Bitcoin Isn't Dead: The Story Of Bitcoins Resilience
‘Bitcoin Is Dead’ is a phrase that has been uttered repeatedly by those who are more skeptical of the cryptocurrency’s meteoric rise. Since Bitcoin’s inception, it has attracted many who are unconvinced that it can be a valuable currency or asset. They believe that eventually, the house of cards Bitcoin investors have created, will fall, leaving Bitcoin completely worthless and destined to never reach its previous heights.
However, time and time again we see these claims get proven wrong. Even with its large swings in price Bitcoin always ends up stronger than where it started.
So, why is Bitcoin so hated?
What kind of claims are being made against it?
And why the heck is Bitcoin so resilient despite everything?
The price of Bitcoin is extremely volatile. If you keep a close eye on it then you’ll know it isn’t uncommon to see massive dumps or pumps in a very short period of time. For the uninitiated just take a look at 2011 when the price of Bitcoin went from well under a dollar to over $28. Then fell back down to under $3 all in the span of just a year.
Having a massive run-up in price and then seeing it come tumbling back down to something more reasonable is a fairly common occurrence for Bitcoin. Similar scenarios played out in 2013, 2017, and 2021. This phenomenon has become known as the Bitcoin cycle and it’s heavily defined by each Bitcoin halving.
A halving is an event where the number of total Bitcoins that are distributed with every block — a new block is created every 10 minutes — is halved. This means in an instant the total number of new Bitcoins being created is cut in half. This in turn makes Bitcoin a much scarcer asset and, eventually, ends up driving up the price. Halvings are a very big deal because they, in an instant, make each Bitcoin more scarce. They also make Bitcoin mining less profitable, at least at that moment.
As of now, there have already been three halvings: one in 2012, reducing the total number of new Bitcoins per block from 50 to 25; another in 2016, further reducing it to 12.5; and the most recent halving in 2020, where now only 6.25 Bitcoins are created every 10 minutes.
The halving happens roughly every four years so 2024, 2028, 2032, and so on are all expected to have them. Halvings occur every 210,000 blocks so they could happen earlier or later depending on how fast each block is mined, but the network attempts to keep them at a 10-minute interval by adjusting mining difficulty. So, just keep in mind the exact date can move around a bit.
In the past, there has been a massive uptrend in the months following the halving. Then a steep decline immediately after the peak. After that, we get a time when things are uneventful and more or less just trading sideways. Then the cycle repeats.
The Bitcoin Cycle creates the perfect environment for critics to look smart. When the price of Bitcoin begins a dramatic rise, and many eyes are on it, critics say that the “Bitcoin bubble will pop”. Then when the price of Bitcoin inevitably crashes back to earth they say “Look I was right! Bitcoin is worthless and is going to zero.” By the time Bitcoin is coming back up to its previous highs again years have passed and everyone has forgotten what the critics said. So, they do the same thing again.
This is why every few years you see tons of stories about Bitcoins’ new all-time highs or massive crashes, but then hear nearly nothing about it for a large stretch of time. It’s way more clickbaity to say that Bitcoin is up 500% in a month rather than saying that the low of this cycle was the high of the previous cycle from 5 years ago.
But it’s true. Each cycle Bitcoin comes out stronger, with a higher price, more people running the software, and more people just being aware of what it is. All extremely good things for Bitcoin.
What A Bitcoin Cycle Really Looks Like
To really show how insane the price increases of Bitcoin are from cycle to cycle let’s imagine we are in 2017 for a minute. Close your eyes and really imagine it. Despacito is on the radio, the Nintendo Switch was just released, and the dumpster fire that was 2020 still seemed like the distant future.
You there?
Okay.
Now, let’s imagine it’s early in 2017 and that you just heard of Bitcoin for the very first time. It’s this new virtual currency that people are saying is going to change the world. You do some reading and find out it costs around $1,000 for one Bitcoin. That seems ridiculous, but as you look back to last year, which is 2016, you realize that one Bitcoin was worth a lot closer to $500. So, its value has doubled just over the last year.
