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Bitcoin (BTC -0.52%) is many things, but you can never call it boring. The oldest, largest, and most mature cryptocurrency is still finding its sea legs in the market, rolling through roughly equal amounts of good news and bad.

The road ahead is as murky as ever. As I write this, Bitcoin's market price stands 62% below the all-time high of November 2021. At the same time, Bitcoin has tripled in three years and gained 1,500% in six years. About half the value of the total crypto market comes from Bitcoin alone. So there are plenty of Bitcoin bulls out there, but also lots of bearish investors.

So where is Bitcoin headed in the long run? Let's consider the best of all possible outcomes, the ultimate bear case, and then find a more realistic middle ground between those extremes.

Bitcoin maximalists, like MicroStrategy (MSTR -3.21%) chairman Michael Saylor, believe that Bitcoin is the future of money. He expects the price to go up "forever," with some volatility along the way but a reliably positive trend in the long run. So MicroStrategy has converted most of its cash reserves into Bitcoin and keeps buying more whenever it finds more spare cash to invest. In Saylor's view, that's the only reasonable way to manage your company's cash in the long run.

So what will it take to fulfill Mr. Saylor's ultra-bullish dreams of massive price gains? Well, let's imagine a world where absolutely everything works out in Bitcoin's favor:

Now, this hypothetical scenario paints a rosy picture indeed, but remember, it's the best case. We'll need a sprinkle of luck and a whole lot of development to get there. But hey, who doesn't love a good daydream?

On the bearish side of the Bitcoin argument, many investors argue that this digital currency -- and all digital currencies -- are fundamentally worthless. For example, master investor and Berkshire Hathaway (BRK.A 0.55%) (BRK.B 0.07%) CEO Warren Buffett has called Bitcoin "rat poison squared."

Buffett and like-minded critics see zero value in cryptocurrencies, so they expect the Bitcoin token to lose all of its value over time. This could happen in many different ways:

Remember, this scenario is as relentlessly pessimistic as the best-of-all-worlds discussion was shamelessly optimistic. The chances of these doom-and-gloom factors materializing are just as slim as all the pieces falling into place perfectly for a Bitcoin utopia. You should always pay attention to the potential risks of any investment, especially one as volatile and unpredictable as Bitcoin.

But the sky isn't falling on Bitcoin yet. So, with the most extreme possibilities out of the way, let's explore the more likely middle-ground for Bitcoin's future.

The extremely Utopian and dystopian reviews above are interesting thought experiments, not firm forecasts. In reality, Bitcoin and other cryptocurrencies will surely see both good and bad news over the next few years. Digital currencies seem ready to reshape the financial markets on a global scale, but the road ahead looks rocky and packed with unexpected twists.

So here's what I see as a more realistic outlook for Bitcoin:

For example, will Bitcoin ever move from Proof-of-Work validation to the less power-hungry Proof-of-Stake system, like Ethereum (ETH -0.53%) did in recent months? And if so, could Bitcoin still hold on to its lifetime cap of 21 million possible coins? And if not, rival coins might eventually use that foot in the door to topple Bitcoin from the crypto throne.

In conclusion, while Bitcoin's future is uncertain, it's likely to be somewhere between the extremes of becoming the world's dominant form of money or disappearing entirely.

Many years down the road, cryptocurrencies should become as uncontroversial as stocks, bonds, or savings accounts, with solid and consistent legal and regulatory rulebooks in every country. But that future is a long way away from 2023 and nobody knows exactly what those fully settled directives will look like, or what Bitcoin's specific role will be.

Understanding Bitcoin and the broader crypto market is a journey, not a destination. Stay informed, keep learning, and make sure to adapt your investment strategy as this exciting new field continues to develop.

For now, Bitcoin and its crypto kin are still high-risk, high-reward investment assets. They may play a part in a diversified portfolio, but only for investors who can stomach their roller-coaster-like ups and downs. I'm cautiously optimistic about Bitcoin's future as a long-term winner. Just tread lightly in the cryptocurrency field, keep an eye out for bear traps, and manage most of your nest egg in more traditional forms such as stocks, cash, or index funds.

Anders Bylund has positions in Bitcoin, Ethereum, and Tesla. The Motley Fool has positions in and recommends Berkshire Hathaway, Bitcoin, Ethereum, Goldman Sachs Group, Starbucks, and Tesla. The Motley Fool has a disclosure policy.

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