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Bitcoin prospects for 2016

29 December 2015, 14:34 / КурсЕксперт / Exchange Rates

2016 will probably be the year when the bitcoin price will again considerably grow. It won’t happen because of the Russian pyramid scheme or illegal drug business. The main reason is quite simple. It includes slower upsurge of money supply.

Bitcoin is known to be a “cryptocurrency” based on web. It is widely used for swift and anonymous movement of funds without the necessity to have a central authority. In spite of the fact that the majority of experts consider it to be the digital currency of the future, it is still often refused for investments because of its changeability.

2016 seems to be different. The reason is that the price of bitcoin is expected to follow the universal principle of supply and demand and thus to be greatly driven by analogous factors related to a traditional functional currency.

Bitcoin is not controlled by a central bank. Instead, it relies on “mining” computers whose task is to change transactions by contesting to cope with mathematical puzzles each 10-15 minutes. As a result, the one who is the first to cope with the puzzle and clear the transaction wins and receives 25 new bitcoins. By the by, 25 bitcoins make up $11,000 BTC=BTSP. The bitcoin program was invented in 2008 by weird Satoshi Nakamoto who has not been identified yet. It was designed for the reward to be divided approximately into two every four year. Can you guess why? In order to avoid inflation! The next division will take place in July 2016.

One more feature of bitcoin is that it was designed to compete commodities by possessing a specific supply of 21 mil. bitcoins. They can be reached in about 125 years. Today it is 15 ml. That’s also where the term “mining” generated from.

Daniel Masters is well known in the world. He is a co-founder of a multi-million dollar bitcoin hedge fund. He started his career in the middle of 1980s. Then he specialized in oil trading at Shell and spent about 30 years selling commodities before passing to bitcoin. According to his estimates, the bitcoin’s price can reach its 2013 top and fix on the value of $1,100 next year. Moreover, by the end of 2017 it can raise up to $4,400. Daniel Masters states that it is caused by a number of factors. Firstly, this is the increase in accepting payments in bitcoin by large companies and authorities. Secondly, the rapid growth of interest and investment in the “blockchain” technology that is basis for bitcoin transactions. And finally, thirdly, more demand on the part of China due to weakening of its own currency and restraining of economy.

“However, in fact this reward division into two will increase the bitcoin’s price by about 50% from the current price”, Masters supposes. “It will happen in spite of the fact that the reward division has always been unavoidable. This is the factor that has already been accounted for in a number of markets”. The expert adds that if suddenly the Organization of the Petroleum Exporting Countries decides to halve oil production in 6 months time, the price of oil would immediately react. The bitcoint market is different. It goes on remaining in its infancy.


DECONCENTRATED DIGITAL ASSET

The price of bitcoin has already grown almost twice over the recent three months and thus paved the way to further growth. Last month it reached $500. This is the first time since August of the previous year. It happened due to the Chinese demand for a ponzi scheme developed by a Russian swindler. However, Bobby Lee, the chief executive of BTCC (BTCC is one of the leading Chinese bitcoin exchanges) thinks that the cryptocurrency still has more perspectives. He believes that the price can increase 8 times before the reward is divided and reach $3,500 by next summer.

In November 2012 the reward was halved from 50 to 25 bitcoins. At that time the rates were much lower and were $12. In spite of that, the price increased by almost 150% over the previous 7 months. This is exactly the time required for next division.



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