Without doing much more reading you go ahead and decide to buy one Bitcoin for $1,000. Maybe it will double to $2,000 and then you can take your money out. A few months go by and nothing super noteworthy happens, but then summer rolls around. In May your one Bitcoin has now doubled to $2,000, but because it’s doing so well you decide to go ahead and hold on to it. Then June arrives and it’s worth $3,000, but by July it drops back down to $2,000. However, you decide to keep holding because you’ve still doubled your money
Then August comes around and you’re Bitcoin is worth over $4,000, but the fun is just getting started. In October you’re up to $6,000, but you still decide to hold because now you’re hearing that it could even hit $10,000. Some people are even saying $20,000, but you’re a little more skeptical of that price, just because it’s so high.
In November your Bitcoin is worth $7,000 and then $8,000. As we get into December your Bitcoin is worth not $9,000, not $10,000, not even $11,000, but $19,000 US Dollars. You have just made one of the most insane trades of your entire life. A casual $1,000 has turned into almost $20,000 in less than a year.
You wish you could have bought more and you even recently started throwing in a few bucks from every paycheck to try and get more Bitcoin before it goes even higher. You want to get as much as you can, after all Bitcoin is the future of money.
But then it happens.
The good times are over.
Bitcoin crashes.
By March 2018 Bitcoin is back under $10,000. You still did pretty good and decide that, maybe Bitcoin isn’t the future of money, maybe it really is dead, and honestly $10,000 seems like a lot for something like Bitcoin. It’s probably way overpriced.
So you sell.
And you still feel pretty good. You’re reading articles about how Bitcoin is dead and it was a fun experiment, but ultimately it failed. At least you were one of the lucky ones who was able to make a decent profit off of the whole thing.
Just out of curiosity, you check the price now and again. 2019 rolls around and you did good. Bitcoin is now under $4,000. Then you forget about it.
A decent amount of time passes and you hear nothing of it. You’re busy with life. 2020 rolls around and things get complicated. The thought of Bitcoin never really crosses your mind anymore.
Then one day in November 2020, while scrolling through your phone you see an article “Bitcoin price hits all-time high of almost $20,000”. It all comes flooding back. You had owned one Bitcoin just a couple of years ago. Actually, you had been buying more and could have been buying more very cheap these last 2 years, but you didn’t because of the crash.
You decide not to buy in. $20,000 is probably around as high as it will get. After all, it only got to that price for just a moment a couple of years back.
But you couldn’t be more wrong.
By April 2021 the price of Bitcoin is over $60,000. And it gets to almost $70,000 by November.
But then it begins to crash.
It drops to $50,000, $40,000 then $30,000. Articles everywhere are saying that Bitcoin is dead, it’s a failed experiment, and that it will never recover. By September 2022 it has dropped all the way down to $20,000. There is ultimate fear in the market and many who were investing in Bitcoin at its highs are now gone.
“20k for one Bitcoin is really cheap,” you tell yourself. You decide to go ahead and invest a few thousand dollars. The price that you once thought was a best-case scenario outcome for Bitcoin is now the price you feel extremely lucky to be able to buy it at.
That’s the difference between just one cycle.
Bitcoin Is Dead — Claims Made Against Bitcoin
Now that you understand how much Bitcoin’s price can rise during these cycles. Let’s take a look at some of the more notable claims made against Bitcoin over the years.
There is a site that has archived many of these claims and is still doing so to this day. They have archived hundreds of articles from Bitcoin skeptics. And these aren’t just random people online, these are at least somewhat notable people who have real claims to back up what they say. Let’s take a look at a few of these articles and get a better idea of what exactly they are claiming.
The first claim I want to take a look at is by far the oldest on this list. In October 2010, well before Bitcoin was getting much mainstream attention an article was written by the Underground Economist that treated Bitcoin with a lot of skepticism, but also a lot of curiosity. I think this article is a really interesting look at Bitcoin’s early history. So, here it is in its entirety.
This article was written on October 15th, 2010. One Bitcoin was worth $0.10 at the time.
