Reasons Why People Invest in Bitcoin in 2023

Thirteen years ago, the value of one bitcoin was $0.07417. Today (July 19, 2023), one Bitcoin is worth $29,991. While many investors advise against banking on cryptocurrencies, citing the market’s volatile nature, Bitcoin’s price history speaks for itself. It’s a deflationary currency, meaning it gains value over time, unlike fiat currencies like the US Dollar, the Euro, Japanese Yen and others whose historical data shows they’ve lost their purchasing power over time. But it wasn’t always this way with fiat currencies. For example, the US dollar was once a gold-backed currency, which explains why it dominated the financial markets and maintained the reserve currency status for decades.

However, since the direct convertibility of the dollar to gold was severed in 1971, it has increasingly faced threats of losing its reserve currency status. With the ongoing wave of possible de-dollarization, and multiple countries seeking an alternative reserve currency, bitcoin investments are on the rise. Bitcoin is very secure compared to other altcoins and payment systems. Additionally, Bitcoin’s value is inherently tied to its limited supply, and the rising market demand.

Bitcoin’s Growth Potential

Most crypto investors focus on short term market fluctuations or volatility when handling crypto, and overlook long term trends. Historically, the value of bitcoin has been on an upward trend since 2009. Many financial experts predict that one bitcoin could even cross the $175,000 mark, or even higher by 2030. The following factors may to drive up bitcoin’s price in the coming years:

• Demand Versus Supply: Bitcoin has a limited supply of 21 million tokens, and it’s expected that all of it will be mined by 2140. This means that its price will go up over the next few decades.
• The Halving Event: The bitcoin halving event is expected to happen in May 2024. The run up to this event is expected to push bitcoin’s prices further up.
• Stability: Bitcoin has continued enjoying more stability than other alternative coins it competes with. The trend is expected to persist, further raising bitcoin’s price.
• Increased Adoption: Bitcoin is enjoying increased adoption in many sectors. These include online gaming, social platforms, hospitality and retail. Big brands like Starbucks, Twitch, Time Magazine, Microsoft and CheapAir pioneered this movement, and it’s spreading to other sectors.

Most importantly, bitcoin is a store of value, and an excellent hedge against inflation, qualities that have so far led to an increase in price.

The first use of Bitcoin as a medium for transactions was the now infamous two Papa John’s Pizzas that Laszlo Sanchez purchased for 10,000 bitcoins in 2010.

Since then Bitcoin has been used as a medium for a wider range of transactions, including Bitcoin gambling and other forms of online entertainment.

This year, different companies have shared their predictions on bitcoin’s price in the coming months. Here’s a sample forecast of how the currency might perform.

Here are some prevailing market trends that position bitcoin investments as a potentially smart financial decision.

1. Inflation Rates are Going Down

Inflation peaked at 6.2% last year, according to data shared by the International Monetary Fund. This led to the general purchasing power and disposable income going down. Bitcoin got caught up in the financial situation, which explains its price drop. However, the inflation has slowed down to 3.5% this year, and is expected to go all the way down to 2% between 2024 and 2027. For the crypto investors, this means that buyers will have more confidence in the crypto market than they did last year. In fact, bitcoin’s current $29,900 price is $6000 higher than its price at the same time last year, which is a 30% increase in value.

2. The US and European Central Bank are Exploring Digital Currencies

The US, European Central Banks are in the advanced stages of developing a digital dollar and Euro respectively. Many other countries are also exploring the possibility of introducing a digital currency whose transactions are domiciled in the digital space. This might seem like the competition that will drive down Bitcoin’s use-but there’s a catch-digital currencies are still centralized and controlled by the bank. However, their adoption can help people understand how digital currencies work, boosting interest in Bitcoin. Since bitcoin is decentralized, it’s projected to still have the upper hand.

3. Whales are Buying Huge Sums of Bitcoin

It is estimated that the wealthiest 97 Bitcoin wallets hold 14.15% of the cryptocurrency’s total supply. This means they have enough capacity to affect the currency’s supply. In fact, experts have predicted that there might be a managed bull run, raising the price of bitcoin all the way to $50,000 in the second quarter of 2023. This would be a 66.6% increase from the current price.

4. Cyber Security is Becoming a Major Concern

Credit card fraud and other financial cyber crimes have been on the rise. Lots of people lose their credit card information, and consequently their money to hackers. As a result, more people are exploring the use of bitcoin for transactions because of the security and anonymity of the process. As Bitcoin gains adoption, its perceived value has risen, and so has its market value.

5. Open Banking is Slowly Taking Over

Open banking is becoming more mainstream, and is expected to do so over the next few years. This is a system that allows third party access to consumer financial data through APIs (application programming interfaces). While this might be good for the financial institutions, it creates a huge privacy concern for consumers as the shared information is prone to abuse. Many people will adopt Bitcoin and other cryptocurrencies in a bid to keep their financial data private.

Bitcoin has definitely established a place for itself as a digital currency and possible alternative to the present financial system. The cryptocurrency, together with the blockchain technology that backs it, has the ability to transform the banking landscape permanently. However, compared to gold, which has been around for thousands of years, bitcoin still has some growth to attain. It would be best to do further research and consult financial experts before deciding whether to invest in bitcoin or gold. They’ll provide insightful data to make the right choice.