) to be born.
This is a brief summary of Bitcoin, but now you have some idea of what the project is about and we can start the predictions for 2020. Although not before discussing some considerations before using all your money in this currency.
PRICE PREDICTION AND ISSUES TO CONSIDER
The reality is that no one can predict for sure the price of cryptocurrencies, since if so we would all be millionaires. In the crypto sector, volatility is a component present all the time, causing it to move up or down at any moment for no apparent reason. This makes predictions very difficult to come by.
That is why it is important to focus on important aspects, fundamental analysis, which allows you to analyze future events and their level of certainty and the impact that this can cause. Of course, this is not easy, but if we focus on its technology, road map, associations and regulations, it can be something simpler.
Even so it can be a very difficult task, even for people who earn a lot of money for doing this all day. Imagine how complicated it can be for anyone who takes it as a hobby. However, if we can perform a long-term analysis and believe, thanks to our own analysis, that Bitcoin or any cryptocurrency has a positive outlook, it is best to invest and not worry so much about the small swings that occur on a daily basis.
Finally, I have to say that you have to avoid investing at all costs for how exciting a prediction can be. Many will have come to my post waiting for a prediction talking about the thousands of dollars they can earn, but my intention is to be as honest as possible. If it were that easy we would all do it, and there wouldn’t be so many people trying to sell their course or their predictions.
My goal with this post, and with any other, is that you learn more, that you make better decisions. If you decide to invest it is because you really believe in that and not because you simply read it.
Today you can run to buy BTC to your favorite exchange, but the reality is that in four or five months you will not remember this post, and when a fall occurs the reality is that you will make bad decisions. However, when you do your own work, you have the convictions and the mentality to face any adversity that the market presents.
Those millionaires who bought when Bitcoin was worth $ 10 did not run at the first decline or the first negative news they found, but they had studied everything they found in their path and made a decision that they maintained despite everything.
PRICE PREDICTIONS FOR 2020
One of the best-known and controversial predictions is the one made by computer security expert and entrepreneur John McAfee. This industry personality is known to be the creator of the popular McAfee antivirus, as well as some eccentricities.
He is also well known in the cryptocurrency industry for writing peculiar predictions on his Twitter account. Although today we know that companies have paid him to carry out these promotional works, where he talked about the potential of a new altcoin.
However, in 2017, McAfee made a risky prediction for the price of Bitcoin in 2020, which would reach $ 500,000. Although this is not exactly the most striking, since although it is a very high number many enthusiasts believe that it is possible, but the fact that if he did not fulfill the promise he would eat his private parts in a live broadcast on television.
Despite this, it will probably not be the strangest thing we see in it, but something quite likely, since in recent times he has decided to redouble the bet and now said he expects it to be $ 1 million. He seems to be quite confident in the result, although statistics do not seem to be on his side.
When I predicted Bitcoin at $500,000 by the end of 2020, it used a model that predicted $5,000 at the end of 2017. BTC has accelerated much faster than my model assumptions. I now predict Bircoin at $1 million by the end of 2020. I will still eat my dick if wrong. pic.twitter.com/WVx3E71nyD— John McAfee (@officialmcafee) November 29, 2017
When I predicted Bitcoin at $ 500,000 by the end of 2020, I used a model that forecast $ 5,000 at the end of 2017. BTC has accelerated much faster than my supposed model. Now he predicted that Bitcoin will cost $ 1 million by the end of 2020. I will still eat the po ** if I am wrong.
McAfee’s prediction is based on a model that he himself has generated, although nobody knows exactly how it works. If the future price of Bitcoin finally rises above $ 1 million, the market capitalization would reach 15 billion, something quite far from the $ 125 billion today.
Market capitalization is the amount of currency circulating for the price. If for example there are 10 million coins in circulation and its price is $ 10, then the capitalization is exactly $ 100 million.
Although there is a light of hope for the intimate parts of McAfee, since to achieve that figure it should increase its value by 4,900% from its historical maximum of $ 20,000. And if we take into account that only in 2017 it increased its value by 2,000%, there may be chances of this happening. However, you should first recover the level seen in December last year.
Tom Lee is a well-known analyst for his predictions and for using technical analysis to do so. Being the founder of Fundstrat, his daily task is to analyze the price of Bitcoin and cryptocurrencies in general, showing his views on television programs as important as those of the CNBC.
According to this analyst, by the end of 2017 Bitcoin could reach $ 25,000, exceeding the historical maximum. Being somewhat more conservative than McAfee by 2020, it drew a price that would be close to $ 91,000.