I wasn’t going to make a post bashing Bitcoin, because their FAQ clearly states that its value only stems from the fact that merchants are willing to accept it. Unfortunately, this hasn’t stopped people from pushing it as the currency of the future, so regretfully, I feel compelled to post why this is not so.
While Bitcoin has managed to bootstrap itself on a limited scale, it lacks any mechanism for dealing with fluctuations in demand. Increasing demand for Bitcoin will cause prices in terms of Bitcoin to drop (deflation), while decreasing demand will cause them to rise (inflation). What happens in each of these cases?
Let’s start with deflation, because right now demand for Bitcoin is on the rise. What do people do when they think something’s value will be higher tomorrow than it is today? Well, they acquire and hold on to it! Who wants to give up money that’s constantly rising in value? In other words, rising demand causes demand to rise further. Irrational exuberance at its finest. Deflation begets deflation, ad infinitum, or at least until something breaks. You could make lots of money on Bitcoin, provided you get out of the market at the right time.
Eventually, of course, prices won’t be able to fall any further. Either people won’t be spending their Bitcoin anyway because they’re making so much money just by holding it, or the merchants will get tired of changing their prices every few seconds, assuming they don’t hit technical issues first, like the indivisibility of coins or their software not being able to handle all the zeros after decimal points.
At this point or shortly before, people will start taking their profits. They’ll start spending or selling their hoarded coins. If this manages to start any inflationary momentum at all, you’ll see the deflation scenario played out in reverse. And who’s going to stop it? The supply of Bitcoin is fixed and there is no other use for it besides as a currency. I doubt prices will have much of a chance to rise, since this will happen so fast. Merchants will go from taking one coin for a year of porn to not taking Bitcoin at all, and a bunch of people will be left with worthless Bitcoin.
The reason this can’t happen with government currencies is that government currencies are backed. They’re backed by bullets. If demand for USD starts to fall faster than the USG would like, the USG can just raise taxes without increasing spending, increasing demand and reducing supply simultaneously. There’s a bunch of stuff the FED can do, of course, and the FED tends to act first, but its operations are harder to explain. This is obviously not a perfect mechanism, since bubbles are still blown and popped, but even this mechanism is not available with Bitcoin.
Negative feedback loops like this are basically homeostasis. In nature, positive feedback loops like exist with Bitcoin are lethal; the only thing that’s even kept Bitcoin alive this long is its novelty. Either it will remain a novelty forever or it will transition from novelty status to dead faster than you can blink.
Take into account that all of this was said months before the first real Bitcoin bull run would even begin. The Underground Economist was making some great observations that many critics after him would also make.
The Underground Economist mentions that Bitcoin isn’t directly backed by anything, unlike USD which is backed directly by the government. They also mention that Bitcoin has no mechanism to deal with price increases, meaning many are going to want to hold Bitcoin rather than just use it as a currency, something that we have definitely seen happen.
They also believed that these massive increases in Bitcoin’s price would reach a head, then it would crash to something that is basically worthless in a way similar to that of how it ran up. They weren’t completely wrong about that. Each cycle is essentially this — a massive euphoric run-up and then a steep decline down. The only thing they didn’t predict is that Bitcoin would end that scenario much stronger than it started it.
They are also very wrong about the last thing that they mentioned: the only thing that’s even kept Bitcoin alive this long is its novelty. This just wasn’t true at all, but they did notice their error. Later the Underground Economist came back with some updates correcting some of what they said.
Update 1 reads,
Since I posted this, I’ve been convinced that due to its unique properties as a purely digital, scarce, easily transferred artifact, Bitcoin’s exchange value is probably enough by itself to prevent a deflationary spiral to zero. See this answer I posted on Quora.
They then made a more annoyed update confirming that they were now officially on board with Bitcoin,
…even with the latest crash I remain convinced that cryptocurrencies have a future, so I’m also not putting this back up as an “I told you so.” I still think I was originally wrong.
The first Bitcoin skeptic that many point back to actually ended up becoming more or less bullish on the technology. This was the right view to have, at least up in the decade or so following these posts.
The next article is from Wired and was published on November 15th, 2011. It is ironically titled The Rise And Fall of Bitcoin. At the time one Bitcoin was worth $2.22.
