The Future of Bitcoin

Deno Trajcevski

Launched on January 3, 2009, Bitcoin opened the doors to decentralization, revolutionizing the financial industry. Although the earliest intention of Bitcoin evolved around a borderless and decentralized alternative to government and central bank-controlled fiat currencies, the ensuing industry has evolved to embrace much more.

Since its debut, more than 11,000 other digital assets have been launched, showing how big the cryptocurrency is shaping up to be. Nevertheless, Bitcoin remains the most important digital asset globally as the industry pioneer.

Starting its journey in a game, in 2010, Bitcoin hit a major milestone when Laszlo Hanyecz made the first real-world transaction by buying two pizzas in Jacksonville, Florida, for 10,000 BTC. Since then, Bitcoin has become the official legal tender of a country and gained massive institutional backing.

With Bitcoin and blockchain technology already changing how we hold and use money, it's almost impossible to picture a future without Bitcoin and cryptocurrencies. There have been huge predictions made about the future of Bitcoin, making the next decade a very significant one for Bitcoin's evolution.

What is the Future of Bitcoin?

After four long years of wait, the Bitcoin community got the Taproot upgrade, which improved the privacy and scalability of the network. Although the Bitcoin network is now capable of supporting smart contracts,

Owing to its first-mover advantage, Bitcoin sets the pace for most of the crypto industry. On its predicted journey of mainstream adoption, here are the likely changes Bitcoin is expected to hit in the future.

Greater Financial Inclusion

The ease of using Bitcoin and its decentralization aided its rapid growth, especially among younger generations. However, Bitcoin's goal of achieving global adoption cannot be achieved until the digital asset becomes infused into the financial industry.

In 2021, Bitcoin hit some remarkable milestones, gaining the most institutional investors than ever before. In addition, countries like Japan have recognized Bitcoin as legal property under the Payment Services Act (PSA). From its first purchase of

Global finance experts have predicted that the trend of Bitcoin's adoption and inclusion into the traditional finance sector is expected to increase, starting in 2022. According to deVere Group, one of the world's largest independent financial advisory, asset management, and fintech organizations, as many as five more countries could make Bitcoin a legal tender in 2022.

Regulation is one major factor that has affected the inclusion of Bitcoin into the financial industry. However, with more countries ready to regulate the industry, the International Monetary Fund has called for a uniform global framework to regulate Bitcoin and other digital assets. Under a favorable uniform framework, the adoption of Bitcoin could become faster, inching closer to achieving mainstream use.

According to Citi Bank, Bitcoin is on the cusp of mainstream acceptance and could possibly become the currency of choice for international trade in the next decade. If custody issues, security, and capital efficiency are settled, then Bitcoin could gain mainstream adoption.

Tackling Scalability

Bitcoin currently handles between 5 and 7 transactions per second (TPS). With Solana capable of handling 50,000 TPS, and Ethereum looking to scale up to 100,000 TPS with its upcoming network transition to proof-of-stake, the Bitcoin network would need to become significantly more scalable to compete with these cutting-edge blockchains.

To compete and possibly replace traditional payment gateways capable of processing thousands of transactions per second, the Bitcoin network will need to become more scalable.

More Network Upgrades

Although Bitcoin remains reluctant to evolve its design like Ethereum is doing, there are going to be upgrades that improve the performance of the network. Because Bitcoin is a decentralized network, upgrades need to be voted and agreed upon by the community of Bitcoin developers.

Although Taproot opened the doorway for smart contracts to be created both on Bitcoin's core protocol layer and on the Lightning Network, the functionality is yet to be fully utilized. As a result, some of the proposed upgrades on the Bitcoin network are centered around exploiting the potential already resident in the network and the Lightning Network.

For example, Eltoo is a proposed enforcement layer for LN that allows any later channel state to replace any earlier channel state. Eltoo, if passed, would reduce the storage space used on the network, creating space for more transactions.

