Picture this: a digital entity, a mere string of code, holds a price tag of £28,000 per coin. If you're new to the world of Bitcoin, this number might seem quite simply absurd!
After all, you can't touch it, hold it in your hands, or feel its presence like you can with a £20 note or a piece of gold. It's intangible, a digital living being, and that might lead you to question its value and legitimacy.
In this blog, we are going to unpick all the common thoughts that go through a beginner's mind when it comes to the astonishing price appreciation of Bitcoin.
The Love for Tangibles
Tangible = Something we can see and/or feel
As humans, we're drawn to things we can see, touch, or feel. Tangible objects offer reassurance; they are straightforward and easy to trust because their existence is evident to our senses. A £20 note, a gold coin, or a house – these are tangible assets, and their worth is self-evident.
Yet, what about Bitcoin? It's a different beast altogether. It's not something you can physically hold, and this very characteristic often bewilders beginners. How can a mere digital code represent value? How can it be real?
These are very real questions. And, they're also completely understandable. Bear in mind that a lot of the older generations didn't grow up with the internet and even struggled to come to terms with platforms such as Google and Facebook.
Therefore, it's not surprising that the likes of Charlie Munger and Warren Buffett are quick to dismiss Bitcoin, and even feel the need to call it "rat poison".
Understanding the Price of Bitcoin for Beginners Can Be Puzzling
Bitcoin's price can appear mind-boggling at first glance. It's the subject of countless discussions and debates, leaving many perplexed about its actual worth.
To grasp the underlying logic and understand the price of Bitcoin for beginners, we need to jump into the heart of what makes Bitcoin tick and why it might just be one of the best-kept secrets in financial history.
At the core of Bitcoin's pricing mystery is the idea that it's more than just a string of code; it's a financial store of value, and arguably, a revolution.
Traditional assets are valued based on factors like rarity, utility, and demand. Bitcoin, too, follows these principles. However, what sets it apart is its inelastic supply.
Inelastic supply = Supply remains unchanged regardless of the price
Bitcoin's supply is strictly capped at 21 million coins. Absolute scarcity - this is revolutionary in itself. It's a one-of-a-kind, unlike traditional currencies, which can be printed endlessly, leading to inflation and devaluation. In contrast, Bitcoin's fixed supply makes it resilient to such devaluation.
This unique aspect has catapulted Bitcoin to incredible heights. Since its inception, Bitcoin has outperformed traditional investments like stocks and gold by a considerable margin. It's not just an investment; it's a hedge against economic uncertainty and random decision-making from central banks.
Bitcoin's remarkable journey has transformed early adopters into millionaires, yet its growth shows no signs of stopping. Its value has surged exponentially over the years, bringing it into the limelight.
But it's crucial to acknowledge that Bitcoin isn't a "get rich quick scheme". Far from it. Instead, it offers every single person in the world an alternative to our purchasing power decreasing over time. It just so happens that this does create a lot of wealth over the long term.
Imagining a £1 Million Bitcoin Price
Now, let's discuss an interesting thought experiment: What if Bitcoin's price hits £1 million?
It might sound far-fetched, but given its limited supply and increasing global demand, this milestone is more conceivable than you might think.
A £1 million Bitcoin would not be as surreal as it may appear. It would signify that Bitcoin's revolutionary principles have taken root in the mainstream financial world. It would represent more than just a digital asset; it would be a symbol of trust, a global currency, and a store of value that transcends borders.
Whilst a lot of that stuff may sound inspiring, it actually wouldn't need to be that groundbreaking. Bitcoin is hard money that cannot be changed or debased. The supply gets cut in half every four years and demand continues to grow. Ultimately, Bitcoin's pathway is heading in the direction of up and to the right. At some point, £1 Million Bitcoin could happen.
Impact on Perception: FOMO and Beyond
But what would this meteoric rise do to people's perception of Bitcoin? Would it still be seen as a scam or a bubble?
This is where FOMO, or Fear of Missing Out, comes into play. As Bitcoin's price climbs, FOMO intensifies. People who once viewed it with scepticism might now fear they're missing out on a financial revolution.
It's also worth pointing out that the longer Bitcoin stays around, the more credible it becomes. This is known as the Lindy Effect. In other words, people who once declared Bitcoin a scam may start questioning themselves if Bitcoin surpasses £100,000 and doesn't die, or perhaps £1 Million and it still fails to die.
This £1 million milestone would mark Bitcoin's acceptance into the financial mainstream. It would signify a paradigm shift. Bitcoin wouldn't be just a string of code; it would be a global asset, a digital store of value, and a force for financial stability.
So, while the idea of a £1 million Bitcoin might initially seem absurd, remember that it is a reflection of Bitcoin's transformative power. It's more than just a price tag; it's a symbol of trust in the face of traditional finance's imperfections.
The journey to understanding Bitcoin's worth might be complex, but it's a journey worth taking. At 123Cryptos, we make that journey as easy as possible with our beginner-friendly courses!
Bitcoin's progression from a silly internet coin to a global financial asset is a testament to its strength. By understanding Bitcoin's unique features, its stellar performance, and the effects of its inelastic supply, you'll find that its price is not just conceivable but may still be an attractive opportunity (remember, not financial advice).
In your journey of understanding Bitcoin, remember that its price reflects more than just its numerical value. It embodies trust, decentralisation, and a vision for a more stable financial future.
While the concept of Bitcoin may be challenging at first, committing yourself to go deeper down the rabbit hole reveals an opportunity that's not only conceivable but potentially transformational.
If you want to learn more about Bitcoin in a beginner-friendly way, check out our course plans below!