Is Bitcoin a Millionaire Maker?

Bitcoin (CRYPTO:BTC) has created thousands of millionaires over its 15-year history. In fact, we know exactly how many. Data from blockchain analytics firm Glassnode shows that there are currently around 104,000 Bitcoin wallets worth more than $1 million.

But after experiencing such a dramatic increase over the years, it’s natural to think that your chances of joining this exclusive club are gone. But what if I told you that Bitcoin still has what it takes to create new millionaires?

Image source: Getty Images.

Why is Bitcoin an ideal asset?

Simply put, for Bitcoin to continue to create millionaires, its price must continue to rise. That’s not a far-fetched thing, but there’s a more nuanced dynamic at play here that makes Bitcoin uniquely suited to continue to rise as it has for the past 15 years. One of the key factors in this dynamic is Bitcoin’s limited supply. Bitcoin’s supply is capped at 21 million coins, making it more likely to increase in value over time due to simple supply and demand dynamics.

Bitcoin’s limited cap means that the price will likely rise as demand increases. There are currently 19.6 million Bitcoins in circulation, with the remaining 1.4 million coins to be phased in by 2140. This slow and slowing release of new coins ensures that Bitcoin will be scarce. As long as demand continues or increases, that scarcity should push the price higher.

In comparison, other assets like stocks can undergo splits, which can increase the number of shares and dilute the value. Gold, another popular store of value, dilutes when new gold is discovered and mined. However, Bitcoin cannot be diluted in this way. Its decentralized and distributed network ensures that there will only be 21 million Bitcoins, making it an ideal asset for creating millionaires. There is no room for game-changing inflation in this system.

Scenarios that investors should consider

Whether Bitcoin can create new millionaires depends on two factors: how much is invested and how high Bitcoin climbs. The higher Bitcoin climbs, the less money one has to invest to become a millionaire. The key question here is how high Bitcoin can climb. While no one knows for sure, several studies and analyses suggest that Bitcoin could one day be worth more than $1 million per coin.

One of my favorite models for predicting the future price of Bitcoin is the Bitcoin Power Law Theory, created by astrophysicist Giovanni Santostasi. The Power Law is a statistical principle that describes phenomena in the natural world, such as the size of cities, the number of species in an ecosystem, and the distribution of wealth. When applied to Bitcoin, the Power Law fits surprisingly well because Bitcoin exhibits the characteristics of a natural network rather than a manipulated system like fiat currencies.

The story continues

Just as the Power Law is applied to natural phenomena such as the distribution of city sizes or the prevalence of species, it can also be used to analyze Bitcoin through variables such as users and transactions. This model quantifies the number of Bitcoin addresses and transactions to correlate with the growth of Bitcoin’s price. It predicts that Bitcoin could reach a fair market value of over $1 million by 2032 and potentially exceed $4.5 million by 2040. This approach provides a solid framework for understanding Bitcoin’s long-term price potential by highlighting how network effects drive Bitcoin’s growth.

Another noteworthy analysis comes from ARK Invest. After examining several scenarios and factors, ARK Invest predicts that Bitcoin could reach $3.8 million by 2030 as institutional investors begin allocating more capital to the cryptocurrency.

While these predictions may sound sensational, it’s hard to ignore that Bitcoin has consistently defied expectations. In 2015, few could have predicted that Bitcoin, which was trading at just $1,000 at the time, would soar to over $70,000 within a decade. While the future is uncertain, Bitcoin has a history of surprising markets and looks set to continue doing so for decades to come.

What does it take to become a millionaire?

Let’s keep it simple. If Bitcoin hits $1 million, you’d need to own a whole Bitcoin to become a millionaire. If it hits $2 million, you’d need half a Bitcoin. At $4 million, you’d need a quarter of a Bitcoin, worth about $13,000 at today’s prices.

While past performance does not guarantee future results, and no model is perfect, Bitcoin’s unique characteristics make it a strong candidate for continued price appreciation. Its limited supply, combined with increasing demand and growing acceptance, make a compelling and clear case for greater long-term growth than many other assets.

While Bitcoin is no get-rich-quick scheme, it has been a rewarding asset for patient investors. The future of Bitcoin remains promising, and its potential to create new millionaires is far from over.

Should you invest $1,000 in Bitcoin right now?

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RJ Fulton has positions in Bitcoin. The Motley Fool has positions in Bitcoin and recommends it. The Motley Fool has a disclosure policy.

Is Bitcoin a Millionaire Maker? was originally published by The Motley Fool