The Bitcoin network can now support smart contracts executions after the Taproot upgrade. Smart contracts are the underlying codes for two of the major trends in the crypto industry today – decentralized finance (DeFi) and non-fungible tokens (NFTs).

While these features are currently not available, Bitcoin can support them, thanks to executing smart contracts. Bitcoin's entrance into the defi space is so highly anticipated that DeFiPrime reports that 25 protocols are currently using Bitcoin.

Broader Institutional Adoption and Bitcoin Spot ETF is Imminent

After a protracted wait, investors got the first Bitcoin ETF futures which debuted on the New York Stock Exchange in October. However, the Securities and Exchange Commission (SEC) has rejected spot bitcoin ETF proposals from several investment companies in recent months.

While the future ETFs that have been approved mimick the underlying asset's price (meaning investors do not need to go through the complicated process of trading bitcoin), a spot ETF would allow investors to trade direct contact with Bitcoin itself.

Although the SEC has delayed the approval of a Bitcoin Spot ETF, more funds are beginning to apply for this type of fund. As a result, it would not be long until investors are granted their long-standing wish of getting direct bitcoin exposure.

Although we have seen a tremendous amount of inflow of attention from institutional investors, especially in 2021, the trend is expected to continue.

Sustainable Mining

Proof-of-work consensus mechanism, which requires miners to secure blockchain networks like Bitcoin, has been hugely criticized for being too power-hungry and bad for the environment. To solve this problem, the Bitcoin Mining Council was formed in 2021.

According to a recent survey conducted by the BMC, Bitcoin miners have steadily adopted sustainable power usage. The council reports that the global Bitcoin mining industry deploying renewable resources to mine Bitcoin has increased from 1% to a notable 58.5%. For Bitcoin to stand the test of time, especially as it remains on the PoW blockchain model, mining needs to be more sustainable and less damaging to the environment.

Where Will Bitcoin's Price Be in the Future?

The price of Bitcoin cannot be separated from the asset, as its one of the main factors that have drawn investors to the digital asset. Since 2011, there have been plenty of huge spikes followed by pullbacks in Bitcoin's price.

While we've seen Bitcoin hit multiple new all-time high prices and is currently stuck amidst big drops, predictions from experts and technical analysis remain bullish about the future of the world's biggest cryptocurrency.

Although the price of Bitcoin is something that cannot be predicted with pinpoint accuracy, many experts seem to agree that the number one cryptocurrency will hit $100,000. Many analysts believe that the milestone can be hit in 2022.

Although there is no certainty in predicting Bitcoin, Anthony Scaramucci, the founder and managing partner of New York City-based investment firm Skybridge Capital, and Cathie Wood of Ark Invest believes that the digital asset could trade at $500,000 a coin.

According to Forbes, a panel of 50 cryptocurrency experts sees a Bitcoin price of $250,000 by 2025 and $5 million by 2030.

Possibly Lower Volatility in the Price of Bitcoin

Although Bitcoin was initially launched as a mechanism to facilitate cross-border transactions, "Bitcoin as a store of value" is currently one of the most used terms in the industry. However, volatility is a plague that investors have continued to endure.

With the entrance of institutional players into Bitcoin and the asset being declared as a valid form of payment for goods and services by countries of the world, the volatility of Bitcoin has been predicted to decrease to become suitable as a payment mechanism.

With increasing institutional adoption and more investors seeing Bitcoin as a store of value, the asset's price could become less volatile. In addition, the increasing "real world" use of Bitcoin as it gets more inclusion in the financial industry are also factors that could stabilize the value of Bitcoin.

In a Nutshell

One of the most asked questions about Bitcoin is its possible use cases in the future. With the disruption the crypto industry led by Bitcoin has caused in traditional finance, Bitcoin could have the potential to become the world reserve currency in the next 50 years. However, if it fails to match advancing technology as they unfold, Bitcoin could just be one of many digital assets that made many people wealthy when it thrived.