His experience is in technical analysis, so it is difficult to take this prediction with enough seriousness that I would like. Predicting the market from historical movements is something that has long been known to have no foundation.
At least Bitcoin is one of the few cryptocurrencies in which these techniques can be applied, since its 9 years of trajectories allow to have a sufficiently important history for these practices. If he is finally right, only time will tell.
The next prediction that I am going to talk to you about is a very interesting one, and was made by Bitcoinist analyst Osato Avan-Nomayo. This is based on the fact that by 2020 the Bitcoin mining reward will be halved, from 12.5 BTC to 6.25 BTC.
This is an event that happened in the past on two occasions, as can be seen in the graph below. In 2012 when it was reduced from 50 BTC to 25 BTC, and then in 2016 when it was divided from 25 BTC to 12.5 BTC. The interesting thing lies in the price action after these two events, where the same increase to new highs.
If we take the example of the first halving (that’s what it is called when the reward is halved) we find that the BTC reached $ 1,000 for the first time. Then, one year after the next reduction, the BTC achieved its all-time high to date of $ 20,000.
In this case there is no estimated price for 2020 as we saw in the other two, only we can expect a price increase and a new high in 2020 after the event occurs.
The last prediction I would like to talk about is that of the CEO of Brave New Coin, a cryptocurrency research organization. In it Fran Strajnar believes that the price could reach new highs close to $ 200,000 by the year 2020.
Strajnar uses as its arguments the adoption rate, which increases all the time, which implies that more and more people use the network, something that is observed in the use of purses and apps. This is a good argument in favor of the price increase, because as more people buy and use Bitcoin the price increases.
In fact, today, in Japan there are more than 200,000 stores where we can spend our BTC physically. The use in the real world is a concrete way to increase its price.
There are more predictions, some of them that are not particularly for the year 2020, but at this point I would like to know what you think about them. Now we will focus on the goals and how Bitcoin stands against them.
We have already spoken that an important aspect of Bitcoin, and that it is well worth observing, is the progress of its road map and the objectives that lie ahead. This, together with the regulations, make up an important part of the evolution of its price. We see some particular questions about this.
Although Bitcoin has a clear advantage because it is the first cryptocurrency, the one with the highest market capitalization, regulations and use in real life, the performance in terms of transactions is still quite poor.
In fact we have seen many other cryptocurrencies that are cheaper to use as well as more scalable.
The first against Bitcoin is that the minimum to wait to confirm a transaction is 10 minutes, as long as there is no congestion on the network. Other currencies, such as Ethereum, can verify transactions in just 16 seconds.
In second place is the problem of commissions, when the network is used by many people at the same time they increase to cost dollars instead of cents.
Finally we find the most important problem, Bitcoin only confirms 7 transactions per second. This is because scalability problems have not yet been addressed as this cryptocurrency deserves. For example, NEO and Ripple are able to confirm thousands of transactions a second, if Bitcoin finally wants to transform itself into a worldwide payment system, it must work tremendously in this regard.
A company called Lightning Labs (which has received investments from very important companies such as Twitter, PayPal and Litecoin) works on a protocol that seeks to end this problem once and for all.
Surely many will already know this technology that is called Lightning Network, which is believed to increase Bitcoin transactions to millions per second. But the best thing is that as a result, the transactions will be much faster and also less expensive.
A technology like this, if successful, could mean a huge increase in the price of Bitcoin in the future.
Although Bitcoin has been among us for almost 10 years, it has only been the last few months that we have begun to talk about the issue of regulations. Many believe that if governments begin to regulate this, it will negatively affect the price of cryptocurrencies, among which I am included.
On the other hand there are people who argue that the regulations could be very beneficial for Bitcoin, as happens in Japan for example.
In 2017, this nation was the first in the world to fully regulate Bitcoin as it does with the financial services industry. In fact, the Japanese government has put Bitcoin into the asset category that includes the yen.
Since that time Japan has seen how cryptocurrency marketing volumes increase. People use it on a daily basis, being able to spend it in more than 200,000 stores.
The arguments of this trend focus on that if these regulations are applied globally, it will help to give Bitcoin more legitimacy. Not only by helping people trust them more, but the big financial institutions start to invest. In this way the price will increase.
In my opinion this is not entirely true, since cryptocurrencies, and especially Bitcoin, were created with the intention of escaping government control. To all those measures that inevitably lead to dire economic cycles. The increase in its volume is easily explained as a result of the increase in its price, which has led to unprecedented media coverage and has boosted its popularity.
