Is Bitcoin Undervalued?

If you are following the cryptocurrency market closely, you might agree that Bitcoin has become a rage again and the way it is sustaining its price increase in recent weeks, it shows that cryptocurrency is not going anywhere and a majority of people out there in financial streets believe that cryptocurrency is actually undervalued.

 

Generally, the way it happens with any stocks in the market, the price increase of Bitcoin and media coverage actually made people talk and started the debate of its rise and fall. Interestingly, a look at the Wall Street Journal survey will let you know that a surprising figure of 96% economists believe that Bitcoin is nothing more than a bubble which is ready to burst.

 

Talking about the other side of the story, you can safely say that the record price increase in Bitcoin in such a short term did not come from nowhere. With strong fundamentals, the financial and technical enhancements contributed as an anchor for Bitcoin’s future.

 

In its favour, Bitcoin officially activated Segregated Witness(SegWit) which will assist in increasing the speed of Bitcoin transactions. SegWit achieves this removing some signature data from the transactions which ultimately frees up the space to accommodate more transactions to the blockchain. If this was not sufficient, Bitcoin soon saw drastic improvements to the ‘Lightning Network’. Lighting Network actually helps bitcoin to handle large volume of transactions in a matter of seconds while at the same time keeps the transaction fee as low as possible. This is generally used for a huge volume of smaller transactions.

 

Another way of looking at it is, whereas the Bitcoin network tackles the processing of large transactions, the lighting network takes care of micro transactions. Lightning Network in fact offers other advantages as well.

For example, privacy. The network waits till the payment channel is closed to post the actual encrypted transactions on the Blockchain, resulting in the increases of Bitcoin’s scalability. Though arguable by some, Lighting Network’s other advantage is the low fee. Some experts believe that though it could be a good thing at present, it doesn’t look good at all for Bitcoin’s future.