Where is Bitcoin Heading? - Possible Scenarios

The Bitcoin price has been very unpredictable for the last year, even by its highly volatile standards. In fact, we now know there’s only one thing certain about Bitcoin when it comes to the price stats, nobody knows what’s going to happen next. The best we can do is take a look at some of the possibilities and prepare for the fact that any of them could happen.

Bitcoin and blockchain technology are at a very important stage of development right now. There are a few possible scenarios for what could happen to the Bitcoin network in the medium and long-term future. Here are some of the most likely ones and what they would mean for the price of the world’s top cryptocurrency.

Scenario 1: Mainstream bitcoin adoption is around the corner

The first scenario is the most optimistic for those holding Bitcoin. This is the case where Bitcoin gains widespread adoption as a currency. This adoption would skyrocket the demand for Bitcoin. At the same time, the supply of Bitcoin would remain fixed at 21 million, giving a huge upward momentum to the price of Bitcoin. We would see new price records and all-time highs.

For this scenario to be possible at all, a few things would have to happen first. The most important would be a long-term fix for Bitcoin’s scalability issues. At the moment, the Bitcoin network stalls when the number of transactions per second exceeds 3 or 4. That number is an order of magnitudes lower than what it needs to be for global, mainstream adoption.

Secondly, institutional investors would have to gain some faith in decentralized technologies in general. Investing big money requires a careful and scientific approach. Decentralized technologies like Bitcoin just haven’t proven so far that they are a safe and worthwhile long-term investment.

There are more factors, but just because of these two, the mainstream adoption scenario seems unlikely in the short and medium term.

Scenario 2: A more subtle kind of adoption

A slightly different adoption scenario will be a bit less obvious to the general public. In this case, there is widespread adoption of decentralized technology like the Bitcoin network, but it happens more in the background. Rather than everyone suddenly using Bitcoin directly as a currency, the Bitcoin network could become a part of the underlying global online payment infrastructure. In other words, many people around the world would be using Bitcoin and other blockchain networks without even realizing it.

This scenario would still be great for the price of Bitcoin, although, probably not quite as much as scenario 1. The demand for Bitcoin would be fueled by the companies and technologies that rely on using the Bitcoin infrastructure.

Of course, this is assuming that the Bitcoin network was the one being used. It could also be another network, like Ethereum, EOS, Stellar, or something else - say, the network that takes on the work of powering the future settlement layer of the internet. This brings us to the next possibility.

Scenario 3: Bitcoin loses its crown

Another possible, but less exciting scenario for Bitcoin holders is that Bitcoin loses its place as the number 1 cryptocurrency. It could be because Bitcoin loses its relevance or can’t fix its problems, or that another network just outperforms Bitcoin. Either way, the glory days would be over for Bitcoin.

If this happens, there would likely be a Bitcoin sell-off to make things even worse. Many of the people currently investing in Bitcoin have done so because it's the biggest and safest cryptocurrency. If another network takes that title, much of that investment would leave Bitcoin.

However, Bitcoin wouldn’t die completely. Bitcoin is still the original cryptocurrency and has many devout fans. Some investors also see Bitcoin as a kind of ‘digital gold’ that can act as a store of value, even if better options exist for everyday payments.

Scenario 4: Cryptocurrency fades

This is the most pessimistic scenario. Here, things aren’t just bad for Bitcoin, they are gloomy for the entire cryptocurrency industry. The prices would never recover to the level we saw in 2017. Instead, they would continue to drop down and down. A large number of enthusiasts and investors would hold on hope and keep saying the next big bull run is around the corner, but it would never come.

This could happen for a number of reasons. The general public and media could lose interest, the technology could fail to work at scale, or there could just be a lack of real-world use cases. This is the view that skeptics and the mainstream banking industry have been taking for years.

The problem with this scenario is that none of those reasons seem to be happening. Despite a very difficult year for the cryptocurrency, there is still a lot of public, media, and investor interest in Bitcoin. The Bitcoin price is still steadily rising if you look at it year-on-year. Scalability solutions such as the Bitcoin lightning network are being developed. And after ten years, Bitcoin and blockchain are still being used and finding more use cases all the time.

Scenario 5: Something big happens

In this last, unpredictable scenario, some big changes would happen to the world and have an unforeseeable impact on Bitcoin. Maybe there’s a global financial crisis and Bitcoin skyrockets. A country with ongoing financial issues could formally or informally adopt Bitcoin as its primary currency. In this case, the Bitcoin value would rise but would also be strongly linked to the economy of that country.

A much more negative possibility is that a large government such as the US, European Union, China or coalition of governments outlaws using Bitcoin. This would deal an immediate and devastating blow to the Bitcoin network. Or, maybe a completely new technology makes Bitcoin irrelevant.

These scenarios aren’t highly likely on their own (depending on who you ask), but together they add up to the very possible scenario of “something crazy happens”.

Hope for the best, prepare for the worst!

Investing in Bitcoin can be a lot of fun, but nobody knows for sure where it’s heading next. When looking ahead, it's important to see the encouraging possibilities alongside the bad ones. This way you’ll know what you’re getting into and won’t get caught off your guard.