In the next couple of years, Bitcoin price is expected to see a drastic variation from the current levels of $290. While the fundamental factors such as the support of national governments may take Bitcoin past $500, an increased number of Bitcoin thefts and scams will undo the good work and may cause irreparable damage to the investors, both potential and existing.

The Bitcoin market also has one major event coming up during the next couple of years; the halving of the block mining reward to 12.5 Bitcoins per block. At present, a successful miner is rewarded with 25 Bitcoins per block. The Bitcoin protocol halves this reward every 210,000 blocks (roughly every four years). The next halving is expected to happen in 2017, or if the computational power exceeds the calculations, the probability of a 2016-halving increases considerably.

It is widely expected that fewer Bitcoins will be mined going forward as network complexity reaches a higher level. Now assuming that the digital payments’ industry expands for the next 2 years at the same rate as it has in the past, the increasing demand for the cryptocurrency amid supply moderation should lead to a spurt in prices. With the price scaling new heights, Bitcoin mining will be revitalized as the value of rewards increases, which will further push up the prices. Having this side, we must also point that extreme volatility and wide vicissitudes will continue to remain in the scene.

Another major consideration is that since only 21 million Bitcoins will ever be mined, and more than 13 million are already in circulation, the sprawling Bitcoin community is left with just a little more than 7 million Bitcoins.

With big and small businesses accepting cryptocurrency payments, and the quantity being constrained, the basic laws of economics are anticipated to play out in the favor of buyers, but not without temporary shocks!

Reference: Bank Of England Report: Innovations in payment technologies and the emergence of digital currencies