Bitcoin has been on a roller coaster since 2017, soaring from under $1000 USD to almost $20,000 in the span of a single year, then sliding into a long, slow crash with occasional rallies throughout 2018. Cryptocurrency hasn’t really caught on with the general public yet, and the 2017 hype led to what appears to have been a pretty serious overvaluation of an asset that is still more or less under construction. Nonetheless, the blockchain technology underpinning Bitcoin and the other cryptos has some far-reaching implications for finance and myriad other fields, and some people remain optimistic about the first-mover advantage still enjoyed by Bitcoin.

What exactly is Bitcoin?

If you don’t understand what all this crypto stuff is about just yet, don’t worry—most people don’t. It’s fairly important to have a basic understanding of how it works to really understand what it does, which can make it tough to get started, but here are the basics:

How it works:

  • Bitcoin is a “distributed ledger technology” (DLT).
    1. Ledger: Imagine a book full of people’s accounts and transactions. Every time a transaction occurs, the account balance is updated and the transaction is recorded—that’s it.
    2. Distributed: There are a lot of copies of the account book, and they have to all show the same balances and transactions. This prevents double-spending and means that no central authority controls the ledger.
    3. Technology: Obviously, it’s not a physical account book. Bitcoin and other blockchains are stored on computers all over the world and run over the internet.

There’s a lot more to dig into if you really want to know the technical terms, but knowing that Bitcoin is essentially a big, decentralized, automatically-updated spreadsheet with a lot of copies, you know most of what you need to.

What it does:

  • Creates a monetary system with no central authority
  • Keeps a permanent, public record of every transaction (it’s pseudonymous at best)
  • Prevents copying/double-spending of digital assets

What’s happened to it:

  • 2009: Bitcoin’s first transaction
  • 2011: Other cryptocurrencies appear
  • 2013: Bitcoin reaches $1,000, then crashes down to $300
  • 2014: The world’s largest Bitcoin exchange, Mt.Gox, goes down, taking 850,000 BTC with it.
  • 2016: Ethereum begins to make it big, especially with its ICO model enabling a quick and easy path to releasing new cryptocurrencies.
  • 2017: Bitcoin’s price soars from $1000 to $20,000, even as a dissenting group splits off to become Bitcoin Cash. Lots of other forks follow.
  • 2018: Bitcoin starts a decline, spiraling into an all-out crash. The exact reasons behind the crash are unclear, but a combination of thefts, hacks, forks, regulations, scams, sell-offs, and general attitude shifts are serving their purpose in correcting a market that was almost certainly heating up way too fast.

As is generally the case in these sorts of markets, there are passionate opinions coming from both sides: some pessimists predict the end of crypto and some optimists are talking about a million-dollar Bitcoin. The truth, though, is likely somewhere in the middle.

Expert opinions

Whenever you hear anyone claiming to know where Bitcoin is headed, your first reaction should be skepticism. No financial prediction is a guarantee, and Bitcoin is still a relatively small, misunderstood market that tends to have its price pushed up and down by variables that aren’t yet fully understood. That said, looking at forecasts and the reasons behind them can at least be educational.

John McAfee

Prediction: $1,000,000 by 2020
Made in: 2017, and he’s repeatedly reaffirmed it
Who: John McAfee is best known for starting the McAfee cybersecurity company. More recently, though, he’s become known for his anarcho-libertarian political views, his very colorful personal life, and advocacy for cryptocurrency. He’s generally regarded as something of an outlier.
Why: McAfee bases his claims on mathematical calculations that measure trends in Bitcoin use and upon his belief that fiat currencies are based on unreliable political institutions.
You can track the progress of McAfee’s prediction here.

Jim Cramer

Prediction: $1,000,000, someday
Made in: June 2018, revised down to long-term stability at $800-$1000 dollars
Who: Jim Cramer is a former hedge fund manager who hosts CNBC’s Mad Money, where he is known for his high-energy style. He’s generally been more of a crypto-skeptic than an active participant.
Why: the $1,000,000 number came from a comment Cramer made in 2017, theorizing that that companies would stockpile Bitcoin in order to pay off potential cryptojackers, pushing the price way up. He also mentioned increasing trading volumes and investor demand as positive factors, but has since revised his claim downwards.

