Bitcoin has over the years become one of the most popular cryptocurrencies. Some people can only mention Bitcoin when asked about the cryptocurrency payment system. This is something that Bitcoin has done well in comparison to others like Ethereum which are only now becoming common knowledge.

 

One advantage that Bitcoin has, is that it was built with a strong background. With a bigger ecosystem, it should come as no surprise that Bitcoin is a strong cryptocurrency. Bitcoin is also a popular brand that only keeps getting bigger. However, due to the recent decline as it lost half its value, it got people thinking if the cryptocurrency is headed for a huge decline from which investors cannot recover. So, what does the future hold for Bitcoin? Is it going to get bigger or you’ll face further decline to nothingness? To understand this, let us look at some of the factors that can influence the value of Bitcoin.

 

Contents:

1. Current Competition
2. Declining Market Cap
3. Trading Value
4. Software Governance
5. Final Thoughts

 

1. Current Competition

Yes, Bitcoin may have been the first player in the game but that doesn't mean it will automatically be the best. Because Bitcoin doesn't have a competitive edge over the other currencies, it is more than likely that any of these alternatives can become bigger. 

 

Some things that may add to the downfall of Bitcoin include limited supply. In addition, even though Bitcoin was the first cryptocurrency, it is now growing at a much slower rate than its competitors like Ethereum. Other things that might lead to the downfall of Bitcoin include:

• High energy consumption
• High transaction fees
• Improvement difficulties due to blockchain

 

If one decided to start a new cryptocurrency, it would be far easier and cheaper than trying to improve Bitcoin. Also, the other new coins on the market have an edge over Bitcoin for consuming less energy and charging a smaller transaction fee.

 

2. Declining Market Cap

If you have been checking the news, you would know that Bitcoin is not trending as much as it did 6 years ago. In 2015, Bitcoin had a market cap of nearly 100%. Fast track to 2021 and that has significantly reduced to well below 65%. The reduction in the market cap shows that other cryptocurrencies are growing at a faster rate and account for most of the growth. 

 

So if you are trying to invest in a coin, you are far better investing in one that will provide higher returns, unlike Bitcoin. What is certain is that the market cap of Bitcoin will keep declining shortly. With that, more investors will shift their attention to other coins, further quickening the decline in Bitcoin.

 

3. Trading Value

Some people like to compare Bitcoin to gold. The argument is that just like gold, Bitcoin will always be valuable because it was the first coin to gain a lot of attention from the public. The mere fact that it was the first coin would prompt people to make purchases.

 

However, one major thing separates gold from Bitcoin and that is the real-world value. Gold is always valuable because it is used to make jewelry, ornaments, and even chips. This factor makes it a highly valuable currency. But the same cannot be said about Bitcoin. Once the coin loses its trading value, no one would want to purchase it, even if it is just for the sake of having a souvenir.

 

4. Software Governance

Even though Bitcoin is decentralized, how it is governed affects its value. Here is the main problem. Bitcoin software was created by developers, however, it is run by miners, who are responsible for verification and transactions. Should the need to change the software arise, things become a bit tricky.

 

Developers need at least 50% of the miners to agree with their decision to make changes to the software. It is only with this support that software can be improved. This makes changing software a costly and time-consuming process. For example, in 2017, Bitcoin created its own cash which was given to most investors. This was designed to process transactions faster than Bitcoin. However, because most investors do not understand the software or coding, it led to a brief decline. These changes seem to hurt the value of Bitcoin, not including the influence of Elon Musk tweets on the value.

 

Final Thoughts

With its recent decline, Bitcoin is at a high risk of losing out in the crypto market. Despite being the first coin to make waves, the currency has been declining at a fast rate. The declining market cap means that other upcoming coins are giving stiff competition. Apart from stiff competition, the blockchain on which Bitcoin was designed is not easy to change. Also, making transactions on this crypto is far more expensive as compared to its competitors.

 

The high energy consumption that is associated with Bitcoin also gives its competitors a huge advantage. Because Bitcoin doesn't offer real-world value, if it keeps declining, many spectators and investors will shift their attention to newer coins that seem to offer better returns. Cryptocurrency might be the future, but not Bitcoin. 

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