How to calculate the future value of bitcoin?
Bitcoin has rocked this world. I bet even your grandma has heard of it. This cryptocurrency keeps changing our reality, and it’s not like it’s stopping anytime soon. How can we find out how much it will cost in the future?
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Number 1 thing to consider: the rule of offer and demand
The law of offer and demand is as easy as one two three. A lot of you have been familiar with this rule since your school days.
The buyers are always trying to buy the product or service at the most economical cost possible. The sellers, for their part, have always been striving to sell their products and services – and you guessed it right – to the highest bidder.
However, there is one more aspect to this rule – the more sellers appear on the market, the easier it is for the buyers to find where to buy. As a result, the prices go down. It stands to the reason that nobody would want to pay more for the thing they can find at every corner – and at a lower cost to boot.
Accordingly, if there are more buyers than sellers, the latter will – obviously – try to make use of the situation. When the demand increases, the prices go up.
Okay, so how can we apply this to the future of Bitcoin?
Here are some events that can generate more demand for Bitcoin and make the cost reach its historical heights:
1. The national governments of the countries and other influential institutions start to officially accept Bitcoin;
2. The updates making the usage of Bitcoin easier and faster emerge;
3. More media attention starts being devoted to Bitcoin – as a result, lots of new, inexperienced, and unskilled investors are attracted. Consequently, Bitcoin’s volatility is increased.
Number 2 thing to consider: the rule of fair value and expected value
Don’t worry – this concept is pretty simple as well.
The fair value concept: if people believe something to have value – it will have value, and the prices are definitely going to soar higher.
The Next Web’s article says: Italians apparently prefer Bitcoin over Visa or MasterCard for online payments. In Italy, Bitcoin was the third most popular online payment method.
This example shows us that the people in Italy consider Bitcoin to be something worth using and something worth paying for.
The expected value concept: this notion is what it literally means – the anticipated value of the thing. If folks believe that technology has what it takes to become a revolutionary one.
If the fair value goes up – the anticipated value goes up, too.
For its part, when the anticipated value goes up – the actual prices go up.
To sum up
There are two basic concepts to consider when calculating the future value of Bitcoin:
1. supply and demand;
2. fair value and expected value.
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