If we let governments regulate them, they can create a false sense of security, but in return we will be losing the freedom to decide what to do with our money and how it behaves. Large investors will enter the market, but along with them all that great speculation that inexorably leads to the bubbles we hate so much.
Now it remains that you analyze all the questions regarding this point and draw your own conclusions. But remember not to analyze only what can happen in the immediate context and in the short term, but what could happen from here to 10 years if that happened. Japan may have many regulations, but the reality is that its GDP has not grown since the 1990s.
Partnerships and adoption
In Japan there are more than 200,000 stores that accept Bitcoin, and in the rest of the world there is one more. There are stores both in countries such as the United States and the United Kingdom, although of course to a lesser extent.
This is like a hamster wheel, as it improves its technical capabilities more stores will accept it, and as they tend to do it more people will use it. This results in the increase in its price. The turning point is these large online stores or apps, such as Square, that can offer a significant boost to their value.
This aspect is very important for the predictions for 2020, widespread adoption is an engine that will push its price to new limits.
While Bitcoin is the first cryptocurrency and number one, there are hundreds of other projects eager to snatch the place. The vast majority are built on other blockchains, such as Ethereum, but there are also independent projects that have turned to the difficult task of fighting the hard battle that involves being a payment system.
There are no guarantees of which cryptocurrency will be the winner of this contest, so it is important to always be investigating what other projects are doing. The example of search engines is the most interesting to draw a parallel.
A few years ago, practically nobody used Google, I am talking about when the internet began to be used and we were still in the twentieth century. At this time, the best known options were Yahoo! o AltaVista, search engines that today do not represent even a very small part of Google’s traffic. This shows us that there may or may not be a cryptocurrency that ends the Bitcoin reign.
We can see that this also happened with Facebook and social networks. Which tells us that we cannot believe that Bitcoin has a secured position just by being the pioneer. It may be, but only the time and developments that are to come can determine this issue. Meanwhile you have to be attentive to the market and that competitors arise in it.
There is also the threat of cryptocurrencies created by central banks, as is the case of the Venezuelan government that has issued Petro. No doubt this is a possible threat, since if we look at the history of money, private banks were the first responsible for issuing paper money. Although finally it was the governments that monopolized this task by creating the consequences we already know, inflation and economic crises.
IS BITCOIN A GOOD INVESTMENT?
Before we continue it is necessary to emphasize that this is not an investment advice. I just base my opinion on all the information we have analyzed above, nothing is guaranteed. The ideal is always that you take all this and do your own analysis, which is based on this information added to your research work.
I believe that in the future many cryptocurrencies will offer enormous value to society and therefore will be able to multiply their value. Bitcoin is a very stable currency and the one that marks the passage of the market, having a huge competitive advantage for this. It does not mean that there are no risks as we have seen before, but that analyzed periodically can be controlled.
Bitcoin probably ends up being a haven of value like the dollar is today, providing all the benefits that something digital can offer. It has a lot to work with in terms of medium of exchange, such as the dollar or the euro. But it is not a necessary condition for this to increase its value over time.
Anyway, improvements like the Lightning Network I think will be very beneficial in the medium and short term for this cryptocurrency. If you succeed, you can leave serious contenders like Bitcoin Cash on the road.
I believe that regulations are an important aspect to consider, but not a positive factor. Of course they are my arguments and you can have completely opposite ones. That is why it is important to form your own opinions and not be left alone with what I or another person can tell you.
If Bitcoin is a good investment or not you can only decide for yourself. If you are not able to take the job of doing an investigation by your own means, the most advisable thing is that you do not invest your money in this, you can lose everything. We have seen great returns in the past, but that does not mean that the market continues to rise without a limit.
Growth has to come from the hand of a valuable contribution to society. Where Bitcoin is finally a currency of daily use, either as a refuge of value or as a means of exchange, and not merely something speculative. Only then can we be sure that our money is in a place conducive to its growth.
After this it is difficult for me to add much more. I think I have covered all those important aspects that I think may be influential factors in the value of Bitcoin. You can follow the price of the BTC on our website, but never forget to do your own homework. It is not bad that you read blogs and news sites constantly, but you will not write all this. But at the end of the day, we are alone before our investments.
We have seen what different personalities thought within the Bitcoin environment, and it is an important kick to begin our investigation. From there we can deepen the arguments that led them to sustain those values by 2020 and convince ourselves that it is something that could happen or not.
Now I would like to know what you think of the predictions, what is your forecast and your arguments for 2020. By sharing we can all benefit from a greater amount of information.