This article is one of the most prominent early writings about Bitcoin. If you look back at old tweets or Reddit posts, a lot of discussions surrounding Bitcoin being dead points directly to this article.
It not only criticizes Bitcoin, but it also explains the history of Bitcoin up until that point, which was necessary for a wider audience considering how niche Bitcoin was at the time. So, while this article is extremely long I’m just going to focus on the critiques of Bitcoin given at the end of it.
Something funny to point out before jumping into this is that this article has actually been taken down. I’m not sure if it's out of embarrassment or irrelevance, but either way, it’s gone. So I’m going to be using an older archived version from the Wayback Machine.
To understand this article it’s important to understand the events that preceded it. 2011 would see the first real Bitcoin bull run. This bull run was a bit different than the ones that future cycles would experience. While normally a bull run is preceded by a halving, this one happened even before the first Bitcoin halving. This bull run likely happened because people were discovering Bitcoin for the first time as the media had begun reporting on it. It had also become easier to invest in because of exchanges like Mt. Gox.
Mt. Gox was one of the first major Bitcoin exchanges and was by far the most prominent exchange for the time — as it handled a majority of all Bitcoin transactions. While it was decent at making Bitcoin more accessible to the masses, it lacked in many other areas, including security.
Due to a hack on the Mt. Gox exchange, a lot of people started to get worried about the safety of investing in Bitcoin. The hacker actually manipulated the price of Bitcoin on the Mt. Gox exchange, causing it to crash from nearly $20 all the way down to 1 cent.
Even after the price had recovered to its real market value, the damage had already been done; Bitcoin wouldn’t return to its previous all-time high of around $30 until 2013.
This article from Wired was written just a few months after this massive hack. At the time, Bitcoin’s price was still trading well below its all-time high, and it looked unlikely that it would ever reach that price again.
A lot of the critiques that this article makes are things associated with Bitcoin, rather than the currency itself. Actually, they even praise Bitcoin saying,
Both the code and the idea of bitcoin may have been impregnable…
But then they go on to criticize other aspects of it.
The first aspect they bring up is Bitcoin wallets. Remember that this is 2011, at the time, Bitcoin wallets were much more antiquated than they are today. There weren’t any seed phrases to make using a wallet friendly to newcomers.
They mention how difficult it can be to properly store Bitcoins and that many users go to extreme lengths to make sure that their Bitcoins are safe.
Some users protected their bitcoins by creating multiple backups, encrypting and storing them on thumb drives, on forensically scrubbed virgin computers without Internet connections, in the cloud, and on printouts stored in safe-deposit boxes.
Then they tell a quick story that relates to this,
Stefan Thomas had three copies of his wallet yet inadvertently managed to erase two of them and lose his password for the third. In a stroke, he lost about 7,000 bitcoins, at the time worth about $140,000. “I spent a week trying to recover it,” he says. “It was pretty painful.
It’s clear that they don’t really like the way that Bitcoins must be stored. It’s more of a hassle than many other types of currency and you could potentially lose your coins forever.
They then go on to tie it back in with the Mt. Gox situation, mentioning that many Bitcoin users are not fans of centralized entities like banks but are, for some reason, willing to trust a small unregulated exchange to hold their precious Bitcoins.
Obviously, things were a lot different a decade ago, but a lot of these ideas still remain true. It is harder to store your Bitcoins than it would be to put money in a bank account. At least, that’s true if you want to put your coins into cold storage where they will be safest, but that process is a lot easier now. Products like hardware wallets and advancements like seed phrases have made this process much more streamlined.
However, even today many people choose to keep their coins on exchanges because it is still much easier. The good news is that exchanges are a lot safer today than they were in 2011. It’s highly unlikely that a large exchange would have their funds hacked and there be no chance of you getting your coins back, but there is always still a risk.
We have seen some well-established crypto services lock users from transferring their funds out. Well-known exchanges like FTX have had much bigger problems. That brings us back to the question: ‘Why put your Bitcoin with a Centralized authority if the whole point is that Bitcoin has no central authority?’
