Over the course of the past year, Bitcoin prices have gone on a slow but steady drop.
However, this does not mean Bitcoin is a lost cause as a currency. In fact, this means just the opposite. The drop in price is simultaneous with the rapid growth of Bitcoin’s transaction volume; meaning Bitcoin’s market has more than doubled its size.
Bitcoin is no longer just a thing of folly. Everyday, it is becoming a more legitimate payment method at cheaper costs, faster transfers, and more transparent management.
The price drop is part of Bitcoin’s natural growth.
When Bitcoin was new, there was no place to spend it. There were only a handful of merchants who opened up to the cryptocurrency, and they sold products that were only interesting to a small chunk of consumers. So these initial users bought more bitcoins than they could spend.
However, you can now book airplane tickets, reserve a hotel suite, buy shoes, clothes, and an entire apartment with bitcoins. At the start of 2015, there were already more than 100,000 merchants accepting Bitcoin worldwide.
In short, Bitcoins are now being spent at a higher rate than when it started, and the major drop in Bitcoin price is a result of more bitcoins going around the market.
Here’s a heads up to all investors: the next bitcoin reward halving policy will take place in 2016. This means that instead of 25 bitcoins being introduced to the market every 10 minutes, there will only be 12.5 new bitcoins put out.
The number of new and available bitcoins will then dramatically decrease, and if transaction volume stays the same, we can count on Bitcoin’s price to increase.
So hold on to your bitcoins—at least until 2016!