Recently at the start of 2022, the mayor of New York City announced that he supports people buying Bitcoin as it continues to dip.
Clearly, there is starting to be a trend for Bitcoin as more and more people start to change their opinion of it. Not only just the normal retail investors, but famous people, politicians, and hedge funds alike are all changing their opinion of Bitcoin. Ironically only a few years ago, it was still considered a currency for drug trafficking, but now it seems to be more of a buzzword for the “sophisticated” thing to invest in.
Let’s break this down. Why is the standard continuing to change, and why is cryptocurrency Bitcoin starting to become the next big thing?
Long-Term Supply And Demand
First, we need to look at the long-term supply and demand of Bitcoin.
The easiest thing to point to is the halving that happens every four years on the network. The only way for new Bitcoin to enter the eco-system is for people to mine and approve transactions. By doing so, they are rewarded with part or all of the block rewards for the block they approve.
Although as it implies, the halving is continually reducing the amount of Bitcoin entering the eco-system every 4 years. We mean halving literally because it reduces the rewards in half from the previous four years of mining. In addition, the number of people looking to purchase Bitcoin and hold it seems to be increasing year over a year only increasing the demand.
Therefore, we have an issue. The supply of Bitcoin continues to fall for new Bitcoin entering the eco-system, all the while Bitcoin is becoming more in the demand and mainstream year after year.
From this we can easily see, Bitcoin will continue to get more and more sought after all the while the price should continue to climb organically as people start to buy up whatever is available.
Utility And Exposure
The next thing to fully consider is the utility of Bitcoin.
Currently, Bitcoin is still limited in its options in terms of utility, but there is so much under the hood that people do not understand.
First, Bitcoin stores data. Not just transaction data, but all kinds of data! This can be used for a number of things! In addition to that data, Bitcoin has the ability to have nearly feeless transactions with a layer 2 solution like the lightning network.
While the lightning network is still debated, the idea is there and the purpose is clear – to bring Bitcoin more utility.
Another elephant in the room to discuss is the impending global market crash that is constantly on the verge of happening. We are fairly sure that most investors around the world have started to view Bitcoin as a store of wealth.
The best comparison is the traditional comparison to gold as the world’s number one commodity. Well, Bitcoin is considered to be the technological version of just that.
The last thing to take a huge swing at is the amount of government and the public approval that Bitcoin has received. In 2021 alone here are some of the things that happened:
- President Putin of Russia openly said that crypto has a right to exist and be used for transactions
- Venezuela approved Bitcoin as a mean of exchange throughout their country encouraging citizens to download wallets with payouts
- A similar thing has happened in parts of the Middle East like Iran to avoid US sanctions through mining
- Miami and New York mayors have said they want to make their respective cities crypto hubs for America
- Likewise, a multitude of countries around the world have started to add Bitcoin to their reserves showing how Bitcoin can not just diversify your portfolio, but become an important part of it
This is just a taste of the things that happened in 2021, but we can see a clear trend once again starting to emerge.
Bitcoin is here to stay. You might want to get some.