Richelle Ross is an independent cryptocurrency consultant and a computer science major at the University of Florida, whose interests include programming and cryptology.
On 23rd July, I predicted on Quora that the price of bitcoin at the end of the year would rest around $420.
It appears at press time that I was not far off. As of 30th December, the bitcoin price is around $425. It seems I identified what many in the cryptocurrency community were predicting – 2015 was the year the bitcoin price would experience the slow and steadier growth it needed.
In previous years there were a lot of unknowns in the cryptocurrency world. It was often believed that a better currency may come along or that bitcoin was just another form of the fabled ‘Tulip Mania’, a period in the Dutch Golden Age used as an example for when the price of an asset outpaces its intrinsic value.
And these concerns were real possibilities because bitcoin was new, and there were growing pains it had to overcome.
Institutional acceptance
This year we learned that bitcoin is probably not going away anytime soon, as evidenced by the continued rise in transaction volumes and legitimization from mainstream leaders and institutions.
Larry Summers, Blythe Masters and UK Chancellor George Osborne have all given approving statements on bitcoin or the blockchain.
Not only are the statements positive, though, they’re increasingly bullish. For example, Summers, the head of US Department of the Treasury under the Clinton Administration, said he is behind the technology as he wanted to side with the “history of change”.
Elsewhere, everyone from politicians to musicians was seeking to find new and novel ways to use and support the technology.
US presidential candidate Rand Paul began accepting bitcoin donations, becoming the first presidential candidate to do so, and indie songstress Imogen Heap released a song on the blockchain.
The list goes on: Patrick Byrne’s blockchain-backed stock platform was recently approved by the SEC; Cameron and Tyler Winklevoss launched their long-awaited exchange Gemini; more bitcoin investment vehicles have been started; the Coinbase service reached 3 million users; and bitcoin startup funding surged to total almost $1bn all-time.
Maturing conversation
Analyzing the bitcoin economy for the last couple years, I have been fascinated by the evolution of conversations between bitcoin skeptics and evangelists. But it’s easy to forget how it used to be nearly impossible to read a bitcoin article without it featuring sources labelling it a Ponzi scheme or scam and an evangelist who claimed bitcoin’s price was going “to the moon” next week.
But, we’ve moved beyond these simplistic sides this year.
Now, the debate centers more on whether bitcoin can maintain its values and whether there will be a role for private or independent blockchains in a decentralized financial technology stack.
In essence, bitcoin is being discussed with more complexity and the pessimistic voices trying to write obituaries are dying out.
Whenever I’ve spoken to colleagues about bitcoin, what usually intrigues them is the global payment rail system.
It parallels the trends we see in communication and cloud networking – nation states are becoming less relevant to younger generations with global systems like the Internet, and that conversation came into the spotlight this year.
Reasons for optimism
Assuming that bitcoin remains the most popular token to run the blockchain and transaction volumes continue to rise, the next few years should be spectacular for the price of bitcoin.
While 2015 was a relatively calm year for the price, it seems likely that 2016 will be much more action-packed with the block halving next summer, where the amount of bitcoins awarded to miners roughly every 10 minutes will be cut in half.
We’ve laid down the tracks so to speak, allowing for there to be more confidence than ever before that bitcoin is, and can continue to be, a credible store of value.
With this in mind, I’ve decided to offer another price prediction for next year since I had some luck for this year. I believe bitcoin will surpass $500 by the middle of the year and average out to a $650 price range in the second half of the year.
Of course, there are too many unknown factors when predicting price to know with any certainty, but the maturing infrastructure has lead me to believe that next year will be an exciting one for investors.
Still, many of bitcoin’s best days come in reaction to world crises in places like Greece, China, and Argentina, meaning at the end of the day, there’s no predicting where the price could go.
As we continue to patch up leaks in the global economy’s sinking ship, I have to wonder will 2016 also be the year we are reminded of why Satoshi created bitcoin in the first place.
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650 image via Shutterstock