Can Bitcoin Reach $1 Million?

Bitcoin (BTC -0.71%) has been on a wild ride in recent years as it soared to highs above $60,000 and is currently trading between $16,000 and $17,000 as I write.

It wasn’t long ago that investors believed that this cryptocurrency could reach $100,000 or more. Could it reach astronomical new heights of over $1 million in the future? Let’s look at the thesis behind Bitcoin’s value.

The best digital store with value

I think the best argument for Bitcoin’s future value increase is that it is a digital store of value, like gold. The token is small because it is limited to 21 million once all mined and there will never be more.

For investors looking for a place to store wealth that is not in stocks, bonds, real estate or other traditional commodities, this can be a good option in the digital world.

The challenge is that if Bitcoin reached $1 million, the value of all Bitcoins would be $21 trillion, more than $11.7 trillion of all gold today. Could Bitcoin be worth more than all the gold in the world?

The inflation protection argument has lost credibility

One of the talking points of Bitcoin advocates in 2020 and 2021 was that it would be a hedge against inflation. Now inflation is here and Bitcoin has proven to be a worse hedge than just holding dollars.

Bitcoin price data from YCharts.

If there’s one chart relevant to Bitcoin’s value proposition, it’s this one (above). Gold has held steady over this time, showing that it is at least a decent hedge, but Bitcoin has proven to be more of a speculative commodity than a hedge against inflation.

Bitcoin has fallen behind as a utility token

The past three years have also proven that several blockchains have surpassed Bitcoin in terms of speed and functionality. According to a study by venture capital firm A16Z released in May 2022, Ethereum (ETH -0.76%) has nearly 4,000 developers; Solana has nearly 1,000; and the oldest blockchain, Bitcoin, has just over 500 developers.

Bitcoin’s blockchain was not built with smart contracts in mind like Ethereum or Solana (SUN -8.27%) was, and it is fundamentally the blockchain behind tool development. It’s also much slower than a blockchain like Solana, which completes around 3,000 transactions per second. And Bitcoin is far more expensive than Solana’s fraction of a krone costs.

If the blockchain is to be used for real benefit, it probably won’t happen on Bitcoin.

Is $1 million ever available?

I don’t think it will ever get that far.

Bitcoin has proven to be a store of digital value, but like gold, it will have limited upside due to its limited use cases.

I think there is far more upside in tokens like Ethereum and Solana that have blockchains that are used for real utility. This is where the value will be created for decades to come.