If you are investing in Bitcoin it would make sense to have some of it in a place where someone else isn’t holding it for you. But just because you let someone else store your Bitcoin doesn’t mean you are going against its core principles. With Bitcoin, you have the option to have full control over your own money, which is not ever possible with traditional currencies like the US Dollar.
To summarize this article nicely here is a direct quote that shows exactly what they thought of Bitcoin when they wrote it,
In the public’s imagination, overnight the bitcoin went from being the currency of tomorrow to a dystopian joke.
With this next article, we are going to skip ahead a few years to March 23rd, 2014. It was written for Vice and titled Bitcoin Is Dead — Long Live Bitcoin. At the time one Bitcoin was worth roughly $564.
This article is interesting because it was written following some other notable Bitcoin Bitcoin-related events. Mt. Gox was hacked again and had $350 Million in Bitcoin stolen from them. This eventually led to Mt. Gox, which was still the largest Bitcoin exchange, being shut down.
This also comes just months after the Silk Road — a large dark web site that facilitated drug deals — was closed down for good. This site is notable because it was one of the most well-known uses for Bitcoin at the time. It’s also why so many people initially thought that Bitcoin was just for people who wanted to buy drugs.
As we dive into this article we see that it relies heavily on the fact that there is a tug-of-war in the Bitcoin community. As Bitcoin became more popular it attracted diverse individuals with different opinions on how it should move forward as a currency.
The article states,
The fact that online drug dealers, Silicon Valley VCs, the FBI, and financial oversight committees in countries all over the world are equally interested in Bitcoin is fascinating. But their interests are at odds with one another — which will quite possibly spell the end of Bitcoin.
The point they are getting at here is that Bitcoin was originally this very niche idea that had a very specific audience. The first participants of the Bitcoin network mostly had a mindset of creating this currency that is untouchable by the government. Satoshi Nakamoto even created it as a response to the 2008 financial crisis; a crisis caused by negligence and greed from both the government and financial institutions.
So in many regards, Bitcoin is a very libertarian and anti-government idea. Many early adopters would probably be okay with things like the Silk Road existing and allowing free markets to work regardless of legality. On the other hand, you have a group that wants to see some government regulation to allow Bitcoin to prosper within the legal system. They want Bitcoin to not be an anti-government tool, but more of an additional means of legally transacting.
The article also states,
For starters, there’s the growing divide between those who want to use the currency as a libertarian weapon against governments and established financial institutions, and Silicon Valley VCs who want to make Bitcoin a legal means of exchange by normalizing it within State control.
This argument about the ideology of Bitcoin being destroyed as it grows is one that may have felt more convincing at the time but seems a lot less relevant today. In 2014 Bitcoin was transitioning from extremely niche to still niche, but with a lot of eyes on it. Companies like Coinbase were popping up adding more legitimacy to it and attracting more investors to the space — something that hadn’t really happened up until that point.
Today, Bitcoin is widespread and for the most part, has already survived the initial jump into the mainstream. Just because the profit made on Bitcoin can be taxed, or other regulations are put in place doesn’t mean it can’t be used to achieve its original goals.
Due to Bitcoin’s decentralized nature, the government can’t change it, at least from a fundamental standpoint. The most they could do is completely outlaw it from being used — like they have done in China multiple times. But regardless of what the government does, they can never print more, or make the network give them a large portion of all coins.
Bitcoin cannot be controlled directly. That’s because it’s a worldwide network. If one country makes it illegal there will still be other places where it is legal. There will always be people securing the network through mining, either by moving to places where it is legal or doing it illegally.
So the ‘Death’ of Bitcoin through government control is not going to happen. Could a government stifle innovation by banning it or putting too much regulation on it? Of course. But it will continue regardless, both literally and ideologically.
While not an article, this clip of Bill Maher from 2014 shows just how ridiculous the concept of Bitcoin seemed to the public at the time.
The next article we are going to take a look at is from April 24th, 2018. At the time one Bitcoin was worth roughly $8,938. This article titled Bitcoin is the greatest scam in history, was written by Bill Harris, the founding CEO of Paypal.