Tyler and Cameron Winklevoss

Prediction: $320,000 in 10-20 years
Made in: February 2018
Who: Tyler and Cameron Winklevoss are the founders of the Gemini Exchange, one of the largest cryptocurrency exchanges in the world. Gemini has a banking charter and has been coming out with crypto-investing products despite the market downturn.
Why: Bitcoin is a scarce asset with all the properties of gold, but more portable and durable. Though they believe it will take a long time to enter everyday use, the Winklevoss twins are confident that Bitcoin and cryptocurrency are here to stay.

Jameson Lopp

Prediction: $250,000 by 2020, $60,000 by the end of 2018
Made in: June 2017 and July 2018 respectively
Who: Jameson Lopp is well-known as an active member of the Bitcoin development community, having worked with Blockchain security company Bitgo and several other startups for quite some time. He is a self-professed cypherpunk and believes passionately in cryptocurrency, but recognizes that parts of it will need to evolve.
Why: Lopp’s personal philosophy is that making money and data private is essential to preserve individual freedom, but his prediction is based on his analysis of seven years of daily value changes.

Tim Draper

Prediction: $250,000 by 2022
Made in: April 2018, and he stands by it as of November 2018
Who: Tim Draper runs Draper Associates, a California-based venture capital firm. He has been bullish on cryptocurrency for years and is perhaps best-known for purchasing all the Bitcoins that were seized from The Silk Road marketplace.
Why: Draper believes that cryptocurrency will eventually make up about 2/3 of the world’s total currency as it becomes easier to use and the advantages become clearer. The exact process by which he arrived at his number is unclear, but he has repeatedly compared Bitcoin to the Internet—another technology that famously had some ups and downs.

Trace Mayer

Prediction: $250,000 by 2020
Made in: 2017, not reconfirmed
Who: Trace Mayer is a well-known cryptocurrency personality and investor. He takes a technical approach and has been involved in Bitcoin from the early days.
Why: Mayer’s predictions are based on his own formula called “The Mayer Multiple,” which divides the current price of Bitcoin by the 200-day moving average. A higher multiple makes it more likely that Bitcoin is overvalued, while a lower multiple means it’s undervalued.

Thomas Lee

Prediction: $125,000 by 2021-2023
Made in: January 2018
Who: Co-founder of Wall Street investment strategy firm Fundstrat, Thomas Lee has a reputation for being bullish on Bitcoin. He has made some bad calls in the past, but to his credit, he’s owned up to his mistakes. He believes that the market downturns are temporary glitches that don’t affect potential long-term value.
Why: Lee believes that institutional money and investors will continue adopting Bitcoin, and bases his ideas about the price on the number of active wallets, account usage data, and Bitcoin’s supply.

Joseph Stiglitz/Nouriel Roubini/Kenneth Rogoff

Prediction: $100 by 2028/high possibility of being pretty low
Made in: 2018
Who: All three of them are highly-respected economists, and while they’re not representative of the economics profession as a whole, their arguments do reflect a lot of general academic attitudes towards cryptocurrency. They have a lot of experience and a few Nobels between them, so they’re worth listening to.
Why: Stiglitz believes that crackdowns on cryptocurrency as a tax avoidance/money laundering tool, along with high levels of theft, will push the price down. Roubini argues that Bitcoin doesn’t really function as a store of value, unit of account, or means of payment—the three main uses of money—and therefore won’t last long. Rogoff has a positive opinion of Blockchain technology in general, but sees cryptocurrency as more of a dark money tool that will eventually be co-opted by the government. They don’t make any specific predictions, but seem to have reached a consensus that cryptocurrencies aren’t a great investment.

Analysis: crypto has a future—we just don’t know what it is

Blockchain technology is unquestionably here to stay. It’s already being leveraged into thousands of applications, from large-scale enterprise systems to small, radical startups. Cryptocurrency is only one application of blockchain, though, and it’s a lot more volatile. It’s a new technology, with all the accompanying issues: high barriers to entry, not enough specialists, not user-friendly, prone to scams, constantly in flux, et cetera.
Making crypto investments a significant part of your portfolio probably isn’t advisable unless you really know what you’re doing, then, but it makes sense to keep an eye on it. In the long term, it’s almost a given that cryptocurrency will be part of our financial life, though that cryptocurrency may or may not be Bitcoin. Bitcoin has the advantage of being the first cryptocurrency in existence, but being the most well-known in 2018 doesn’t necessarily mean it will stay dominant forever. Taking financial advice about more traditional investment products like stocks is already quite risky, so in a market as new and volatile as cryptocurrency, it pays to be extra- careful.