The Case for a Million Dollar BitcoinA far-fetched dream or a probable reality? Photo by Bermix Studio on Unsplash
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January 3rd 2021 was the 12th birthday of Bitcoin since the inception of the genesis block. And there are good reasons to celebrate. The news of Bitcoin constantly breaching new highs is a welcoming narrative by all HODLers and bulls alike. While the price is still going parabolic as we speak, the million-dollar question is now again on the table — how likely is it for Bitcoin to add six zeros in its value?
I posted this question on Reddit mid-December and has since gathered more than 50 opinions in the discussion thread. I studied and compiled the opinions and analysed the rationales behind them.The Probability Photo by Edge2Edge Media on Unsplash From single-digit to double-digit probabilities, most certainly a non zero chance.
Most arguments seem to align with the narrative that Bitcoin will continue to raise its prominence as the preferred store-of-value asset, outpacing the flow of capital into bank savings, pension funds, and even gold.
When we look at the numbers, for Bitcoin to worth a million bucks apiece, the entire market cap has to reach a staggering 20 trillion dollars, which is about 28 times of its current market cap (around 8 billion dollars at the time of writing) and twice as big than that of gold’s.
Why comparing against the gold you ask? Gold has largely played an important role in human history as a reliable store of value for more than 2000 years (~550BC to 2021). In response to Nixon shock in 1971, gold has decoupled itself as a medium of exchange against the dollar, effectively paving its new role as a deflationary asset. Ever since gold has appreciated from roughly $30 an ounce to $1,900 today, a...