This article was written just a few months after Bitcoin’s December 2017 all-time high of nearly $20,000 dollars. In those few months, its price had declined by well over 50%. And Bitcoin wouldn’t see its price reach those previous all-time highs for several years.
Bill Harris really tears into Bitcoin with his article. A lot of his criticisms are exactly the kind of thing you hear people criticize today.
He states that Bitcoin is a colossal pump and dump and that it relies entirely on the greater fool theory. The greater fool theory is the idea that you are buying something entirely because you know someone else will buy it from you for more. You’re a fool for buying this overpriced asset, but someone else will be a greater fool and buy it from you for more.
He also goes on to mention how Bitcoin isn’t useful as a means of payment and that it isn’t a good store of value. Basically, he’s saying that Bitcoin isn’t useful in any way, or at least not in any way that another currency doesn’t do better.
After listening to Bill Harris speak on Bitcoin it seems clear that he had little understanding of how the Bitcoin network actually works. He claims that it isn’t valuable due to scarcity, which is 100% true. It’s pretty basic economics that scarcity doesn’t provide value, but scarcity can make an already valuable asset even more valuable.
While he does touch on the fact that blockchain technology is useful and innovative, he goes on to say that Bitcoin itself does not need to exist. The entire time he ignores the fact that the whole point of blockchain technology in the Bitcoin Network is to provide a way for it to be transparent and trustless — allowing the network to be decentralized. Any other already existing currency like the dollar or euro would not adopt these same principles when creating a blockchain-based version.
The whole point of Bitcoin is that there is no central authority —it can’t be directly manipulated. However, he never really even discusses Bitcoin’s decentralization, either because he doesn’t understand it or doesn’t care, both show that he likely has a minimal understanding of the technology.
He then goes on to discuss how Bitcoin’s only real use case is for criminals,
Cryptocurrency is best-suited for one use: Criminal activity. Because transactions can be anonymous — law enforcement cannot easily trace who buys and sells — its use is dominated by illegal endeavors.
This argument was probably even a bit antiquated for the time. He even brings up the Silk Road which had been shut down for nearly 4 years at this point. It lends to the fact that saying Bitcoin is only really useful for criminals is a fairly ignorant stance.
It is true that criminals have and still do use it as a payment method. Sites like the Silk Road did use it for their illegal activities due to its decentralized nature. But as time has gone on many regular normal people are using it for normal and regular purchases.
He also brings up the point that Bitcoin is anonymous, it is not. It’s actually pseudonymous. Which means that you have a pseudonym while transacting on the blockchain. For example, if wallet a has 10 Bitcoin and then sends 1 Bitcoin to wallet b, we can all see that activity. We may not know who owns wallets a or b, but we can see what they are doing. This can and has been used to track criminal activity.
On the other hand, dollars can easily be used without leaving a trace. Many criminals use dollars as a means of payment while conducting illegal activity, yet it’s still a legitimate form of currency.
Bill Harris does go on to mention a few other concerns about Bitcoin, but the main point is that he doesn’t think it’s valuable or useful in any way. I’m not just singling Bill Harris out here. I’m sure he’s a really intelligent guy who’s done tons of things I could only ever dream of doing. He is just a good example of how many critics view Bitcoin and the flawed arguments that they make.
The last article is from June 19th, 2022. At the time one Bitcoin was worth around $19,000. The article is titled Sign cryptocurrency is dead as bitcoin dips to $17k. This article is a great example of how news sites resort to clickbait at the end of each Bitcoin cycle.
Saying ‘Bitcoin is dead at 17k’ is ridiculous on so many levels. The subtitle is even more ridiculous as it says ‘Bitcoin has pretty much lost all its gains throughout the pandemic and hit a new horror low that will make history.’ So, $17,000 is the horror low that will make history. Show that to someone in 2017 and they will be mind-blown.
This article is basically what you would expect. It just talks about how Bitcoin has seen a steep decline in price over the last few months and that it could continue. It mentions that Bitcoin hasn’t seen a price of $17,000 since October 2020 and has wiped out all gains since then.
