Will Bitcoin Ever Be Stable?
Though Bitcoin has a $60 billion market cap, it is still nothing when related with vast global currency markets. Till the BTC market cap starts to grow into the trillions, it is highly unlikely that it will be steady enough to function as a currency. The instability merely happens because there is a Reflect about it. How many ways can exchange your fiat currency into other currencies, commodities, or goods? Since almost everyone agrees in fiat, you can always discharge your cash without affecting its price. Meanwhile, in spite of continuous growth, very few people, traders, or services are willing to receive Bitcoin. In fact, most central banks and controllers are actively trying to make it more problematic to buy or sell Bitcoin. It all leads to a lesser market cap and lower liquidate for Bitcoin than fiat moneys.
All of it is easier to hold with a metaphor. Imagine a plump man jumping into a small swimming pool. As he drops, he makes a vast splash and soaks everyone around him. A lot of water is exiled from the pool, as the level of water changes. Now imagine the same plump guy jumping into a huge body of water such as a lake or a sea. There is so much water that his presence in there is so irrelevant, that no matter how hard he goes, it’s barely impossible to reduce the water level. Will Bitcoin Ever Be Stable?
In this similarity, the plump guy represents an investor with a lot of money and Bitcoin is water. At this fact, Bitcoin is still a small swimming pool and is far from being a lake. When someone enters or leaves the market, they create a massive swell effect on the price. But, once Bitcoin develops like a lake or an ocean, the price will stabilize, and you won’t be able to notice any individuals moving the market.
The Future of Bitcoin
Bitcoin has seen an upsurge in approval in countries like Venezuela and Zimbabwe where traditional money systems have failed. Some experts say it’s only a matter of time when other national financial systems begin to smash, too. That is likely to be the major chance for Bitcoin and cryptocurrencies to gain mass trust, adoption, and liquidity.
If Bitcoin gains adequate liquidity, there should be meaningfully less fluctuation in price. While Bitcoins market cap is around $60 billion, the most unchanging world currencies are restrained in trillions. When and if Bitcoin gains the levels of acceptance and liquidity which are near the level of usage of leading government-issued currencies, it’s price will become much more steady than it is today. Will Bitcoin Ever Be Stable?
All currencies and assets change their seeming value on a daily basis. Looking back at the past of money, it becomes clear that all currencies, particularly fiat, tend to denigrate due to increase. In the case of Bitcoin today, price depreciation could occur due to a letdown of its network, new regulations, stability issues, better replacements or anything else that downcast people from using it. However, unlike traditional currencies, Bitcoin is deflationary, which means that it should escalate in value over time. Notwithstanding the apparent risks, it still has the best track record of all cryptocurrencies and therefore signifies the most important financial innovation of our time.
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