Will Bitcoin's Continued Rise Fall in 2016?

2016 is about to see another surge in the price of bitcoin. The reason behind it is not so-called dark web drug trafficking or a Russian Ponzi scheme, but a relatively less sensational factor: the slowdown in the growth of the money supply.

Bitcoin is a network-based virtual currency that does not rely on a central authority to exist, providing users with a fast and anonymous way to circulate money. Although it is highly regarded by some people as a template for future currencies, there are still some people who think it is not safe enough to be used as an investment currency.

What makes 2016 unique is that Bitcoin is subject to similar factors as traditional fiat currencies, with the same unchanging supply and demand factors affecting this new currency.

Bitcoin is not controlled by a central bank, but rather relies on a system of so-called 'mining' computers that compete every ten minutes to verify a block of transactions through mathematical calculations. In return, the most

Calculate the result first. Those who clear the transaction will be rewarded with 25 new bitcoins, which is worth about 11,000 BTC=BTSP.

But when the mechanism was first invented in 2008 by a person using the pseudonym 'Satoshi Nakamoto', the first version of the mechanism was that the reward would be halved every four years to prevent inflation. The next four-year period will be in July 2016.

Bitcoin is also like ordinary commodities, with a limited issuance of 21 million. Currently, there are 15 million Bitcoins issued, and this number is expected to be reached in the next 125 years. Therefore, it is very appropriate to describe it as "mining".

Daniel Masters, co-founder of Jersey-based Global Millions Bitcoin Hedge Fund, started out as an oil trader for Shell in the 1880s. After 30 years of experience marketing commodities, he eventually came across Bitcoin.

He now believes that the price of Bitcoin is expected to exceed the $1,100 level reached in 2013 next year, and then continue to rise, reaching $4,400 in 2017.

"There are a number of factors behind this, including the acceptance of bitcoin as a payment method by large corporate institutions, rapidly growing investment and profits in 'blockchain' technology (blockchain is the technology that supports bitcoin) and growing demand in China due to slow economic growth as its currency depreciates," Master said.

But Master believes that if we look at Bitcoin alone, the reduction in the reward mechanism will cause its price to increase by about 50%. Just like in other markets, the reduction in the reward mechanism is an inevitable reality.

It's like if OPEC came out tomorrow and said, 'Oil prices are going to be lower in six months,' the price of oil would be affected immediately. Bitcoin is still in its infancy, and I don't think this factor will fully affect the price, Master said.

Virtual assets that are not under unified control

Bitcoin prices have nearly doubled in the past three months, their fastest quarterly growth in two years, and hit $500 last month for the first time since August, thanks in part to Chinese demand for pyramid schemes set up by Russian fraudsters.

Bobby, CEO of BTCC, a leading Chinese bitcoin exchange, believes that the virtual currency still has a long way to go. He believes that the price will increase eightfold by July 2016 and reach $3,500 by next summer.

“Given that there are $6.5 billion in Bitcoin in circulation, the price of Bitcoin today is about $1 per person in the world,” Lee said.

The reward mechanism has already experienced a reduction in November 2012, from 50 bitcoins to 25 bitcoins. Since then, the shares have been even lower, with one bitcoin worth about $12, but in the next 7 months, the price has increased by 150%, almost to the time of the next reduction.

“Other impacts are minor, but the devaluation has had a significant impact on supply, which has put a lot of pressure on the price of bitcoin,” said Jeremy Millar of Magister Advisors, a London-based financial technology research center. He expects demand to continue to grow.

“No one would question this basic economic principle.”

JPM compiled from

Reuters, Record Highs Predicted for Bitcoin in 2016 as New Supply Halves, by Jemima Kelly.