This is one article in a collection of 52 articles published weekly throughout 2023 on the basics of Bitcoin. The series is intended for people unfamiliar with Bitcoin or people wishing to enhance their understanding of the fundamentals that underpin the technology. Please contact us, if you have any questions or comments.
The Bitcoin protocol has been so successful that during the 2021 bull run the price of a single bitcoin was more than $69,000. When the price of bitcoin surpassed $54,000 bitcoin’s market cap exceeded the $1 trillion threshold for the first time only 12 years after its creation! Currently, bitcoin’s market cap is approximately $550 billion. The next closest cryptocurrency in terms of market cap is Ethereum which has a market cap of roughly $220 billion. However, the market cap of the most valuable cryptocurrencies quickly diminishes as an individual goes further down the list as the cryptocurrency with the tenth highest market cap does not exceed $8 billion. Bitcoin’s dominance and prevalence in the space cannot be overstated.
While Bitcoin is not a company and, perhaps, could more fairly be represented as a social project, compared to other companies, bitcoin became the fastest company (or project) to have a market cap surpass $1 trillion! The next closest in speed for a company to have its market cap surpass the $1 trillion benchmark was Google. It took Google almost twice as long, 21 years. It took Amazon 24 years, Apple 42 years, and Microsoft 44 years!
For similar projects, it took an even more staggering amount of time to meet the trillion dollar benchmark. Take gold for instance, (I guess gold was a passion project for God (or the creator if that’s more your speed)), gold did not surpass the $1 trillion market cap until 2009. That’s a staggering 4.5 billion years to surpass the trillion dollar market cap! Yes, it is easy to manipulate numbers, but the comparison to other companies, particularly technology companies, appears appropriate. An insightful article discussed the history of companies who would have previously surpassed the $1 trillion benchmark valued in today’s dollars.
While entities like the ones listed in the linked article above had technologies caving in on them that would make their once lucrative business obsolete or half the world’s population fighting against its entire industry, a whole new world of technologies is coming into the palm of the world’s populations’ hand. Drawing the conclusion that these technologies should only increase the use cases for Bitcoin and increase its value in the future does not seem far-fetched particularly in light of the fact that bitcoin has been the most asymmetric bet an investor could have made a decade ago.
Is that type of sustained growth possible, of course not. The price was $55 per bitcoin in March 2013 and it is approximately at $28,000 on April 2, 2023. That’s a 50,800 percent return. At that rate the value of a single bitcoin in 2033 would exceed $14,250,000. Few people in the Bitcoin space are that optimistic. But could bitcoin’s market cap surpass gold’s $10 trillion market cap within the next decade? Many have predicted just that to happen! That would put the price of a single bitcoin at $500,000.
Yes, since those all-time highs the bitcoin market fell significantly for myriad reasons including the FTX fiasco which sent the price of bitcoin plummeting to $15,645. However, this is a trend seen repeatedly throughout Bitcoin’s history. To date, the bitcoin price has always recovered and moved onward and upward. As we discussed in a previous publication, the reward a miner receives for mining a block is cut in half every four years. The next halving is scheduled to occur in early May 2024 at which time the block reward will be 3.125 bitcoin. The bitcoin halvings have created a phenomenon known as the bitcoin market cycle. That’s what we will discuss next week.
