Will the dominoes fall?
It won’t be one catalyst that will make BTC reach 1 million USD but instead will be multiple factors.
Factor 1 Mass Adoption
The price of Bitcoin is based on the laws of supply and demand. Bitcoin has a fixed, limited and predictable supply; the only thing that no one has figured out is the demand. For Bitcoin to reach a 1 million Dollar price it will need a LOT of demand. Demand will come from people wanting to hold and use Bitcoin; mass adoption.
There are multiple things that must take place for mass adoption to happen.
- Bitcoin must become easier to use. Most people are intimidated by the Bitcoin wallet structure. Fortunately, projects like Divi and Monarch Wallet are making Bitcoin easier to use.
- Bitcoin must have more merchants adopt it as payment. Fortunately, there are already plenty of well known merchants who do including: Microsoft, Overstock, Whole Foods and many more. Check out Who Accepts Bitcoin in 2020? (Top Companies) - CoinDiligent to see a more complete list.
- Friendlier regulations and built in tax prep for wallets would also help. In the USA if you get paid in BTC you get taxed on it as income, and if it goes up in value there is capital gains tax. Most of all those who do lot’s of transactions will find it a complicated process to accurately provide the IRS with their tax information. For many people this will keep them away from BTC.
Factor 2 Scaling Solutions
Bitcoin must scale. This is currently Bitcoin’s greatest challenge. If the current number of Bitcoin users doubled overnight it would be a disaster for that blockchain. Updates to the underlying system like Mimblewimble will help but successful layer 2 solutions like the Lightning Network are essential. If millions of people are waiting days or weeks for their Bitcoin transactions to go through they will abandon it. On a development level this is what I am most concerned with. However, there are a lot of people working on these solutions so I am optimistic that it will get figured out.
Factor 3 Fiat Currency Failure
Failing government currencies is something that could boost Bitcoin’s value overnight. Since Bitcoin is an open and permissionless blockchain anyone with a computer and an internet connection can use it. This means that when there is currency hyperinflation the common people will go to Bitcoin before they go to a different government’s currency. Bitcoin does not have to be the worlds best currency to grow in value; it only needs to be better than the worst.
However, if the US Dollar experienced hyperinflation Bitcoin could quickly reach 1 million USD value. This would happen for two reasons:
- US Citizens would quickly adopt Bitcoin to maintain the value of their wealth (and adoption boosts the value of BTC).
- The devaluation of the US Dollar would also increase the price of BTC. The value of BTC would not increase but it would take more Dollars to buy the same product. For instance, if it takes 2 Dollars to buy a can of Coke instead of 1 Dollar the value of soft drinks has not gone up the value of the Dollar has gone down.
Conclusion
I actually think fiat currency failure could be the biggest catalyst for a Bitcoin revolution but the other 2 factors must be in place for it to happen. If the average person can’t navigate basic cryptocurrency space or find merchants to accept their Bitcoin the masses will give up. The worst thing that could happen is billions of people wanting to use Bitcoin but not being able to do because it can’t scale. That would be a nightmare. So all 3 of these factors need to happen for Bitcoin to reach 1 million USD and factors 1 and 2 must happen before the government currencies experience mass failure.
If you want to learn more about Bitcoin and cryptocurrency follow my Quora Space The Crypto Cave.
