Everlasting Shortage of Bitcoin

12.01.2016

   

   The growth in demand for Bitcoin does not influence its mining, and vice versa, mining does not influence the demand. It is impossible to compare Bitcoin with other assets because there are no such assets. Demand and supply of Bitcoin exist separately, therefore, the flexible supply reflects on the rate.
   If to compare Bitcoin with gold (the most stable asset at all times), their origin is rather similar, but gold cannot have the characteristics typical for Bitcoin; it is not for nothing Bitcoin is called “gold of the 21st century”. There is a difference which lies in the following: gold mining increases following the growth of the price, in other words, more gold is mined, so more funds are invested in working of mines. Well, there is nothing new – it is enough to compare data on price and mining.
   Bitcoin is structured in other way. Following the specific math program, the shortage is automatically created regardless the demand.
We have already witnessed automatic decline in volumes of cryptocurrency entering market, which reduced the amount of money in the market twice; that led to the shortage of this currency and, as a result, growth of its rate in comparison with all other assets. After that there was no emission. According to the program algorithm next decline by half is expected after seven months; it doesn’t matter, what Bitcoin rate will be at that moment or how much will be invested in mining. This independent from external factors emission makes this cryptocurrency a truly unique financial instrument.
In one year the number of transactions with Bitcoin increased four times. In 2014 the volume of transactions was around 50,000, so at the end of 2015 the number exceeded 200,000; even the simplest analysis shows that the number should continuously increase. As of now it is the largest boom in practical use of blockchain in the course of its existence. Given that program emission is so close, demand for Bitcoin doesn’t stop growing – this is the analytical fact.
Of course, opinions concerning the growth of Bitcoin rate differ, and sparse skeptics offer to consider other scenario, when once we may witness mass sales of Bitcoin, so its rate will reach the lowest possible level. This is just one of the views, but facts tell us a different thing – we can see recurring growth of Bitcoin rate, so after emission we shall expect a sudden surge of the rate.
Besides flawless facts there is a counter-evidence that gives no peace to any reasonable investor – “in compliance with blockchain algorithm the crisis of Bitcoin-coins’ proceeds will last forever.”  
 The entire range of logic assumptions serves as evidence to the statement:

  • Supply does not match the demand for over three months;
  • Miners have every reason to keep extracted coins expecting a sudden surge in Bitcoin rate after the consecutive decline of the block’s rate. With this predictable behavior miners automatically increase the deficit of cryptocurrency even prior to emission preventing the whole blockchain ecosystem in its continuously growing condition from a sudden increase of the rate.
  • The growing rate inevitably attracts mass-media, and as a result, attracts more new investors and favors the growth in demand for cryptocurrency.
  • Automatic deflationary effect forces investors to keep their coins not for cheap purchases in online-shops but for long-term investment, in this way deepening the shortage of cryptocurrency. In other words, part of Bitcoins is withdrawn from commerce by keepers (investors), and the nature of the cryptocurrency put the wind in capital accumulation for further selling in long-term prospect.
  • Bitcoin is accepted at more and more places; its acceptance is growing at an exponential rate. As predicted for the current year, acceptance will be increased twice; the demand for Bitcoin outpaces supply prior to emission.
  • Expected that due to the growth in demand and low supply the rate of Bitcoin after the next drop in Bitcoin mining will increase and reach around $1,000-1,150 for 1 BTC.
  • Purchase of Bitcoins has significantly simplified, so number of investors is expected to increase dramatically.

Keeping in mind the above mentioned arguments no need to be an expert to conclude that in 2016 we may witness new culmination of the Bitcoin rate. Well, if the epoch of Bitcoin shortage has begun, why not to focus our attention on this cryptocurrency? Seems we have something to think about…


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