They talk about how people have lost a lot of money and some crypto companies are filing for bankruptcy. Pretty standard stuff. But it does demonstrate just how ridiculous this kind of thing is.
In October 2020, less than two years from when this article was published, they would have written the exact opposite article. Bitcoin was at $17,000 for the first time in a couple of years and that could be a sign that Bitcoin is going to some ridiculously high price.
It’s just media companies looking for clicks. When things look bad and people feel bad, they write something bad. Articles like this have been popping up everywhere with Little to no real information besides saying Bitcoin or crypto is dead. As more people read articles like these they spread the idea that Bitcoin is dead even further.
Bitcoin Cycles Aren’t Identical
Bitcoin Cycles are exactly that, a cycle. There are always going to be people capitalizing on the rise and fall of Bitcoin through each one, but that doesn’t mean that every cycle is exactly the same. Actually, they are fairly different.
The biggest difference is that earlier cycles were way more volatile. Back in the day people were putting in $100 and making millions, but that isn’t happening anymore. Bitcoin’s market cap is so high now that 1,000% upswings just aren’t going to happen in a short period of time.
Bitcoin is a massive asset that has a large amount of capital invested in it. Even when it’s at a low it’s still worth hundreds of billions of dollars. Opposed to back in the day when people wondered if the market cap could ever even reach one billion. That means now it takes that much more demand to really move its price up. However, it does have a lot of room to grow to become as large as something like gold, but it’s still huge.
The Bitcoin cycles are also getting noticeably longer. We are consistently seeing it take longer and longer to go from the lows of the previous cycle to the highs of the next one. So, it takes longer to reach new highs and the overall gains of each cycle are becoming less insane.
What does that mean for Bitcoin?
It could mean that it is just becoming a more stable asset overall. Which is what a lot of Bitcoiners anticipate. Bitcoin could become an asset that increases at something like 5% a year on average. Rather than the more insane price swings, we have today.
You also have to take into account that each halving becomes less and less impactful. The number of new Bitcoins was cut down from 50 to 25, then to 12.5, and so on. Going from 50 to 25 warrants a fairly big price movement. While moving from 12.5 to 6.25 is still big, it isn’t nearly as impactful. And as we go on blocks won’t even award one entire Bitcoin. Going from .39 Bitcoin to .19 in 2040 isn’t going to warrant as large a price movement as we see today. Although it should definitely still be noticeable.
It’s also important to talk about how these cycles are just an idea. Yes, we see trends and a lot of it makes sense, but that doesn’t mean these cycles are going to continue. Most people think they will, but even if they do we just mentioned how each one looks at least a little bit different than the last. It’s important to not treat the Bitcoin cycle as pure gospel. It’s an idea we use to understand how this pattern is happening and what it could look like in the future.
Despite seeing these massive 80% drops every few years Bitcoin continues to rebound and grow stronger. This is due to many factors. Obviously things like the halving help to make it an even scarcer asset to those who already are invested, but that’s just the tip of the iceberg.
With each cycle, a wave of media attention attracts new investors, who end up staying in the space after the hype is gone. They build new and interesting companies and technology in the crypto space, which attracts more attention to it and the cycle repeats.
Sometimes this technology is stuff like the crypto exchange Coinbase, which made it easy for a wide range of people to invest in Bitcoin and other cryptocurrencies. In 2021 NFTs took the spotlight and many people became interested in Bitcoin after hearing about jpegs that were worth millions of dollars.
Bitcoin is resilient because people see its worth. They join to get rich and then when they see what Bitcoin actually is and how it functions they decide it's worth sticking around for.
Bitcoin is a new and emerging technology and there are tons of unknowns. As time goes on it becomes more clear that it won’t only survive, but it will thrive. New technologies always have their skeptics. Just look at the internet in the 90s where many thought it was nothing but a passing fad, but as we all know today there hasn’t been a more influential technology.
Soon the term ‘Bitcoin is dead’ will seem just as ridiculous as saying ‘The internet is a fad’, but for now it’s just a sign that we are still early.